AFRICAN DEVELOPMENT BANK

Public Disclosure Authorized Public Disclosure

COTE D’IVOIRE

POWER TRANSMISSION AND DISTRIBUTION NETWORKS REINFORCEMENT PROJECT (PRETD)

APPRAISAL REPORT

Public Disclosure Authorized Public Disclosure

ONEC DEPARTMENT November 2016

Translated Document TABLE OF CONTENTS PROJECT OVERVIEW ...... ii I. IPROJECT PRESENTATION, ALIGNMENT AND BENEFICIARIES ...... 1 A. Project Context, Development Objectives and Specific Objectives ...... 1 B. Expected Project Outcomes and Impacts ...... 1 C. Project Outputs ...... 2 D. Project Rationale...... 2 E. Project’s Alignment with National Development Goals ...... 2 F. Project Alignment on Bank Strategies and Policies ...... 3 G. Integration of Requirements Set Out Under Presidential Directive No. 02/2005 ...... 3 H. Consultation Process and Ownership by the Country ...... 3 I. Project Target Areas, Beneficiaries and Selection Criteria ...... 4 II. PROJECT COST AND FINANCING...... 5 A. Estimated Project Cost and Financing Arrangements ...... 5 B. Coordination of Joint Project Donors ...... 5 III. PROJECT FEASIBILITY ...... 5 A. Project Economic and Financial Performance ...... 5 B. Sensitivity of Project’s Financial and Economic Performance ...... 6 C. Environmental and Social Impact ...... 6 D. Climate Change ...... 7 E. Gender ...... 7 IV. PROJECT IMPLEMENTATION AND MANAGEMENT ...... 7 A. Governance ...... 7 B. Implementation Schedule ...... 8 C. Procurement Strategy and Plan ...... 8 D. Financial Management ...... 9 E. Monitoring and Evaluation ...... 9 F. Sustainability ...... 9 G. Risk Management ...... 10 V. LEGAL INSTRUMENTS AND AUTHORITY ...... 10 A. Legal Instrument ...... 10 B. Conditions Associated with Bank’s Intervention ...... 10 40. The Bank’s financing is subject to the following conditions: ...... 10 VI. RECOMMENDATIONS ...... 11 Annex 1: Web Links Annex 2: Map of Project Area Annex 3: Project Implementation Schedule Annex 4: Procurement Systems Annex 5: Justification of Level of Côte d’Ivoire’s Project Counterpart Funding

CURRENCY EQUIVALENTS August 2016

1 Unit of Account = 822.4586 XOF 1 Unit of Account = 1.2529 EUR 1 Unit of Account = 1.3934 USD

1 January to 31 December

WEIGHTS AND MEASURES

1 kilometre (km) = 1 000 m 1 km² = 1 000 000 m² 1 hectare (ha) = 10 000 m² 1 tonne = 1 000 kg 1 kilojoule (kJ) = 1 000 Joules (J) 1 kilovolt (kV) = 1 000 Volts (V) 1 kilovolt-ampere (kVA) = 1 000 Volt – ampere (VA) 1 kilowatt (kW) = 1 000 Watts 1 Megawatt (MW) = 1 000 000 W = 1 000 kW 1 Gigawatt (GW) = 1 000 000 kW = 1 000 MW 1 kilowatt-hour (kWh) = 1 000 Watt-hours = 3 600 000 Joules (J) 1 Megawatt hour (MWh) = 1 000 000 Wh = 1 000 kWh 1 Gigawatt hour (GWh) = 1 000 000 kWh = 1 000 MWh 1 tonne of oil equivalent (Toe) = 41 868 Joules = 11 630 kWh 1 million tonnes of oil equivalent (MToe) = 1 000 000 Toe

ACRONYMS AND ABBREVIATION : ADF African Development Fund BD : Bidding Documents CIE : Compagnie Ivoirienne d’Electricité CI-ENERGIES : Société des Energies de Côte d’Ivoire CIPREL : Compagnie Ivoirienne de Production de l’Energie Electrique CLSG : Côte d’Ivoire, Liberia, Sierra Leone and Guinea Interconnection Project CSP : Country Strategy Paper DC : Direct Contracting EIB : European Investment Bank ERR : Economic Rate of Return ESIA : Environmental and Social Impact Assessment ESMP : Environmental and Social Management Plan GDP : Gross Domestic Product HV : High Voltage ICB : International Competitive Bidding LCB : Limited Competitive Bidding LV : Low Voltage MDG : Millennium Development Goals MOT : Mean Outage Time MV : Medium Voltage NA : Not available NCB : National Competitive Bidding NDE : Non-distributed energy OCB : Open Competitive Bidding PAP : Project Affected People PAR : Project Appraisal Report PEPT : Electricity for All Programme PIA Project Impact Area PIU : Project Implementation Unit PND National Development Programme PRONER : National Rural Electrification Programme PSV : People in Situations of Vulnerability QCBS : Quality- and Cost-Based Selection RAP : Resettlement Action Plan RO : Regional Operations SDG : Sustainable Development Goals SP : Simplified Procedures TFP : Technical and Financial Partners UA : Unit of Account

i

PROJECT OVERVIEW Project Name Power Transmission and Distribution Networks Reinforcement (PRETD) Country Côte d’Ivoire Project SAP Code P-CI-FA0-014 Geographic Location Districts: , Montagnes and Bas Sassandra Identification Sector Energy Sub-Sector Electricity Name and Telephone Olivier KOFFI of Project Task Tel.: (225) 20 20 61 71 Manager

Acceleration of the economy’s structural transformation Overall Objective through industrialization and improvement of the people’s living conditions Improve grid performance in order to provide consumers Specific Objectives with high quality energy and increase the electricity access rate Transmission lines and sub-stations, distribution lines and Description Outputs sub-stations, project studies and management, mitigation of environmental and social impacts Reduction of technical losses, NDE and MOT Outcomes Improved access rates Improvement of the people’s quality of life Impacts Job creation Increased GDP growth rate

Country Strategy The 2016-2020 PND and the Energy Sector Strategic Plan /Objective aligned on Strategic The Bank’s strategy The Bank’s Ten-Year Strategy, High 5s and the New Deal Thrust aligned on for Energy in Africa CSP Pillars aligned Pillar II (2013-2017 CSP). on

Population 1 400 000 Beneficiaries Women (%) 51 Minorities (%) NA

Environmental Score or Yes/No/N.A. and Social Environmental Category 1 Impacts Does an ESIA exist? YES Does an ESMP exist? YES Does an RAP exist? YES

Climate change resilience YES Safeguards Involuntary resettlement NO required Gender inequalities YES Governance issues NO

Executing Agency’s Name and CI-ENERGIES Address 01 B.P. 1345 Abidjan 01 Project Procurement strategies adopted National system, Bank’s system and Management United Nations system Implementation Period 36 months ii

Yes/No/N.A. Have the key executing agency staff assumed duty? YES Has the executing agency opened a bank account? NO Have the project counterpart funds been disbursed? NO Project Does a Detailed Project Implementation Plan (DPIP) exist? YES Readiness Does a detailed financial plan exist? YES Does a detailed procurement plan exist? YES Does a Results Monitoring and Evaluation Framework exist? YES Estimated Loan/Grant Signature Date 24 October 2016

Amount % of total cost (in UA million) Cost and Total cost 162.14 100 Financing ADB loan 137.82 85 Government/Sponsor 24.32 15

Lending currency Euro (EUR) or any other convertible currency Loan type Fully Flexible Loan Tenor To be determined (not exceeding 25 years) Grace period To be determined (not exceeding 8 years) To be determined (depending on the depreciation Weighted average maturity1 profile) Repayments Semi-annual payments after the grace period Base rate + Funding margin +Lending spread + Interest rate Maturity premium This interest rate must be above or equal to zero. Floating (6-month EURIBOR resets on 1 February Base rate and 1 August or any other acceptable rate) A free-fixing option is offered to fix the base rate Bank’s funding margin resets on 1 January and 1 Funding margin July and applied on 1 February and 1 August with Financial the base rate. Information Lending spread 80 basis points (0.8%). To be determined: - 0% if the average weighted maturity <= 12.75 Maturity premium years - 0.10% if average weighted maturity<=15 - 0.20% if average weighted maturity >15 years 0.25% of the loan amount to be paid latest on the Front-end fee loan signature date. 0.25% per year on the undisbursed amount. It starts Commitment fee: to accrue 60 days after loan signature and is payable on interest payment dates. In addition to the free-fixing option for fixing the Base rate conversion option base rate, the Borrower is now offered the possibility 2 : of returning to the floating rate or re-fixing all or part

1 An average weighted maturity calculator is available at this website

2 The conversion options and transaction fees are governed by the Bank’s Guidelines for Loan Terms at this website iii

of the disbursed amount of its loan. Transaction fees are payable. The Borrower is offered the possibility of Interest rate cap or collar establishing base rate caps or collars for all or part of option 3 : the disbursed amount of its loan. Transaction fees are payable. The Borrower is offered the possibility of converting the lending currency for all or part of its disbursed or Lending currency undisbursed loan into another Bank-approved Conversion option 4: lending currency. Transaction fees are payable.

