Mauritania, Senegal, Mali
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Document of The World Bank Group FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 83025 - MR PROJECT APPRAISAL DOCUMENT ON A PROPOSED IDA PARTIAL RISK GUARANTEE IN THE AMOUNT UP TO US$ 130 MILLION IN SUPPORT OF THE ISLAMIC REPUBLIC OF MAURITANIA A PROPOSED IDA PARTIAL RISK GUARANTEE Public Disclosure Authorized IN THE AMOUNT UP TO US$ 99 MILLION IN SUPPORT OF THE REPUBLIC OF SENEGAL A PROPOSED IDA PARTIAL RISK GUARANTEE IN THE AMOUNT UP TO US$ 32 MILLION IN SUPPORT OF THE REPUBLIC OF MALI AND A PROPOSED MIGA GUARANTEE IN THE AMOUNT OF US$ 585 MILLION IN THE ISLAMIC REPUBLIC OF MAURITANIA COVERING INVESTMENTS BY TULLOW PETROLEUM Public Disclosure Authorized (MAURITANIA) PTY LTD, TULLOW OIL (MAURITANIA) LTD, MAURITANIA HOLDINGS B.V., PC MAURITANIA 1 PTY LTD, PC MAURITANIA II B.V., PREMIER OIL EXPLORATION (MAURITANIA) LTD, AND FP MAURITANIA A B.V. FOR THE BANDA GAS TO POWER PROJECT May 9, 2014 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 April 30, 2014) Currency Unit = Mauritania Ouguiya & Francs CFA 1 USD = 295 UMA 1 USD = 473 FCFA FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AFD Agence Française de Développement (French Agency for Development) AfDB African Development Bank AFESD Arab Fund for Economic and Social Development ARE Autorité de Régulation (Regulation Authority in Mauritania) bpd barrels per day Btu British thermal units BBtu Billion British thermal units BoC Breach of Contract CAPEX Capital Expenditures CCGT Combined cycle gas turbines CPS Country Partnership Strategy CREE Commission de Régulation de l’Electricité et de l’Eau (Regulatory Commission for Electricity and Water in Mali) CRSE Commission de Régulation du Secteur de l’Electricité (Electricity Regulatory Commission in Senegal) EDM Energie du Mali (Power Utility of Mali) EEM Eskom Energy Manantali EHS Environment, Health and Safety Plans EIB European Investment Bank EIRR Economic Internal Rate of Return EITI Extractive Industries Transparency Initiative EMP Environmental Management Plans EPC Engineering Procurement and Construction ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan ESRS Environmental and Social Review Summary FCFA Francs Communauté Financière Africaine (West African Currency) FDI Foreign Direct Investment FID Final Investment Decision GDP Gross Domestic Product GHG Greenhouse Gas GoML Government of Mali GoMR Government of Mauritania GoSN Government of Senegal GSA Gas Sales Agreement GWh Gigawatt hour HFO Heavy Fuel Oil HV High Voltage ICSID International Center for the Settlement of Investment Disputes IDA International Development Association IFC International Finance Corporation IMF International Monetary Fund IPP Independent Power Producer IRR Internal Rate of Return IsDB Islamic Development Bank JV Joint Venture kWh Kilowatt hour L/C Letter of credit LNG Liquefied Natural Gas LoS Letter of Support M Millions mmBtu Million British thermal units mmscf Million standard cubic feet mmscfd Million standard cubic feet per day MIGA Multilateral Investment Guarantee Agency MW Megawatt NPV Net Present Value O&M Operation & Maintenance OMVS Organisation pour la Mise en Valeur du Fleuve Sénégal (Senegal River Basin Organization) O.P. Operational Policy OPEX Operational expenditures ORAF Operational Risk Assessment Framework PAD Project Appraisal Document PDO Project Development Objective PPA Power Purchase Agreement PPIAF Public Private Infrastructure Advisory Facility PRG Partial Risk Guarantee PRI Political Risk Insurance PSC Production Sharing Contract RFP Request For Proposals RPF Resettlement Policy Framework SMH Société Mauritanienne des Hydrocarbures (Mauritanian Utility for Hydrocarbons) SNDE Société Nationale des Eaux (National Water Utility in Mauritania) SNIM Société Nationale Industrielle et Minière (National Company of Industries and Mines in Mauritania) SPEG Société de Production d’Electricité à partir du Gaz (Gas-Fired Electricity Production Company in Mauritania) SENELEC Société Nationale d’Electricité du Sénégal (National Power Utility in Senegal) SOGEM Société de Gestion de l’Energie de Manantali (Manantali Energy Management Company) SOMELEC Société Mauritanienne d’Electricité (National Power Utility in Mauritania) TOP Take or Pay Tullow Tullow Petroleum (Mauritania) Pty Ltd., a private company incorporated under the laws of Australia UMA Mauritanian Ouguiya (Mauritanian currency) US¢ US cents US$ United States dollars WB World Bank WBG World Bank Group WTP Willingness to pay World Bank (IDA) Vice President: Makhtar Diop Country Directors: Vera Songwe / Paul Noumba Um Sector Director Jamal Saghir Sector Manager: Meike van Ginneken Guarantee Manager: Pankaj Gupta Task Team Leader: Moez Cherif Guarantee Team Leaders: Katherine Baragona/Patrice Caporossi MIGA Vice President: Michel Wormser General Counsel: Ana-Mita Betancourt Director of Operations: Edith Quintrell Sector Manager: Antonio Barbalho Task Team Leader: Abir Burgul ISLAMIC REPUBLIC OF MAURITANIA / REPUBLIC OF SENEGAL / REPUBLIC OF MALI Banda Gas to Power Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ............................................... 