Ruzizi III Regional Hydropower Plant Project Goal : Increase Renewable Energy Generation for the Sustainable Socio-Economic Development of ECGLC Countries

AFRICAN DEVELOPMENT BANK GROUP

MULTINATIONAL

RUZIZI III REGIONAL HYDROPOWER PLANT

APPRAISAL REPORT

Public Disclosure Authorized Authorized Authorized PublicDisclosure Public Disclosure

ONEC DEPARTMENT December 2015

Translated Document

TABLE OF CONTENTS Currency Equivalents Acronyms and Abbreviations Project Information Sheet, Executive Summa Results-Based Logical Framework and Implementation Schedule i to v

1 STRATEGIC THRUST AND RATIONALE ...... 1 1.1 Project Linkages with Countries' Strategies and Objectives ...... 1 1.2 Rationale for Bank's Involvement ...... 1 1.3 Aid Coordination ...... 2

2 PROJECT DESCRIPTION ...... 3 2.1 Project Description and Components ...... 3 2.2 Technical Solutions Retained and Alternatives Explored ...... 3 2.3 Project Type ...... 4 2.4 Project Cost and Financing Arrangements ...... 4 2.5 Project Target Areas and Beneficiaries ...... 7 2.6 Participatory Process...... 8 2.7 Bank's Experience and Lessons Reflected in Project Design ...... 8 2.8 Key Performance Indicators ...... 8

3 PROJECT FEASIBILITY ...... 9 3.1 Economic and Financial Performance ...... 9 3.2 Environmental and Social Impacts ...... 9

4 PROJECT IMPLEMENTATION ...... 12 4.1 Implementation Arrangements ...... 12 4.2 Project Monitoring ...... 14 4.3 Governance ...... 15 4.4 Sustainability ...... 15 4.5 Risk Management ...... 15 4.6 Knowledge Building ...... 16

5 LEGAL FRAMEWORK ...... 16 5.1 Legal Instrument ...... 16 5.2 Conditions for Bank's Involvement ...... 16 5.3 Compliance with Bank Policies ...... 18

6 RECOMMENDATION ...... 18

ANNEX 1: Countries' Comparative Socioeconomic Indicators…………………………….……………..I ANNEX 2: Tables of AfDB Portfolio in the Countries………………………………….………………...IV ANNEX 3: Development Partners' Operations in the Electricity Sub-Sector in the Great Lakes Countries………………………………………………………………………………………IX ANNEX 4: Map of Project Area………………………………………………………………………..….X ANNEX 5: On-lending of ADF Resources…………………………………………………………..…….XI ANNEX 6: Factors of Fragility Addressed by the Project…………………………………………..……..XII

TABLES No. Title Page No. Title Page 2.1 Project Components and Cost 3 2.5 Project Cost by Expenditure Category 6 2.2 Project Alternatives and Reasons for 4 2.6 Expenditure Schedule by Component 6 their Rejection 2.3 Estimated Cost by Component 5 3.1 Key Financial and Economic Indicators 9 2.4 Project Sources of Financing 5 4.1 Main Project Implementation Stages 15 2.4bis Project Sources of Financing by 6 6 Component

Currency Equivalents October 2015 1 Unit of Account (UA) = USD 1.41 1 Unit of Account = EUR 1.25 1 Unit of Account = BIF 2,222.38 1 Unit of Account = CDF 1,300.59 1 Unit of Account = RWF 1,019.60

Fiscal Year 1 January - 31 December

Weights, Units and Measures T Tonne = 1000 kg kW kilowatt = 1000 Watt Gigawatt = 1 000 000 kW or 1 000 GW kWh kilowatt-hour = 1000 Wh MW Megawatt-ampere = 1 000 kVA or 1 000 000 GWh Gigawatt-hour = 1 000 MWh MVA VA Toe Tonne of oil equivalent MW Megawatt = 1 000 000 W or 1 000 kW kV kilovolt = 1 000 Volt MWh Megawatt-hour = 1 000 kWh kVA Kilovolt-ampere = 1 000 VA tCO2 Tonne CO2 = 1000 kg of carbon gas

Acronyms and Abbreviations

ABAKIR Lake Kivu and Ruzizi River Basin PC Project Company Authority ADF African Development Fund PCR Project Completion Report AfDB African Development Bank PCU Project Coordination Unit AFD French Development Agency PIB Gross Domestic Product

CPIA Country Policy and Institutional PIDA Programme for Infrastructure Development in Assessment Africa CSP Country Strategy Paper PIU Project Implementation Unit DRC Democratic Republic of Congo PPP Public-Private Partnership