3 Idem 2 4 Idem 2 iv

RESULTS-BASED LOGICAL FRAMEWORK

Country and Project Name: Côte d’Ivoire- Power Transmission and Distribution Networks Reinforcement Project Objective: Accelerated transformation of the economy through industrialization and improvement of the people’s living conditions.

PERFORMANCE INDICATORS RISKS/MITIGATION MEASURES RESULTS CHAIN 2015 Baseline Means of Verification Indicators 2019 Targets Situation Project Completion Reports of: Economic development of

- Ministry of Planning and Risk: the region and - Jobs created - - 3020 jobs, of Development - Failure to connect rural households in the event of non- improvement of the - GSP growth - which 32% for - Ministries of Oil and Energy availability of counterpart funds. people’s quality of life - National access rate - 80 % women - CI-ENERGIES Mitigation measure

IMPACT - +1.5 % - CIE - Central government commitment to facilitate the people’s

- 81.24 % access to electricity under PEPT.

Reports of - 82 % - 60 % - Ministries of Energy Risks: - 14 kV - 20 kV - CI-ENERGIES - Weak capacity of CI-ENERGIES to implement a large-scale - 460 MWh - 153 MWh - CIE project - 75 % - 51 % - Poor performance of contractors to complete project - Reduction in Riviera II sub-station load rate - 321 MWh - 100 MWh - Administrative red tape in granting exemptions - Improvement of Bingerville voltage plan - 36 h - 10 h Mitigation measures: - Reduction of NDE in Bingerville - 30 kV - 33 kV - Recruitment of a control mission to assist CI-ENERGIES in - Reduction in Man sub-station load rate - N-1 safety - N- 1 requirements implementing the project - Reduction of NDE at Man sub-station requirements not met - Qualification criteria raised to exclude contractors without - Reduction of MOT at Man sub-station met - 62.77% relevant references Enhanced quality of - Improved voltage plan - 41.24 % - 87.96 % - Existence of a Tax Unit at CI-ENERGIES responsible for service, energy efficiency - Ensure continuity of service in San Pedro - 57.14 % - 96.31% monitoring exemptions within the different tax administrations and improved coverage - 58.58 % - 0

OUTCOMES - Improvement of coverage rate in - 5 - Improvement of coverage rate in Guémon - Improvement of coverage rate in Cavally - Reduction in the number of localities supplied by isolated diesel generators

v

HVB lines constructed - Length of 225 kV lines - 205 km Project appraisal reports, reports of HVA lines constructed - Length of 33 kV lines - 1356 km the consulting engineer, quarterly, HVB/HVA sub-stations - Length of LV lines - 1445 km supervision, audit, monitoring- established - Number of HVB/HVA sub-stations constructed/ - 5 evaluation, completion and DGE MV/LV sub-stations reinforced - activity reports. established - Number of HVA/LV sub-stations constructed - 351 Consulting engineer’s report LV lines constructed - Number of public lighting units installed - 6568 Audit reports Public lighting installed - Number of connections made - 20 000 Connections made - Number of studies conducted on future projects - 4 Studies for future - Number of CI-ENERGIES employees trained - 85 projects - Number of groups of people in situations of - 12

Employees trained vulnerability assisted Support to people in situations of vulnerability OUTPUTS

COMPONENTS INPUTS

ES

I

ACTIVIT 1. Infrastructure: (i) Construction of 205 km of 225 kV lines, 1 356 km of 33 kV lines; (ii) Construction of 2 x 225/33 kV sub-stations, one Resources

KEY 225/20 kV sub-station and extension of 2x225/33 kV sub-stations; (iii) Installation of 351x 50kVA pole-mounted sub-stations, 1445 km of ADB : EUR 137.82 million LVA lines; and (v) installation of 6568 public lighting units and completion of 20,000 connections. Government : EUR 24.32 million 2. Project Management: (i) control and supervision of network restructuring and extension work; (ii) external auditing of project accounts; Application (iii) procurement of nine works supervision vehicles; (iv) procurement of IT equipment and office furniture; (v) unit’s operating costs; and Component 1 : EUR 141.56 million (vi) various training courses Component 2 : EUR 11.45 million 3. Environmental and Social Mitigation: (i) Compensation of project affected persons; (ii) support to vulnerable groups; and (iii) project Component 3 : EUR 9.13 million environmental management.

vi

MEMORANDUM AND RECOMMENDATION OF BANK GROUP’S MANAGEMENT TO THE BOARDS OF DIRECTORS CONCERNING A PROPOSAL TO GRANT AN ADB LOAN OF EUR 137.82 MILLION TO THE REPUBLIC OF COTE D’IVOIRE TO FINANCE THE POWER TRANSMISSION AND DISTRIBUTION NETWORKS REINFORCEMENT PROJECT

Management hereby submits this Memorandum and recommendations concerning a EUR 137.82 ADB loan proposal to contribute to finance the Power Transmission and Distribution Networks Reinforcement Project (PRETD)

I. PROJECT PRESENTATION, ALIGNMENT AND BENEFICIARIES

A. Project Context, Development Objectives and Specific Objectives

1. Between 2012 and 2015, Côte d’Ivoire posted sustained economic growth at an average rate of 9.4% due to the recovery of the main growth-bearing sectors of the national economy: agriculture, mining and services. In the electricity sub-sector, this economic growth has led to an annual increase in power demand of about 12%, which could settle at 6% in the medium and long term. Côte d’Ivoire’s existing electricity system is unable to meet demand despite the entry into service, in 2015, of additional capacity of 253 MW, i.e. 17%, following the reinforcement of the AZITO and CIPREL plants. The Soubré plant, with a capacity of 275 MW, is expected to come on stream in 2017. The study on the Power Generation and Transmission Master Plan (PDPT), conducted in 2014, highlighted the dilapidated state and saturation of power networks as one of the major constraints preventing the electricity sub-sector from playing its role as a driver of the country’s development.

2. The project’s development goal is to accelerate the structural transformation of the economy through industrialization and the development of infrastructure evenly distributed throughout the national territory, and environmental conservation. The project’s implementation will contribute to the launching of mining and cocoa processing projects in the San-Pedro region (these projects await the availability of electricity). More specifically, the project aims to reduce non-distributed energy and the total mean outage time as a result of the limited capacity of some structures of the national interconnected grid. It also aims to restructure distribution networks with a view to relaunching connections for new customers in the towns of San Pedro, Bingerville, Duékoué and Zagné, and ensure the rural electrification of 252 rural localities in .

