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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD1565 INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT APPRAISAL DOCUMENT ON Public Disclosure Authorized PROPOSED CREDITS IN THE AMOUNT OF US$169.135 MILLION AND A PROPOSED GRANT IN THE AMOUNT OF US$56.565 MILLION EQUIVALENT Public Disclosure Authorized TO THE REPUBLIC OF TAJIKISTAN FOR A NUREK HYDROPOWER REHABILITATION PROJECT - PHASE I ENERGY AND EXTRACTIVES GLOBAL PRACTICE EUROPE AND CENTRAL ASIA 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 February 28, 2017) Currency Unit = Tajik Somoni (TJS) TJS7.88 = US$1 US$1 = SDR0.73 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS ACF Average Capacity Factor IMF International Monetary Fund ACG Arab Coordination Group IPP Independent Power Producer ADB Asian Development Bank ISA International Standards on Auditing AIIB Asian Infrastructure Investment Bank IsDB Islamic Development Bank AMC Anti-Monopoly Commission KfW Kreditanstalt fur Wiederaufbau a.s.l Above see level kV Kilovolt BoP Balance of Plant kWh Kilowatt-hour BT Barqi Tojik LC Letter of Credit CAPS Central Asia Power System LEC Levelized Energy Cost CASA Central Asia South Asia LV Low Voltage CCGT Combined Cycle Gas Turbine MEWR Ministry of Energy and Water Resources CHP Combined Heat and Power MIV Main Inlet Valve CPS Country Partnership Strategy mln Million CRI Corporate Results Indicators MMBtu Million British Thermal Units CSO Civil Society Organization MOEDT Ministry of Economic Development and Trade DA Designated Account MOF Ministry of Finance DC Direct Contracting MOJ Ministry of Justice DCC Development Coordination Council MV Medium Voltage DPL Development Policy Loan NGO Non-Government Organization EBRD European Bank for Reconstruction and NPV Net Present Value Development EBITDA Earnings before Interest, Taxes, OBE Operating Basis Earthquake Depreciation, and Amortization ECA Europe and Central Asia O&M Operation and Maintenance EDB Eurasian Development Bank OP Operational Policy EC European Commission OPEC The Organization of Petroleum Exporting Countries EIB European Investment Bank PFMA Possible Failure Mode Analysis EIRR Economic Internal Rate of Return PMC Project Management Consultant EPC Engineering, Procurement, and PMT Proxy Means Testing Construction EPP Emergency Preparedness Plan PoE Panel of Experts ii ESIA Environmental and Social Impact POM Project Operational Manual Assessment ESMAP Energy Sector Management Assistance PPA Power Purchase Agreement Program ESMP Environmental and Social Management PPSD Project Procurement Strategy Document Plan EU European Union PRG Project Realization Group EXIM Exports and Imports PSDI Plant Supply, Design, and Installation FIRR Financial Internal Rate of Return QCBS Quality and Cost Based Selection FM Financial Management RFB Request for Bids FMM Financial Management Manual SCADA Supervisory Control and Data Acquisition GBAO Gorno-Badakhshan Autonomous Oblast SEE Safety Evaluation Earthquake GDP Gross Domestic Product SEP Social Engagement Plan GHG Greenhouse Gas SOE State-owned Enterprise GRM Grievance Redress Mechanism SSS Single-Source Selection GRS Grievance Redress Service TA Technical Assistance GWh Gigawatt-hour TALCO Tajik Aluminum Company HAP Hydropower Advancement Project TPP Thermal Power Plant HPP Hydropower plant TSA Targeted Social Assistance ICB International Competitive Bidding IDC Interest During Construction UN United Nations IFAC International Federation of Accountants UNDP United Nations Development Program IFI International Financial Institution USAID United States Agency for International Development IFR Intermediate un-audited Financial Report VECs Valued Environmental and Social Components IFRS International Financial Reporting Standards Regional Vice President: Cyril Muller Country Director: Lilia Burunciuc Senior Global Practice Director: Riccardo Puliti Practice Manager: Ranjit Lamech Task Team Leaders: Artur Kochnakyan, Takhmina Mukhamedova iii REPUBLIC OF TAJIKISTAN Nurek Hydropower Rehabilitation Project, Phase I TABLE OF CONTENTS Page A. Country Context ............................................................................................................ 1 B. Sectoral and Institutional Context ................................................................................. 2 C. Higher Level Objectives to which the Project Contributes ........................................ 10 A. PDO............................................................................................................................. 11 B. Project Beneficiaries ................................................................................................... 