ECCAS Economic Community of Central PRSP Poverty Reduction Strategy Paper African States II RE Regional Envelop ECGLC Economic Community of the Great RMC Regional Member Countries Lakes Countries EGL Great Lakes Electricity Utility RIPS Regional Integration Policy and Strategy (RIPS) EIB European Investment Bank RISP East Africa Regional Integration Strategy Paper EPC Engineering, Procurement and Construction EU European Union RO Regional Operation GPRSP Growth and Poverty Reduction SME Small-and-Medium-Sized Enterprises Strategy Paper KfW Kreditanstalt für Wiederaufbau tCO2 Tonne of carbon dioxide TFP Technical and Financial Partners TSF Transition Support Facility (formerly Fragile NELSAP Nile Equatorial Lakes Subsidiary States Facility-FSF) Action Programme - Project to UA Unit of Account Strengthen Power Grid Inter- connection of Nile Equatorial Lakes Countries PBA Performance-Based Allocation WB World Bank

PROJECT INFORMATION SHEET

CLIENT INFORMATION Donees: Burundi and Democratic Republic of Congo Borrowers: Democratic Republic of Congo and Rwanda Executing Agency Electricité des Grands Lacs (EGL)

FINANCING PLAN SOURCES Amount (UA million) INSTRUMENT BURUNDI DRC RWANDA TOTAL COUNTRY TOTAL 21 60 17.5 98.5 7 7 Grant ADF (PBA) 7 7 Loan 14 30 44 Grant ADF (RE) 10 10.5 20.5 Loan 15 15 Grant TSF (Pillar I) 5 5 Loan AfDB (private sector) 35.62 Loan Other Donors (AFD, EIB, WB, 238.05 KfW, EU) Private Partnership 71.24 TOTAL PROJECT COST 443.40

BURUNDI DRC RWANDA ADF/TSF Type of Financing ADF Grant ADF/TAF Loan ADF Loan Grant Currency UA UA UA UA Interest Rate Type NA(*) NA NA NA Interest Rate Spread NA NA NA NA Service Charge NA NA 0.75% / yr. 0.75% /yr. Commitment Fee NA NA 0.50% / an 0.50% / yr. Other Charges NA NA NA NA 10-year grace period 10-year grace period Maturity NA NA and 30 years of and 30 years of reimbursement reimbursement (*)NA: Not applicable

FIRR 7.84% FNPV USD 63.13 million EIRR 13.35% ENPV USD 36.13 million

TIMEFRAME AND MAIN MILESTONES Concept Note Approval 3 September 2015 Project Approval 16 December 2015 Effectiveness 30 April 2016 Closing Date 31 December 2022 Completion 31 December 2023 Last Reimbursement 31 December 2056

iii

EXECUTIVE SUMMARY

1. Project overview: The Ruzizi III Hydropower Plant Project which is part of the Programme for the Development of Infrastructure in Africa (PIDA) concerns Burundi, the Democratic Republic of Congo (DRC) and Rwanda. It entails the construction of a run-of-river dam (on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower dam), a 147 MW power plant and a distribution station. Burundi’s current total capacity will double, while Rwanda’s will increase by half. DRC’s share will contribute to raising supply in the Eastern region currently not connected to the interconnected network, while also significantly reducing the percentage of energy of thermal origin. The project will help to meet the needs of the population and of the economy, in general, in accordance with the national development strategies of the countries concerned, which underscore the importance of ensuring reliable and affordable electric power supply to achieve sustainable economic transformation. The specific objectives of this operation are to: (i) contribute to the development of Ruzizi III for hydropower generation; and (ii) strengthen regional economic integration through the creation of an electricity market. The plan is to implement a project at a total cost of UA 443.40 million (of which UA 98.5 million financed by the Bank’s public sector window and UA 35.62 million expected from the private window) over a period of six (6) years, one year of which constitutes the development phase. This is the first regional project designed as a public-private partnership (PPP) aimed at optimizing the hydropower potential of the Ruzizi cascade. For its implementation, a private partner, acting in the capacity of investor/developer, will be recruited and awarded a concession. This partner will be required to develop the project, be a majority partner in a project company (PC) with the three countries concerned and secure the necessary financing.

2. Needs assessment: The project feasibility study was assessed based on several previous studies concerning electricity demand, in particular the PIDA study. The three countries are experiencing enormous problems in meeting demand for electricity due to the lack of major investments for over a decade in a context of population growth and multiplication of socio-economic development efforts. Existing infrastructure allows coverage of less than 35% of demand in the project area, estimated at about 3800 GWh by 2025. All the studies concur that this estimate is below potential demand.