B. Expected Project Outcomes and Impacts 3. The near-to-medium term outcomes are a reduction of the mean outage time (MOT) of the entire interconnected grid from 44.6 hours to 42 hours, optimal grid utilization, increase in access to electricity from 80 to 81.24 % at national level, creation of direct jobs during the project phase and availability of qualified human resources to set up and manage projects at CI-ENERGIES. The project’s main impacts will be industrial development and the economic opening up of rural areas. The pipeline of industrial, mining and agri-business projects in the western region of the country has the potential to create about 3020 direct jobs, of which 32% for women, and their implementation due to the availability of electricity as a result of the project’s implementation will contribute to the country’s economic and social development, and to GDP growth. The expected impacts of the electrification of 252 localities are the reduction of insecurity as a result of public lighting and adequate telecommunication resources, the rapid dissemination of information by audio-visual equipment, women’s empowerment and gender equality in rural, urban and peri-urban areas. Indeed, the project will help to reduce the drudgery of daily chores, allow the development of women’s potential in disadvantaged environments and the expansion of petty trades in the formal and informal sectors, sources of new jobs for the population, especially people in situations of vulnerability (youth, women and the unemployed). A negative impact that could occur would be that the opening up to the outside world through audio-visual media and the internet could be a source of social unrest

1

C. Project Outputs

4. On completion, the expected project outputs will be: (i) the electricity infrastructure comprising the Bingerville 225/20 kV sub-station, the Duékoué and Zagné 225/33 kV sub-stations; the extension of the Soubré and San Pedro sub-stations; Soubré - San Pedro (128 km) and Duékoué-Zagné (77 km) 225 kV lines, the HVA networks in Bingerville, Duékoué, Zagné and Taï, the distribution networks in 42 localities in , 82 localities in Guémon Region and 128 localities in Tonkpi Region; (ii) Support for people in situations of vulnerability; and (iii) intangible outputs including the information, education and communication campaign, the project’s environmental and social management, the audit of project accounts, works control and supervision missions, feasibility studies on future projects and the training of CI-ENERGIES personnel.

D. Project Rationale

5. The project addresses the sector’s main problems, namely the dilapidated state and saturation of the networks, which affects the electricity sub-sector’s performance and are the causes of the suspension of new connections of industrial and household customers in certain regions, especially in the West of the country. Therefore, the project’s implementation will result in the launching of industrial and mining projects such as those related to the Feketero, Ouélé and gold mines, the Touleupleu iron ore mines, the Sampleu nickel mines and the San Pedro iron ore and manganese plant. The total estimated capacity of these projects by 2018 is 70 MW. The project will also allow wood processing industries in Montagnes District, currently using their own energy sources (diesel generators with a total capacity of 3.3 MW) to make significant savings as a result of their connection to the grid, the cost of which is CFAF 77 per kWh compared to CFAF 117 for the generators, i.e. a 34% saving. As a result of the project, Compagnie Ivoirienne d’Electricité (CIE) (the power utility company) will close down eight isolated thermal plants operating in Montagnes District (in , Diboke, Medibli, Taï, Sakre, Zeregbo, Koreahinou and Ouallo-Kouloukoro localities), with a total capacity of 1.3 MW and an average generation cost of CFAF 169/kWh compared to an average generation cost on CFAF 77 for all the country’s power generating facilities. CIE will make annual fuel savings of about CFAF 800 million based on 2014 data. The closure of plants operated by CIE and wood processing industries will avoid annual CO2 emissions of about 3600 tonnes. Lastly, the project’s implementation will result in the electrification of 252 rural localities and the connection of 7000 new customers in the town of San Pedro and efficient power supply to the towns of San Pedro, Bingerville, Duékoué, Zagné and Taï.

E. Project’s Alignment with National Development Goals

6. The reference document for the country’s development goals is the 2016-2020 National Development Programme (PND 2016-2020), the overall objective of which is to make Côte d’Ivoire an emerging country by 2020, with a sound industrial base. PND 2016-2020 is focused on the following five strategic thrusts: (i) enhancement of the quality of institutions and governance; (ii) acceleration of human capital development and social well-being; (iii) acceleration of the economy’s structural transformation through industrialization; (iv) development of infrastructure evenly distributed throughout the national territory and environmental conservation; and (v) strengthening of regional integration and international cooperation. For the energy sector, PND 2016-2020 aims to develop high quality power facilities through the following four outputs: (i) strengthening governance in the electricity and oil and gas sub-sectors; (ii) increasing oil and gas production, storage and transportation facilities; (iii) increasing power generation, transmission and distribution facilities; and (iv) adopting a power saving and efficiency policy.

7. The project is in keeping with the country’s development goals and sector objectives. It is aligned on strategic thrusts (ii), (iii) and (iv) of PND 2016-2020 and its outputs are consistent with output (iii) of the PND 2016-2020 for the energy sector. By 2020, the targeted objectives for the electricity sub-sector will be to increase the amount of energy supplied to the transmission and distribution networks from 8 251 GWh (2015) to 12 662 GWh, scale up power supplied to the mining

2 sector from a peak of 1 260 to 3090 MW and increase the rural population’s electricity access rate from 80 % in 2015 to 81.24 % by 2020. In this regard, the electricity sub-sector 2015-2030 Investment Programme provides for the construction of 3 025 km of transmission lines and 23 related sub-stations, and the electrification of 1076 rural localities over the 2015-2030 period,. The project will contribute to the achievement of these objectives by the construction of 205 km of transmission lines, five sub- stations and the electrification of 252 rural localities.

F. Project Alignment on Bank Strategies and Policies

8. The Bank’s 2013-2022 Ten-Year Strategy targets inclusive growth and the development of sustainable infrastructure to more effectively safeguard energy. Approved in 2012, the Bank’s energy sector strategy aims to increase the modern energy services access rate and to promote cleaner energy that will protect the environment. The project will contribute to the implementation of these strategies by providing the country with high quality transmission and distribution infrastructure, and by increasing the population’s electricity access rate. The project will also contribute to the implementation of the Bank’s High 5s and the different programmes of the New Energy Deal for Africa, in particular the “access programme for the bottom of the pyramid” through the connection of 20 000 rural households, the programme to improve the performance of power utilities by training 85 CI-ENERGIES employees, the programme to increase the number of bankable projects by conducting feasibility studies on four future projects, the energy efficiency programme by constructing 205 km of 225 kV lines and five related sub-stations that will reduce energy losses and outage times.

G. Integration of Requirements Set Out Under Presidential Directive No. 02/2005

9. The project is in line with Presidential Directive No. 02/12015 Concerning the Design, Implementation and Cancellation of Bank Group Sovereign Operations. The project design is based on detailed technical studies conducted between 2013 and 2015 using Government resources. The availability of these studies facilitated project appraisal and the preparation of bidding documents. Therefore, this is an operation with a satisfactory maturation level. On this basis, the Government requested and obtained the Bank’s consent to use the Advanced Contracting (AC) procedure, thanks to which bids were invited from June 2016. As of 30 September 2016, all bids for rural electrification works were received and appraised, and contracts will be signed as soon as the project is approved. The initial disbursements could be made in the first quarter of 2017. For works on the transmission lines and stations, bids will be received in November 2016. Negotiations on the financing agreement were held on 12 October 2016. The Ivorian party approved the loan conditions proposed by the Bank. The Government has set up organs charged with implementing the project as set out in paragraphs 26 to 29 of this memorandum. Concerning ongoing operations, it is worth noting that the energy sector project portfolio in Côte d’Ivoire comprises three operations amounting to UA 96.13 million: two national private sector operations (the CIPREL Plant Extension Project and the AZITO Plant Extension Project), and one regional public sector project (the Côte d’Ivoire-Liberia-Sierra Leone-Guinea Interconnection Project). The two private sector operations were approved in July 2013 with disbursement rates at 74% and 100%, respectively. The facilities financed are already operational. The public sector project was approved on 6 November 2013 and the financing agreement signed on 23 November of the same year. The regional project is behind schedule mostly due to the Ebola epidemic that affected the other three countries concerned. The disbursement rate for the national component stands at 37%. It is expected that works will be completed during the first half of 2017.

H. Consultation Process and Ownership by the Country

10. The Government initiated a consultation process with communities living in the project areas, allowing them to express their main concerns, the most important of which were taken into account in the project design. These mainly related to their financial difficulties in paying connection charges, their fear of seeing the project being implemented without compensation for affected persons, fear of accidents occurring as a result of the mishandling of electricity and the need for financial support to

3 create income-generating activities through the use of electricity. To address these concerns, the project will finance: (i) household connections by using the payment mechanisms provided for under the Electricity-for-All Programme (PEPT); (ii) support to people in situations of vulnerability who are members of women’s and youth associations in their agricultural production, agricultural product processing and fish-farming revival activities; and (iii) an information, education and communications (IEC) campaign to provide the population with the necessary information for the efficient use of electricity. Concerning compensation, works on any given zone cannot be undertaken without prior recompense of affected persons in the zone.