11 C. PDO Level Results Indicators ..................................................................................... 12 A. Project Components .................................................................................................... 13 B. Project Financing ........................................................................................................ 15 C. Project Cost and Financing ......................................................................................... 15 A. Institutional and Implementation Arrangements ........................................................ 16 B. Results Monitoring and Evaluation ............................................................................ 18 C. Sustainability............................................................................................................... 18 D. Role of Partners........................................................................................................... 19 A. Overall Risk Rating and Explanation of Key Risks.................................................... 19 A. Economic and Financial Analysis ............................................................................... 22 B. Technical .................................................................................................................... 29 D. Procurement ................................................................................................................ 31 E. Social (Including Safeguards) ..................................................................................... 33 F. Environment (including Safeguards) .......................................................................... 35 G. Other Safeguards Policies Triggered .......................................................................... 35 iv H. World Bank Grievance Redress .................................................................................. 36 Map IBRD 42611……………………………………………………………………………...113 v PAD DATA SHEET Republic of Tajikistan Nurek Hydropower Rehabilitation Project Phase I (P150816) PROJECT APPRAISAL DOCUMENT EUROPE AND CENTRAL ASIA REGION ENERGY AND EXTRACTIVES GLOBAL PRACTICE Report No.: PAD1565 Basic Information Project ID EA Category Team Leader(s) P150816 B - Partial Assessment Artur Kochnakyan, Takhmina Mukhamedova Lending Instrument Fragile and/or Capacity Constraints [ ] Investment Project Financing Financial Intermediaries [ ] Series of Projects [ X ] Project Implementation Start Date Project Implementation End Date May 4, 2017 31-Dec-2023 Expected Effectiveness Date Expected Closing Date 01-Nov-2017 31-Dec-2023 Joint IFC No Senior Global Practice Practice Manager Country Director Regional Vice President Director Ranjit J. Lamech Riccardo Puliti Lilia Burunciuc Cyril E Muller Recipient: Republic of Tajikistan Responsible Agency: Ministry of Energy and Water Resources Contact: Usmonali Usmonzoda Title: Minister Telephone No.: 99237-235-35-66 Email: [email protected] Responsible Agency: OJSHC Barqi Tojik Contact: Mirzo Ismoilzoda Title: Chairman Telephone No.: 99237-235-87-66 Email: barki_tojik@tajnеt.соm Project Financing Data(in USD Million) [ ] Loan [ X] IDA Grant [ ] Guarantee [ X ] Credit [ ] Grant [ X ] Other vi Total Project Cost: 350.00 Total Bank Financing: 225.7 Other Financing: 100.00 Financing Gap: 24.30 Financing Source Amount International Development Association 169.135 (IDA) IDA Grant 56.565 Asian Infrastructure Investment Bank 60.00 (AIIB) Eurasian Development Bank 40.00 Total 325.70 Expected Disbursements (in USD Million) Fiscal 2018 2019 2020 2021 2022 2023 2024 Year Annual 2.00 36.00 22.00 50.00 60.00 40.00 15.70 Cumulati 2.00 38.00 60.00 110.00 170.00 210.00 225.70 ve Institutional Data Practice Area (Lead) Energy & Extractives Contributing Practice Areas Trade & Competitiveness, Water Proposed Development Objective(s) The project development objectives are to rehabilitate and restore the generating capacity of three power generating units of Nurek hydropower plant, improve their efficiency, and strengthen the safety of the Nurek dam. Components Component Name Cost (USD Millions) Rehabilitation of the three generating units, the key 310.00 infrastructural components of the plant, and replacement of auto-transformers Enhancement of dam safety 30.00 Technical assistance (TA) 10.00 Systematic Operations Risk- Rating Tool (SORT) Risk Category Rating 1. Political and Governance High vii 2. Macroeconomic High 3. Sector Strategies and Policies High 4. Technical Design of Project or Program Substantial 5. Institutional Capacity for Implementation and