3. Bank's value added: The Bank is providing assistance to the three countries concerned to develop the energy sector. It became involved at a very early stage by financing transaction advisory services. The Bank is helping to structure the project and facilitate dialogue among stakeholders. By being the first to approve the project, the Bank is playing a key catalytic role in leveraging the required concessional financing to significantly reduce the cost of energy (from USD 0.19 to USD 0.11/kWh) and initiate the development phase. The Bank is strengthening the project's credibility and sustainability, and is participating in the creation of an electricity market. It is also asserting its leadership role in the African energy sector. Its intervention will help to build resilience and address the situations of fragility that characterize the Great Lakes Region. Close attention will be given to gender issues by putting a specialist at countries’ disposal during the project’s final design and throughout the implementation phase.

4. Knowledge management: Using several Bank windows, this is an innovative project that supports large-scale clean energy generation initiatives with a transformational impact on the economies of the beneficiary regional member countries. The experience that will be acquired in managing this type of multinational project structured as a PPP will contribute to the implementation of the Bank's green growth strategy. Such experience will create opportunities for replication, particularly for Ruzizi IV. Therefore, the project is in keeping with the Bank's strategic vision for the development of the African energy sector through the promotion of universal access to modern energy on a low-carbon, inclusive growth path.

RESULTS-BASED LOGICAL FRAMEWORK Country and Name of Project: Multinational (Burundi, DRC and Rwanda) - Ruzizi III Regional Hydropower Plant Project Goal : Increase renewable energy generation for the sustainable socio-economic development of ECGLC countries

PERFORMANCE INDICATORS MEANS OF RISKS/ RESULTS CHAIN Indicator Baseline Situation 2023 Target VERIFICATION MITIGATION MEASURES (including CSI) (2015)

Increase in electricity trading between ECGLC Volume of energy trade 36 MW and 125 Over 247 MW or 1030 GWh Annual electricity company 1: Regional electricity trade does not materialize; countries through the supply of sustainable energy to GWh (Ruzizi II) and PS reports Mitigation Measure: Support institutional capacity achieve economic growth and poverty reduction National statistics; building for energy trading in ECGLC countries Electricity access rate Burundi: 7% Burundi: 20% Bank country IMPACT Eastern DRC: 18% Eastern DRC: 42% reports/economic data; 2: Collapse of shareholding agreement which Rwanda: 22% Rwanda: 90% UNDP reports supports the Project Company; Mitigation Measure: maintain close supervision during operation and establish a strong dispute resolution forum. Improved reliability of energy supply and cost of the Average cost of electricity (USD/kWh) Burundi: 0.10 Burundi: 0.12 AfDB supervision mission countries' energy mix DRC: 0.05 DRC: 0.05 reports; 3. Other Risks: political stemming from the fragility Rwanda: ≥0.20 Rwanda: < 0.15 Quarterly Activity Reports; of the peace process and political instability in Project Completion Report; Burundi and in the Ruzizi Plain, institutional Trade Ministry Reports; structure, financing (counterparty risk, co-financing Demand satisfaction rate Burundi: 1/3, Demand coverage at peak period of 100% Ministry of Energy, Economy risk), trade, technical, implementation including Rwanda: 85%, in the participating countries (for East and Finance Reports fiduciary and coordination risks. OUTCOMES DRC: 1/3 coverage DRC) Creation of new jobs Number of jobs created NA Creation of 800 to 1,000 direct and Mitigation Measures indirect jobs during implementation, 100 Commitment of the three countries that signed a of which for women and 450 permanent communiqué on 8 March 2013; undertaking by jobs in the operational phase governments to include counterpart funding in their budgets. A donor coordination mechanism is Reduction of greenhouse gas emissions Carbon dioxide emission avoidance -- 151,000 tCO2 per year established; ongoing energy distribution networks; establishment of ABAKIR, water resource 1. The Ruzizi III plant is constructed 1. Installed capacity -- 147 MW (in 2023) AfDB Supervision Mission management and incorporation of lessons learnt from 2. Length of high voltage line and number -- 8.3 km by 2023 & Reports 2. The Ruzizi III power distribution system is Ruzizi II development. of sub-stations constructed 01 in 2023 constructed 3. Training programme implemented -- Training programme fully implemented by Executing Agency Reports 3. Institutional support is provide to ECGLC 4. Number of women trained 2020 countries to increase regional electricity trading OUTPUTS 5. Report of study on optimization of -- 45 (15 per country) Project Completion Report 4. Audit reports and quarterly status reports are power trading opportunities and -- 01 prepared maximization of project benefits 6. Audit reports and quarterly reports -- 5 and 20