11. Project ownership by the Ivorian party is highlighted by its inclusion in the National Development Plan (PND 2016-2020), the Public Investment Programme (PIP 2015-2020), the Electricity Production – Transmission Master Plan and the 2017 National Budget. The country has mobilized the necessary resources to prepare the feasibility studies, environmental and social impact assessments and detailed designs of the main project components, and for the acquisition of land for the construction of the Duékoué, Zagné and Bingerville sub-stations. Lastly, the project sponsor, CI- ENERGIES, has formed a project preparation team at its Equipment and Development Department. The team comprises the Head of the Transmission Division, Head of the Distribution Division, two employees from the Markets and Logistics Department, an employee of the Finance and Accounting Department and an employee of the Studies and Planning Department. This team supervised the above- mentioned feasibility studies and prepared the requests for proposals for the recruitment of contractors and service providers.

Project Target Areas, Beneficiaries and Selection Criteria

12. The project concerns three of the countries districts: the Autonomous District of Abidjan for the Bingerville sub-station, the Montagnes District for the Duékoué-Zagné line and related sub-stations as well as the electrification of 252 rural localities, and the Bas-Sassandra District for the Soubré-San Pedro line and related sub-stations. The 252 localities are located in Cavally (42), Guémon (82) and Tonkpi (128) regions. Project sites were selected in compliance with the National Investment Plan, which anticipates the entry into service of sub-stations and lines planned under the project in 2017. The Soubré-San Pedro line meets the need to increase transmission capacity to San Pedro to meet the ever increasing demand and safeguard the town’s power supply. Currently, San Pedro is supplied by a 225kV line from Soubré (operated at 90 kV) and without back-up supply if it were to be out of service for scheduled or unpredicted reasons. The construction of the Duékoué and Zagné sub-stations is justified by the need to offload the Man sub-station which supplies them by long overloaded medium-voltage lines subject to significant voltage drops. Such occurrence affect the quality of service in these towns and their hinterland. The projected real estate development and population growth in Bingerville captured as part of the Abidjan District Development and Expansion Plan, requires high quality supply. The Rivera sub-station which currently supplies Bingerville is saturated. As regards rural electrification, the localities to be electrified were selected based on the criteria for the national rural electrification programme which targets localities with over 500 inhabitants. The Bank’s dialogue with the country led to consideration of rural localities located in the low access area concerned by the transmission network reinforcement works. This resulted in the selection of the three regions of Montagnes District. 13. The direct beneficiaries of the rural electrification component are the inhabitants of 252 localities estimated at 245,000 people comprising 54.1% men and 45.9% women; persons aged under 15 account for 41.8% of the beneficiaries5. The other project beneficiaries are economic operators whose activities could be launched or increased as a result of the availability of electricity as well as urban communities whose quality of life will improve thanks to the infrastructure created by the project. Basic social facilities in rural localities, in particular schools and health centres, will benefit from electricity, thus improving the quality of service delivery to the population. Other direct beneficiaries will be CI-

5 Results of the 2014 General Population and Housing Census

4

ENERGIES and CIE due to higher turnover as a result of increased quantities of electricity sold and the reduction of losses. II PROJECT COST AND FINANCING A. Estimated Project Cost and Financing Arrangements

14. The total project cost is EUR 162.14 million. The Bank’s contribution to the project’s financing is estimated at EUR137.82 million, i.e. 85% of the total cost. The remainder, i.e. EUR24.32 million, will come from the counterpart funding. The Bank’s contribution will be through a Bank Group ADB sovereign window loan. Use of this financing instrument is justified by the depletion of the ADF allocation for Côte d’Ivoire when the Government’s request was received and the opportunity provided by the country’s eligibility for the ADB window. The detailed project cost tables (costs by expenditure category and by sources of financing) are presented in Annex 2.

B. Coordination of Joint Project Donors

15. The project is financed by the Bank and the Government, with no other donor as co-financier. However, this project is part of a vast programme which is financed by several technical and financial partners (TFP), in particular Chinese Cooperation, the European Union and the World Bank. This programme covering the 2014-2020 period, concerns the rehabilitation and reinforcement of transmission networks as well as the extension of distribution networks to improve the electricity access rates of rural and peri-urban communities. Chinese Cooperation (EXIM BANK CHINA), through the project to construct the SOUBRE hydro-power plant evacuation system, is currently financing to the tune of EUR 80.7 million (ongoing works) the Soubré – Taabo and Taabo - Yopougon 2 (Abidjan) transmission lines as well as the necessary works for the Soubré, Taabo and Yopougon sub-stations. Through the Project to Upgrade and Rehabilitate Côte d’Ivoire’s Electricity Network, the same Chinese Cooperation (EXIM BANK OF CHINA) is financing to the tune of USD 818.6 million, the construction of 13 new high voltage sub-stations, the rehabilitation and extension of 12 former ones, the construction of 1 681 km of high voltage lines and the electrification of 500 rural localities. The World Bank is preparing its Electricity Transmission, Distribution and Access Project for USD 250 million. This project concerns the construction of 56 km of 225 kV lines, the construction of 2 x 225kV lines, the upgrade to 225kV of 3 stations from 90kV, the supply and installation of transformers in the 5 sub- stations, the reinforcement of 10 x 90kV sub-stations, the extension and reinforcement of distribution networks in 10 regional administrative headquarters, the underground installation of 400 km of Abidjan’s overhead HVA grid, and rural electrification of 200 rural localities.

16. The TFPs operating in the energy sector have a consultative framework chaired by the European Union Delegation. This framework allows discussion on each partner’s activities with a view to creating synergy among their respective operations and preventing the duplication of efforts. The appraisal mission coincided with the World Bank’s preparation mission. In collaboration with CI- ENERGIES, the two teams agreed on the scope of their respective interventions.

III. PROJECT FEASIBILITY

A. Project Economic and Financial Performance

17. The project submitted for Bank financing is a project to reinforce transformer sub-stations and construct transmission lines in order to connect households and wood and agricultural product processing industries. The immediate unfulfilled power needs of industries are estimated at 70 MW, representing annual consumption of 360 GWh. In addition to industrial customers, the project will connect about 20 000 households in rural areas, 7 000 in the town of San Pedro (awaiting connections as a result of the saturation of the town’s existing sub-station) and 1 000 new customers in Bingerville. In addition, the improved quality of service delivery and availability of energy will create 350 new household subscribers in the towns of Duékoué, Zagné and . Based on these scenarios, the

5 project’s financial rate of return will be 11.12%, significantly above the average cost of resources which is below 5%. The project economic analysis was carried out on the basis of the economic rate of return (ERR). The ERR calculation is based on the economic costs (investment, operating and maintenance costs adjusted by conversion factors) and the expected economic benefits of the project, in particular, those from the sale of electricity to new customers (households and industries), reduction of losses from saturated lines and sub-stations, and valuation of the reduction in the level of non-distributed energy following the rehabilitation of transformer sub-stations and construction of transmission lines. The ERR will be 25.01% and exceeds the economic cost of capital estimated at 10% in April 2016.

B. Sensitivity of Project’s Financial and Economic Performance

18. The sensitivity of the project’s economic and financial performance was analysed in relation to: (i) a 10% increase in investment costs; (ii) a 10% increase in the cost price of electricity and operating costs; and (iii) a 10% reduction in the average selling price of electricity. This analysis shows that the financial rate of return exceeds 5% in every case and that the economic rate of return, while more sensitive to a drop in the average selling price of electricity than the other factors, remains above the economic cost of capital estimated at 10%, thus confirming the project’s economic and financial viability.