11 A. Country issues ................................................................................................................... 11 B. Sectoral and institutional context ...................................................................................... 12 C. Higher level objectives to which the Project contributes .................................................. 19 II. PROJECT DEVELOPMENT OBJECTIVES ................................................. 21 A. PDO................................................................................................................................... 21 B. Project Beneficiaries ......................................................................................................... 21 C. PDO Level Results Indicators ........................................................................................... 22 III. PROJECT DESCRIPTION ............................................................................... 22 A. The Banda Gas-To-Power Project .................................................................................... 22 B. The Banda Gas-to-Power Project Financing Plan ............................................................ 25 C. Project Contractual Structure ............................................................................................ 26 D. Proposed WBG instruments – IDA and MIGA Guarantees ............................................. 26 E. Lessons learned and reflected in the Project design ......................................................... 33 IV. IMPLEMENTATION ........................................................................................ 34 A. Institutional and implementation arrangements ................................................................ 34 B. Monitoring and evaluation of outcomes/results ................................................................ 35 C. Sustainability..................................................................................................................... 35 V. KEY RISKS AND MITIGATION MEASURES ............................................. 35 A. Risk Ratings Summary ..................................................................................................... 35 B. Overall Risk Rating Explanation ...................................................................................... 36 VI. APPRAISAL SUMMARY ................................................................................. 38 A. Economic and financial analyses ...................................................................................... 38 B. Technical ........................................................................................................................... 40 C. Financial Management ...................................................................................................... 41 D. Procurement ...................................................................................................................... 42 v E. Environmental and Social Safeguards .............................................................................. 43 Annex 1: Results Framework and Monitoring ........................................................................ 47 Annex 2: Detailed Project Description ...................................................................................... 49 Annex 3: Operational Risk Assessment Framework (ORAF) ................................................ 58 Annex 4: Economic and Financial Analysis ............................................................................. 61 Annex 5: Statement of MIGA's Exposure ................................................................................ 72 Annex 6: Proposed IDA Guarantees ......................................................................................... 74 Annex 7: Implementation Support Plan ................................................................................... 84 Annex 8: WBG Team Composition ........................................................................................... 85 Annex 9: Map .............................................................................................................................