Inputs: AfDB Group: UA133.5 million including 1. Component 1: Support for Ruzizi III Implementation - (i) provide States with their equity participations; (ii) provide States with resources to be on-lent to the Project Company; public sector (UA 98.5 million) and private sector 2. Component 2: Support for Regional Cooperation and Integration – Contribute to the conduct of different studies; and (UA 35 million); Utilisation: Component 1: UA 90.50 million; Component 2: UA 4.06 million; 3. Component 3: Project Management – (i) institutional support to EGL; (ii) monitor works implementation; (iii) establish a panel of independent experts; (iv) prepare a procedures manual; (v) KEY Component 3: UA 3.94 million ACTIVITIES BY audit project accounts; and (vi) monitor ESMP implementation. Co-financing: EIB (USD 120 million + USD 50 COMPONENT million private sector window); WB (USD 150 million); AFD (USD 15 million + USD 30 million private sector window); KfW (USD 30 million); EU (USD 11+35 million); Commercial debt (to be confirmed following assessments)

IMPLEMENTATION SCHEDULE OF RUZIZI III REGIONAL HYDROPOWER PROJECT

2015 2016 2017 2018 2019 2020 2021 2022 2023 Yr0/M Yr1/M Yr2/M Yr3/M Yr4/M Yr5/M Yr6/M Yr7/M S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA M 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 Project Preparation Phase Finalization of negotiations with investor/developer (I/D) Preparation and signing of Project Agreements Finalization of project preparation by financial partners EGL capacity building Establishment of project company (PC) Mobilization of commercial debt by PC Training Activities (EGL,Steering Committee and representatives of States) Project Development Phase Establishment of the Steering Committee Recruitment of advisors Preparation of general project implementation schedule Finalization of geotechnical studies Updates of ESIA and FRP Implementation of ESMP, FRP and compensation of PAPs Preparation of BDs and launching of bidding for EPC contract Bid preparation Establishment of the Steering Committee Establishment of Water Management Agency (ABAKIR) Construction Phase Detailed designs for civil works and hydroelectric structures Civil works and hydroelectric structures Detailed designs for equipment Detailed designs for transmission line and sub- Maufacturingstation of transmission line and substation equipment Manufacturing of electromechanical equipment Installation of transmission line and substation equipment Installation of electromechanical equipment Commissioning of transmission line and substation Filling of dam Commissioning of dam Operational phase Industrial commissioning (for 12 months) Environmental and social monitoring

MANAGEMENT’S REPORT AND RECOMMENDATIONS TO THE BOARD OF DIRECTORS CONCERNING THE PROPOSAL TO PROVIDE FINANCING TO THE DEMOCRATIC REPUBLIC OF CONGO AND RWANDA FOR THE RUZIZI III REGIONAL HYDROPOWER PLANT PROJECT

Management hereby submits the following report and recommendation concerning a proposal to award (i) a UA 21 million grant to Burundi; (ii) a UA 45 million TSF grant (Pillar I) to DRC; and grant (iii) a UA 15 million TSF loan (Pillar I) to DRC; and (iv) a UA 17.5 million ADF loan to Rwanda, to finance the Ruzizi III Regional Hydropower Plant Project.

1 STRATEGIC THRUST AND RATIONALE

1.1 Project Linkages with Countries' Strategies and Objectives

1.1.1 Due to the dominance of fossil fuels in electricity generation, the ECGLC countries are experiencing serious electricity supply problems that impede their economic activities. Moreover, despite their relative socio-political stability, these countries continue to suffer from the effects of over a decade of wars, marked by acute socioeconomic problems, vulnerable economies and, consequently, difficulty in attracting investments. The project is a regional solution entailing the implementation of an integration project in three countries of Central and Eastern Africa, and involves the construction of a regional hydropower plant in collaboration with the private sector. It supplements ongoing ECCAS initiatives. The project is in keeping with Pillar I of the Bank's Regional Integration Strategy Papers (RISP) for Central and Eastern Africa, which are anchored on regional infrastructure.