C. Environmental and Social Impact 19. The project has been classified in Environmental Category 1. The country has carried out the project environmental and social assessments, which have been disclosed at national level. The project has obtained certificates of acceptability issued by the National Environmental Agency. The summary of these documents were published on the Bank’s website on 15 April 2016 and are accessible by clicking on the following link: http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame2.aspx?sourcedoc=/oivpdept/ON EC/Shared%20Documents/CI%20PRETD_resume%20EIES%20_FR.docx&action=default and http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame2.aspx?sourcedoc=/oivpdept/ON EC/Shared%20Documents/CI%20PRETD_%20resume%20PCR_FR.docx&action=default 20. The project’s main negative impacts relate to removal of all obstacles from the corridor (crops and trees), which will require the clearing of 12 ha of degraded secondary forests, 1 ha of rubber and cocoa plantations, and 269 ha of fallow land and crops. These impacts on the human environment concern 2 158 affected assets, the temporary loss of seasonal harvests, health risk, especially an increase in the prevalence of STD, an increase in the risk of accidents to the population and labour, and the deterioration of living conditions during the works phase. The most significant positive impact is the rural electrification of 252 localities that will reduce pressure on forests - currently the main source of energy. 21. The 2,158 properties include 1,100 built structures (1,068 for the 128-km long Soubré-San Pedro corridor and 32 for the 78-km long Duékoué-Zagné corridor), 57 uncultivated plots and 986 cultivated plots (717 for the Soubré-San Pedro corridor and 284 for the Duékoué-Zagné corridor). The compensation measures are as follows: (i) for built structures, housing and/or facilities located along the line, compensation based on the replacement value of the property, including the cost of land; (ii) for lessees of housing located along the line, rehousing assistance; (iii) for land owners affected by the installation of pylons, payment of customary rights on the area appropriated; (iv) for farmers, compensation for loss of crops incurred during the construction of the line, including loss of crops not tolerated during the operations phase because they could present a danger to equipment operators (tall crops); (iv) for owners of parcelled land who can no longer build without consent from the network operator to pursue construction, compensation based on the value of the land; and (v) for all land owners, compensation for overhang to compensate for restrictions linked to the line’s right-of-way. The population impacted will not relocate from their villages. Public consultation and studies have concurred on the availability of customary land in the villages concerned.

6

22. The compensation and mitigation measures for the negative impacts and optimization measures for the positive impacts have been implemented and an ESMP prepared. The cost of compensation is UA 6.9 million and represents almost 5.3% of the project cost. Evidence of the payment of compensation as the works progress will be a loan condition. In any event, prior to any start-up of works in a given area, evidence of the compensation of project affected persons in that area in compliance with the Resettlement Action Plan (RAP), the Environmental and Social Management Plan (ESMP), and the Bank’s related Rules and Procedures, in particular its Involuntary Resettlement Policy and its Integrated Safeguards System, will be a pre-requisite. D. Climate Change 23. The project’s main positive impacts on climate change are the reduction of 1 200 tonnes of CO2 following the closure of diesel-fired plants and access to electricity for the population. The project will provide a less-polluting alternative to the use of wood fuels (fuelwood and charcoal) and kerosene lamps, which currently represent the main source of energy and lighting. The risks of climate change on the project were examined and could concern flooding as well as erosion and landslides in the area where the structures, sub-stations and transmission line pylons will be constructed. However, the lines and sub-station sites were selected so as to avoid flood-prone areas. Furthermore, the project areas present a gradual relief, which considerably mitigates the risk of landslides. E. Gender 24. The project's rural areas are experiencing a situation of gender-based inequality reflected, on the one hand, by women’s difficulties in accessing electricity and, on the other hand, by the fact that women are not usually considered household heads and normally do not have access to land legally; this can undermine the ability to be compensated even when their livelihoods are affected by the project. Indeed, limited access to electricity is not only due to the unavailability of electricity but also to the lack of financial resources of households to be connected and to pay the utility bills. For this project, the issue of subscription is addressed by use of the PEPT mechanism which will cover the subscription costs estimated at CFAF 150,000 with households paying only CFAF 1,000 francs at subscription. The balance will be paid over ten years through the utility bills. 25. To enable women cope with the electricity consumption costs, the project will assist (especially women) groups in processing and trade in farm products in the cassava, rice and fish sub-sectors in the Montagnes District through the procurement of modern electrical instead of diesel machines. The project will finance the rehabilitation of the Dompleu hatchery in the Man Department to ensure the availability of fingerlings and fish feed for fish farming cooperatives made up mostly of women and youth. This activity will employ 600 women in fish production and marketing. FAO/Côte d'Ivoire, which will be responsible for providing assistance to associative groups, will propose an individual and community coaching programme on managing small production units to be provided in order to sustain the outcomes of the proposed support.

IV. PROJECT IMPLEMENTATION AND MANAGEMENT

A. Governance

26. Société des Energies de Côte d’Ivoire (CI-ENERGIES) will be the project’s executing agency under the authority of the Ministry of Energy. CI-ENERGIES is a State-owned company responsible for planning and implementing public investment projects in the electricity sector. It will establish a Steering Committee (SC) and a Project Implementation Unit (PIU). A Steering Committee (SC), a Monitoring Committee and a Project Implementation Unit (PIU) will be established. The Steering Committee and the Monitoring Committee will be established by Inter-ministerial Order of the Minister in charge of Energy and the Minister of Planning and Development. Members of the Project Implementation Unit will be appointed by the General Manager of CI-ENERGIES from among in-house staff depending on their competence.

7

27. The Steering Committee will be composed of the Chiefs of Staff of the following Ministries or their representatives: Ministry of Petroleum and Energy who will be the chair, Ministry of Planning and Development (Vice-Chair), Ministry attached to the Prime Minister’s Office in charge of the Economy and Finance, Ministry attached to the Prime Minister’s Office in charge of the Budget and State Portfolio, Ministry of Agriculture and Rural Development and the Ministry of the Environment and Sustainable Development and the General Manager of CI-ENERGIES, which will provide secretariat services. This Committee will be responsible for approving strategic changes to the project; removing administrative obstacles the project may face, including the mobilization and disbursement of counterpart resources and lifting constraints to the exemption process.

28 The Monitoring Committee will be composed of directors of the Directorate General of Energy, CI-ENERGIES and CIE, the Directorate General of Budget and Finance, the Directorate of Public Debt and the Directorate of Public Investment Programmes. The Director of Equipment and Development at CI-ENERGIES will be Chair.

29. Based in Abidjan, the Project Implementation Unit will be responsible for routine, technical, administrative and financial management, and comprises the following experts: a coordinator, a procurement expert, a sub-station engineer, a transmission line engineer, a rural electrification engineer, an engineer responsible for studies, a monitoring/evaluation expert, an environmentalist, an administrative and financial officer, a driver, an assistant and a representative of the Man District Regional Agricultural Department to be responsible for monitoring PSV support actions. The Project Implementation Unit will report to the Steering Committee through reports such as minutes of meetings, status reports, mid-term review reports, final evaluation reports and the project risk assessment report. The PIU Coordinator will make a presentation at the quarterly meetings of the Steering Committee or at any other meeting the Steering Committee may consider useful to organize to review the project’s progress. The Steering Committee will report regularly to the CEO of CI-ENERGIES on the project status.

B. Implementation Schedule

30. The project will be implemented over a 36-month period. The project implementation activities began in June 2016 with the issuing of invitations to bid for works and submit expressions of interest for the recruitment of the works control mission. The project uses the advance contracting procedure. The detailed project implementation schedule is presented in Annex 3.

C. Procurement Strategy and Plan

31. Procurement of goods, works, supplies and consultancy services will be made in accordance with the Bank’s new Procurement Policy approved on 14 October 2015 and effective since 1 January 2016.

32. The national procurement system, the capacity of local firms operating in the electricity sector as well as the procurement experience and capacity of CI-ENERGIES were assessed. This triple assessment showed that CI-ENERGIES has the required capacity to carry out the project’s planned procurement activities and that there were sufficient local or regional enterprises capable of implementing the low and medium voltage works. However, there were not enough of such enterprises to guarantee healthy competition for the high voltage works.

- The Bank’s procurement system will be used for the procurement of works for the high voltage lines and sub-stations, consulting engineering and auditing services. For the procurement of other works and consulting services, the AfDB system will be used in compliance with the Procurement Policy for Bank Group Funded Operations dated 14 October 2015.

8

- The National Procurement System will be used for all procurements (except for those for people in situations of vulnerability); rural electrification work and connections, HVA grid works, tele-control and telecommunications equipment; services of consultants to carry out feasibility studies on four future projects, capacity building as well as information, education and communication.

- Agencies of the United Nations System, in this case FAO, for the procurement of goods and small works in favour of vulnerable individuals in accordance with paragraph 5.3 (e) of the Bank’s Procurement Policy approved in October 2015.

The Table in Annex 4 shows the proposed procurement system and method for each procurement. A procurement plan has been prepared and can be accessed using the following link: http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame2.aspx?sourcedoc=/oivpdept/ONEC/S hared%20Documents/Projet%20PRETD_Plan%20de%20passation%20de%20march%C3%A9s%20(0 04).pdf&action=default

33. The country sought and obtained the Bank’s agreement to use the Advance Contracting procedures. Invitations to bid for the procurement of rural electrification works and to submit proposals for the works control and supervision mission were published in June of this year, bids and proposals have been received and their evaluation is nearing completion. Invitations to bid for transmission network reinforcement works were published in August of this year. D. Financial Management

34. CI-ENERGIES, the project executing agency, will be responsible for managing the project funds. An independent auditing firm will be recruited for the annual auditing of the project accounts based on the Bank’s standard terms of reference. The audit costs will be financed from the loan resources. In addition, the Internal Audit Unit of CI-ENERGIES will perform the project account audit as part of its duties. This unit issues an annual audit plan, which includes both the operation of CI- ENERGIES and the projects implemented by the company. It is worth noting that the different reports (portfolio review and 2013-2017 CSP Mid-Term Review) show that to-date, there have been no cases among Bank Group funded projects of non-compliance with the Bank Group’s financial management rules and procedures. The project’s detailed financial schedule was prepared and can be accessed via the link in Annex 1.

E. Monitoring and Evaluation

35. The monitoring and evaluation plan was prepared by CI-ENERGIES and approved by the Bank Group. It will be implemented by the PIU with the support of CI-ENERGIES’ Monitoring and Evaluation Division. At project start-up, the PIU will update the values of the project indictors set out in the results-based logical framework. Upon completion, the project’s final evaluation will be carried out by a firm on a contractual basis.

F. Sustainability

36. The sustainability of the infrastructure established under the project will be guaranteed by the resources generated by power sales. This infrastructure will form part of the entire state-owned electricity assets, currently managed by CIE under a 15-year lease contract signed in 1990 and renewed in 2005 for the same duration. Under this contract, CIE is responsible for all the operating, routine maintenance and management costs as well as implementation of maintenance work. CIE has the necessary skills to operate the project facilities efficiently. Furthermore, for a power utility, CIE’s main efficiency indicators such as energy sold/employee (0.52 GWh/employee), installed capacity per employee (2.61 MW/employee), number of customers per employee (3.24 customers/ employee) and the recovery rate (93%) exceed the averages for Africa. The reinforcement and extension of the grids

9 will increase maintenance costs but the project aims to minimize them by procuring equipment that is similar to or compatible with that currently used on the Ivorian network, thereby reducing spare part stocks.

G. Risk Management

37. Risks linked to the achievement of project outputs and outcomes: The significant volume of work at CI-ENERGIES following the simultaneous implementation of several large-scale projects, namely: the Soubré Hydropower Plant, the Project for the Development and Rehabilitation of Côte d’Ivoire’s Power Network financed by the Exim Bank of China for USD 800 million and World Bank’s Electricity Access, Transmission and Distribution Project for USD 250 million). Plans have been made to recruit a control mission to support CI-ENERGIES and use young professionals, counterparts of the control mission experts, who will be paid from the project’s counterpart funds for project monitoring in support of CI-ENERGIES teams. Moreover, the weak performance of contractors in works implementation and administrative red tape in granting authorizations for exemptions from customs duties and other tax charges on project equipment and materials could delay project implementation. These risks will be mitigated by the qualification criteria for firms designed to eliminate those without the required expertise, and also by the establishment of a tax unit charged with monitoring exemption documents at the CI-ENERGIES Markets and Logistics Department.

38. Impact-related risks: The failure to connect rural households in the event of the unavailability of counterpart funding to finance that activity and unequal access to electricity linked to gender or situations of vulnerability. As a result of the central government’s commitment to provide the population with access to electricity under the PEPT and from government funds, 90 000 rural households were connected to the power grid between March 2014 and December 2015. The project will also finance the income-generating activities of associations in situations of vulnerability to help provide them with the necessary resources to cover their electricity costs.

V. LEGAL INSTRUMENTS AND AUTHORITY

A. Legal Instrument

39. The Bank and Côte d’Ivoire will sign a loan agreement in line with the conditions of the Bank Group’s ADB sovereign window.

B. Conditions Associated with Bank’s Intervention

40. The Bank’s financing is subject to the following conditions:

Conditions precedent to Board presentation: the project’s presentation to the Board shall be subject to the Borrower’s fulfilment of the following conditions, to the Bank’s satisfaction: (i) provide evidence of the appointment of members of the Project Implementation Unit; and (ii) provide evidence of the opening of the two bank accounts for the payment of counterpart resources and loan resources meant for training;

Conditions precedent to loan effectiveness: effectiveness of the loan agreement shall be subject to the Borrower’s fulfilment of conditions stipulated in Section 12.01 of the General Conditions Applicable to Bank Loan Agreements and Guarantee Agreements.

Conditions precedent to first loan disbursement: in addition to effectiveness of the loan agreement, the first loan disbursement shall be subject to fulfilment by the Borrower of the following condition: (i) provide a copy of the loan resources on-lending agreement signed between the Republic of Côte d’Ivoire and CI-ENERGIES.

10

Other conditions: the Borrower shall also fulfil, to the Bank’s satisfaction, the following condition: (i) provide as the works progress, and no later than works start-up in the area concerned, evidence of the compensation of project affected persons in that area in accordance with the Resettlement Action Plan (RAP), the Environmental and Social Management Plan (ESMP), and the Bank’s relevant Rules and Procedures, especially its Involuntary Resettlement Policy and its Integrated Safeguards System; and (ii) provide, no later than six (6) months after the first disbursement, evidence of establishment of the Project Steering Committee and the Project Monitoring Committee, as well as evidence of appointment of their members.

Undertakings: the Borrower shall, to the Bank’s satisfaction, undertake to: (i) implement the Project, the RAP and the ESMP, and have them implemented by the Executing Agency and its contractors in accordance with: (a) the Bank’s rules and procedures; (b) national law; and (c) the recommendations, specifications and procedures contained in the RAP and the ESMP; (ii) not start up any work on specific areas without ensuring that project affected persons have been fully compensated; and (iii) provide the Bank with half-yearly RAP and ESMP implementation reports, including, if necessary, weaknesses and remedial actions taken or to be taken.

VI. RECOMMENDATIONS

41. Management recommends that the Board of Directors approve the proposal for an ADB sovereign loan of EUR 137.82 million (UA 110 million) to the Republic of Côte d’Ivoire to finance the Transmission and Distribution Networks Reinforcement Project on the terms and conditions set forth in this Memorandum and its annexes.

11

Annex 1: Web Links to Annexes a) Link to the Country Strategy Paper (2013-2017 CSP) : http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame.aspx?sourcedoc=/oivpdept /ONEC/Shared%20Documents/RCI%20-%20DSP%202013- 17%20%20RPP%20(2).pdf&action=default b) Link to the Project Due Diligence Report: http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame.aspx?sourcedoc=/oivpdept /ONEC/Shared%20Documents/Rapport%20de%20v%C3%A9rifications%20pr%C3%A9al ables%20_rev%20az.docx&action=default c) Link to the Detailed Project Implementation Plan (PDEP), which has been prepared: http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame.aspx?sourcedoc=/oivpdept /ONEC/Shared%20Documents/PDEP- du%20PRETD%20Version%20du%2008%2006%202016-V2%20(1).docx&action=default d) Link to the Procurement Plan, which has been prepared:

http://baobab.afdb.org/oivpdept/ONEC/_layouts/15/WopiFrame.aspx?sourcedoc=/oivpdept /ONEC/Shared%20Documents/PRETD%20PLAN%20DE%20PASSATION%20DE%20M ARCHE.xlsx&action=default

e) Link to the Full Resettlement Plan Summary (English): http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social- Assessments/Cote_d%E2%80%99Ivoire_- _Grid_reinforcement_and_rural_electrification_project_-_Summary_RAP_-_04_2016.pdf f) Link to the Environmental and Social Impact Assessment Summary (English) : http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social- Assessments/Cote_d%E2%80%99Ivoire_- _Grid_reinforcement_and_rural_electrification_project_-_Summary_ESIA_-_04_2016.pdf g) Link to the Environmental and Social Impact Assessment Summary (French): http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social- Assessments/Cote_d%E2%80%99Ivoire_- _Projet_de_renforcement_du_r%C3%A9seau_de_transport_et_d%E2%80%99%C3%A9le ctrification_rurale_-_R%C3%A9sum%C3%A9_EIES_-_04_2016.pdf h) Link to the Full Resettlement Plan Summary (French): http://www.afdb.org/fileadmin/uploads/afdb/Documents/Environmental-and-Social- Assessments/Cote_Ivoire- Projet_de_renforcement_du_r%C3%A9seau_de_transport_et_d%C3%A9lectrification_rur ale-Resume_PCR.pdf

I

Annex 2 :Map of Project Area

The perimeters framed by a dashed line represent the project area

II

Annex 3: Detailed Project Costs

Project Cost by Expenditure Category

EUR Million Expenditure Categories % F.E. F.E. L.C. Total Works 117.96 13.11 131.06 90% Goods 0.00 0.90 0.90 0% Services 6.32 2.71 9.02 70% Operation 1.12 0.48 1.58 70% Compensation of PAPs 0.00 7.56 7.56 Total Base Cost 125.39 24.75 150.12 84% Provision for Contingencies 6.27 1.24 7.51 84% Provision for Price Escalation 3.76 0.74 4.51 84% Total Project Cost 135.41 26.73 162.14 84%

Project Sources of Financing

EUR Million Sources of Financing % Total F.E. L.C. Total

ADB 121.11 16.70 137.82 85% GOVERNMENT 14.30 10.01 24.32 15% Total Project Cost 135.41 26.73 162.14 100%

Project Cost by Expenditure Category and Source of Financing

EUR Million Expenditure Categories ADB GVT Total Works 118.03 13.03 131.06 Goods 0.09 0.00 0.90 Services 8.68 0.34 9.02 Operation 0.00 1.58 1.58 PAP Compensation 0.00 7.56 7.56 Total Base Cost 127.62 22.52 150.12 Provision for Physical Contingencies 6.38 1.13 7.51 Provision for Price Escalation 3.83 0.68 4.51 Total Project Cost 137.82 24.32 162.14

III

Expenditure Schedule/Source of Financing

2017 2018 2019 TOTAL OUTPUTS AfDB Gov. Total AfDB Gov. Total AfDB Gov. Total AfDB Gov. TOTAL Works 53.11 5.86 58.98 41.31 4.56 45.87 23.61 2.61 26.21 118.03 13.03 131.06 Goods 0.35 0.00 0.35 0 .34 0.00 0.34 0.21 0.00 0.21 0.90 0.00 0.90 Services 3.36 0.12 3.48 3.06 0.12 3.18 2.26 0.10 2.36 8.68 0.34 9.02 Operation 0.00 0.71 0.71 0.00 0.47 0.47 0.00 0.40 0.40 0.00 1.58 1.58 Compensation of PAPs 0.00 3.40 3.40 0.00 2.27 2.27 0.00 1.89 1.89 0.00 7.56 7.56 Total base cost) 56.82 10.09 66.91 44.71 7.42 52.13 26.08 5.00 31.07 127.61 22.51 150.12 Physical contingencies (5%) 2.84 0.50 3.35 2.24 0.37 2.61 1.30 0.25 1.55 6.38 1.13 7.51 Price escalation (3%) 1.70 0.30 2.01 1.31 0.22 1.56 0.78 0.15 0.93 3.83 0.68 4.51 TOTAL 61.37 10.89 72.27 48.29 8.01 56.30 28.16 5.40 33.56 137.82 24.32 162.14

IV

Annex 4: Project Implementation Schedule 2016 2017 2018 2019 Project Activities J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A J J Approval and Effectiveness Approval by BD Loan Agreement Signature Loan Agreement Effectiveness Electricity Infrastructure Bingerville Sub-Station Recruitment of Contractors Works Implementation Duékoué-Zagné Line and Sub- Stations Recruitment of Contractors Works Implementation Duékoué and Zagné Telecoms Recruitment of Contractors Works Implementation Soubré-San Pedro Line and Sub- Stations Recruitment of Contractors Works Implementation Soubré and San Pedro Telecoms Recruitment of Contractors Works Implementation Restructuring of HVA networks Recruitment of Contractors Works Implementation Cavally Rural Electrification Recruitment of Contractors Works Implementation Guémon Rural Electrification Recruitment of Contractors Works Implementation Tonkpi Rural Electrification Recruitment of contractors Recruitment of consultant Works Control Mission Recruitment of mission Control and supervision Studies on Future Projects Recruitment of Consultant Conduct of Studies Support to PSV Signature of Agreement Service Delivery Training Recruitment of Training Firms Conduct of training Project Management V

Annex 5: Procurement Systems and Methods Note: figures in parenthesis […] in the table refer to non-AfDB resources Lot Cost Procurement Procurement Expenditure No. Description (EUR System Method Category million) Establishment of Installation of 3 225/20 kV 50 Bingerville Source Sub- 1 8.29 AfDB OCB6 Station MVA transformer bays Lot 1: Construction of 225/33 kV 2x40 10.24 AfDB OCB MVA sub-station in Duékoué

Lot 2: Construction of Duékoué- Zagné Construction of Duékoué- 225 kV line (77 3 Zagné 225 kV line km) and looped 12.36 AfDB OCB connection to the Duékoué sub- station on the Buyo-Man line Lot 3: Construction of the Zagné 225/33 9.20 AfDB OCB kV 2x24 MVA sub-station Lot 1: Extension of Soubré Sub- 1.57 AfDB OCB Station Works Lot2: San Pedro - Soubré 225 kV 19.09 AfDB OCB line (128 km) Doubling of Soubré-San Extension and Pedro line 3 reinforcement of 225/90 kV sub- stations, including 2x 10.55 AfDB OCB 225/90 kV 100 MVA transformers in San Pedro Delivery and assembly of Duékoué and tele-control and Zagné sub- 1.14 ADB ICB7 telecommunications 2 stations equipment Soubré and San 0.82 ADB ICB Pedro sub-station Restructuring of HVA Lot 1: Bingerville 4.71 ADB NCB8 networks HVA networks Telecommunications 2 Lot 2: Duékoué. equipment for Soubré and Zagné and Taï 1.96 COUNTRY NCB San Pedro sub-stations HVA networks 6 Cavally 1 1.20 COUNTRY NCB (Blolequin) Electrification of 42 Cavally 2 localities in Cavally COUNTRY NCB (Toulepleu) [1.71] Cavally 3 COUNTRY NCB

6 OCB: Open Competitive Bidding 7 ICB: International Competitive Bidding 8 NCB: National Competitive Bidding VI

(Guiglo 1) 1.26 Cavally 4 COUNTRY NCB (Guiglo 2) 1.35 Cavally 5 (Taï 1) COUNTRY NCB [1.11] Cavally 6 (Taï 2) COUNTRY NCB 1.09 Guémon 1 COUNTRY NCB ( 1) [1.73] Guémon 2 COUNTRY NCB (Bangolo 2) 1.21 Guémon 3 COUNTRY NCB (Bangolo 3) 1.95 Guémon 4 COUNTRY NCB (Bangolo 4) 1.67 Guémon 5 COUNTRY NCB (Douékoué) 1.96 Guémon 6 COUNTRY NCB Electrification of 82 ( 1) 0.75 11 localities in Guémon Guémon 7 COUNTRY NCB (Facobly 2) 1.47 Guémon 8 1.09 COUNTRY NCB ( 1 Guémon 8 COUNTRY NCB (Kouibly 2 1.47 Guémon 9 COUNTRY NCB (Kouibly 3 1.10 Guémon 10 COUNTRY NCB (Kouibly 4 [1.19] Guémon 11 COUNTRY NCB (Kouibly 5) [1.25] Tonkpi 1 COUNTRY NCB ( 1) 1.83 Tonkpi 2 COUNTRY NCB (Biankouma 2) 1.62 Tonkpi COUNTRY NCB 3(Biankouma 3) 1.47 Tonkpi 4 COUNTRY NCB () 1.67 Tonkpi 5 1.85 COUNTRY NCB (Danane 1) Tonkpi 6 COUNTRY NCB (Danane 2) 2.13 Electrification of 128 13 Tonkpi 7(Danane COUNTRY NCB localities in Tonkpi 3) 1.85 Tonkpi 8 COUNTRY NCB (Danane 4) 1.60 Tonkpi 9 (Man 1) COUNTRY NCB [1.86] Tonkpi 10 (Man COUNTRY NCB 2) 1.37 Tonkpi 11(Zouan COUNTRY NCB Hounien 1) 1.14 Tonkpi 12(Zouan COUNTRY NCB Hounien 2) 1.16 Tonkpi 13(Zouan COUNTRY NCB Hounien 3) [1.73] Household connections 1 The 252 localities [4.54] COUNTRY NCB Rehabilitation of the 0.14 Dompleu fry stocking United Nations station and of 20 fish farms

VII

Consulting Engineering - services for transmission 5.86 ADB QCBS9 grid rehabilitation works Auditing of Accounts 0.09 ADB LCS10 Misc. Training 0.41 COUNTRY QCBS Information, Education COUNTRY [0.33] QCBS Communication Preliminary studies on the 0.56 Anyama 225/33 kV sub- COUNTRY QCBS station construction project Preliminary studies on the Project to Double the COUNTRY QCBS 2 Services Abidjan 225 kV loop Preliminary studies on the construction of the Tengrela 225/33 kV sub- station and the - 0.56 COUNTRY QCBS M’bengué – Tengrela – Boundiali 225 kV high voltage transmission line Preliminary studies on the Project to Construct the Bouake 3 sub-station and 0.56 COUNTRY QCBS11 double the Taabo – Kossou – Bouaké 2 – Bouaké 3 225kV line Vehicles for PIU (9 COUNTRY NCB [0.25] vehicles) Measurement testing COUNTRY SP12 [0.10] equipment Office supplies [0.10] COUNTRY SB13 Procurement of office COUNTRY SP [0.10] furniture Vehicle maintenance [0.10] COUNTRY SP 3 Goods 14 Fuel [0.40] COUNTRY RCB Equipment for processing 0.22 United Nations SB15 cassava into attiéke (4) Equipment for processing 0.12 United Nations SB cassava into flour (1) Rice processing United Nations 0.18 SB equipment (2) Fish smoking equipment 0.06 United Nations SB Cold room 0.08 United Nations SB

9 QCBS: Quality and Cost-Based Selection 10 LCS: Least Cost Selection 11 QCBS: Quality-and Cost-Based Selection 12 SP: Simplified Procedures 13 SB: Sealed Bidding 14 LCB: Limited Competitive Bidding 14 SB: Sealed Bidding

15 SB: Sealed Bidding VIII

Annex 5: Justification of Level of Côte d’Ivoire’s Project Counterpart Funding

The proposed project will be jointly financed by the Bank and the Government of Côte d’Ivoire. The Bank’s contribution covers 85% of the total cost, net of taxes and customs duties, through an ADB loan of EUR 137.82 million (UA 110 million). The estimated counterpart funds are EUR 24.32 million ( UA 19.40 million), i.e. 15% of the project cost. The level of counterpart funding was mutually determined with the Government based on the following three criteria, in compliance with Section 4.2.2 of the Policy on Expenditure Eligible for Bank Group Financing (Revised version of 10 December 2014): i) Country’s Commitment to Implement its Development Programme

Following the implementation of the first National Development Plan (2012-2015 PND) which aimed to lay the foundations for emergence in the wake of the 2011 post-electoral crisis, Côte d’Ivoire has recently adopted its second National Development Plan (2016-2020 PND) whose main objective is to lead it towards emergence by 2020 through a pro-active strategy. The 2016-2020 focuses on the following strategic thrusts: (i) enhancement of the quality of institutions and governance; (ii) acceleration of human capital development and social well-being; (iii) acceleration of the economy’s structural transformation through industrialization; (iv) development of infrastructure evenly distributed nationwide and environmental conservation; and (v) strengthening of regional integration and international cooperation. The estimated cost of the 2016-2020 PND is CFAF 30,000 billion. Energy sector actions implemented under the 2012-2015 PND raised generation capacity from 1 391 MW in 2011 to 1 772 MW in 2015, i.e. a 28% increase, helped to rehabilitate the transmission and distribution networks, and increase the population’s electricity access rate from 77 to 80%. ii) Financing Allocated by the Country to the Target Sector by Bank Assistance

The estimated cost of the 2016-2020 PND is CFAF 30,000 billion, CFAF 4 589 billion (i.e. 15%) of which will be allocated to the energy sector. Achievement of the outcomes of strategic thrust (iii) of the 2016-2020 PND and the Government’s determination to provide access to electricity for all by 2020 will require increased generation capacity and extension of the transmission and distribution networks. According to Ministry of Petroleum and Energy forecasts, power requirements are expected to reach about 3 000 MW in 2020, up by 69 % on 2015. Given the inherent uncertainty of gas exploration activities, the Government intends to develop alternative sources, in particular the country’s hydropower potential estimated at 2 500 MW, which will reduce dependency on fossil fuels and the cost of generation. The ongoing construction of the Soubré plant falls within the framework of this increase in generating capacity and diversification of energy sources, and will be followed by three others also to be located on the Sassandra River, the ongoing studies on which are being financed by the Bank. iii) The Country’s Fiscal Situation and Debt Level

The fiscal policy set out in a medium-term expenditure framework is based on an increase in the expenditure required to finance infrastructure and other development needs in a post-conflict context. For the past two years, primary balance equilibrium has been virtually achieved while the overall deficit has been about 3% of GDP, financed by recourse to regional and international financial markets. The country’s post-conflict context with vast (re)construction and social and economic (re)insertion needs, coupled with the objective of accelerated development as set out in the 2016-2020 PND, will continue to weigh heavily on government finances.

The estimated tax ratio at the end of 2015 was 15.3% of GDP and, according to estimates, is expected to improve in 2016. Eighty per cent (80%) of the 2016 budget represents domestic resources and 19.7% external resources; 69.8% of the external resources, estimated at CFAF 988.5 billion, comprises project loans and 30.2% budget support operations.

Debt restructuring under the HIPC initiative helped to maintain the public debt/GDP ratio at 45.6% in 2015, with external public debt service representing 12% of central government revenue. Debt remains sustainable

IX according to both the sustainability analysis carried out by IMF services in 2015 and the country risk assessment undertaken by AfDB services in the same year. The Medium-Term Debt Strategy (MTDS) for 2015-2019, adopted in 2014, will help to maintain this sustainability even if the future accumulation of external debt, in particular non-concessional debt, must take into account the need to avoid the concentration of maturities in the mid-2020s, and explore solutions to mitigate the refinancing risk. iv) Country Financing Parameters

The country's financing parameters (CFP) regarding project cost sharing between the Bank and the Republic of Côte d'Ivoire is being prepared. While waiting for the Bank to define its own financing parameters, the still-valid analysis conducted by the World Bank for the Côte d’Ivoire in 2008 can be used. For the World Bank, financing can attain 100% of the total project cost (including taxes). These parameters have not changed despite Côte d’Ivoire’s access this year to the “Scale Up Facility” (an intermediate status between IDA countries and IBRD countries).

In conclusion, based on the foregoing, and at the behest of Government, it is proposed that the national contribution be fixed at 15% of the total cost excluding taxes for the Project. The contribution of the Government of Côte d'Ivoire (EUR 24.32 million) for the Project will be used to partially finance the works, the full cost of expropriations and operation fees of the implementing agency and the tax expenditure associated with this project related to exemptions from customs duties and other taxes.

X