1.1.2 At country level, the ongoing national development strategies of the three countries underscore the need to increase electricity generation. For Burundi, developing the electricity sector is one of PRSP II's main objectives. Pillar II of the Bank's 2012-2016 Country Strategy Paper prioritizes the development of national and regional energy projects in order to significantly increase supply of reliable and affordable electricity, and improve countrywide access to electricity. For DRC, the project is in keeping with the 2011-2015 GPRSP, the main reference framework for all development operations. GPRSP is focused on 4 pillars, including Pillar (iii) on improving access to basic social services and strengthening human capital, and Pillar (iv) on environmental protection and climate change adaptation. The project's objectives are consistent with Pillars 1 and 2 of the 2013-2017 CSP. In the case of Rwanda, one of the pillars of the Economic Development and Poverty Reduction Strategy 2013-2018 aims to support growth and economic transformation by improving the connectivity of Rwanda's economy. This strategy aims to increase electricity generation and access. The project is in line with Pillar I of CSP 2012-2016 on infrastructure development.

1.1.3 The project, which also aims to set up a public-private partnership for the generation of abundant supplies of electric power is in keeping with the Bank's energy policy and Ten-Year Strategy targeting inclusive and green growth through the promotion of non-polluting energy. Furthermore, the project aligns with the Bank's “Strategy for Addressing Fragility and Building Resilience in Africa, 2014-2019”, whose Focus Area 2 (Promote Resilient Societies Through Inclusive and Equitable Access to Employment, Basic Services and Shared Benefits from Natural Resource Endowments) considers equitable access to electricity as a factor likely to strengthen the legitimacy of governments, establish trust between States and citizens and consolidate peace dividends in post-crisis contexts.

1.2 Rationale for Bank's Involvement

1.2.1 This projects targets the objectives of the Bank's Ten-Year Strategy (2013-2022) and its Energy Sector Policy. It takes into account the need to increase the population's access to electricity by strengthening green energy generation, with a view to sustainable development. It is in keeping with the operational priorities defined by the Bank in terms of regional integration infrastructure and private sector development. It also aims to build the capacity of two States in transition (Burundi and DRC) as

well as Rwanda's resilience by providing basic services through inclusive development as recommended in the Great Lakes Regional Fragility Assessment Report, which identified the following factors of fragility (reflected in the project design) (see Annex 6): (i) volatility of the security situation and political instability; (ii) the different forms of exclusion and social inequalities, including those based on gender; and (iii) extreme poverty and unemployment, especially youth unemployment. By helping to improve the region's socio-economic situation, the project could serve as a major instrument of dialogue in the political and security stabilization process.

1.2.2 With annual generation of about 710 GWh, evenly distributed among the three countries, it will help to avoid greenhouse gas emissions equivalent to 151,000 tonnes of CO2 per year. The Ruzizi III project will significantly transform the electricity sectors in the countries concerned. Its implementation will contribute to: (i) optimal exploitation of the Ruzizi River's energy potential to improve security of supplies and access to electricity; and (ii) the strengthening of regional economic integration by creating a market for electricity.

1.2.3 At continental and regional level, the project is in keeping with the PIDA Priority Action Plan and is among the priorities defined in the Bank's Regional Integration Policy and Strategy (RIPoS, 2014- 2023). RUZIZI III is a developmental project, given the role it will play in the electric power system of the Great Lakes Region. Because of its geographic location - between DRC and Rwanda - it will contribute to the activities of three of the five African Power Pools: CAPP (Central Africa); EAPP (Eastern Africa); and SAPP (Southern Africa). The PIDA study also proposes an optimal date for the commissioning of Ruzizi III between 2015 and 2017, since this plant is part of the plan for the more cost-effective, long-term development of the Great Lakes Region.

1.2.4 The three countries concerned have made implementation of Ruzizi III one of their development priorities. They have contacted different partners, including the Bank, regarding the optimal development of the Ruzizi River’s hydropower potential. They have initiated an innovative approach consisting of developing a regional project in the form of a public-private partnership.

1.2.5 The Bank Group provides real value added to the development of the Ruzizi III project in that it is a continuation of its previous actions and provides support to two fragile States to set up a complex project. The Bank has sound knowledge of the sector's context and actors since its intervention is based on its recent experience in the region, including the provision of transaction advisory services with support from NEPAD/IPPF and the construction of a transmission line to supply Burundi. This value added is reflected in the Bank's involvement, through its public and private sector windows, in the form of guidance to the countries concerned but also as facilitator between the different actors participating in the project, in particular, the future private sector partner and the different donors. The Bank's level of commitment, particularly reflected in the advanced stage of project appraisal and the volume of concessional resources mobilized by the leverage effect mechanism of regional operations, now enhances the project's credibility by strengthening its feasibility, with a significant reduction in the cost of electricity generation.

1.2.6 The Bank's leadership in the development of Africa's energy sector must be maintained, especially in the Great Lakes Region, confronted by socio-political upheaval, until the implementation of the Ruzizi III project.

1.3 Aid Coordination

1.3.1 In the three countries, aid is coordinated through groups established for consultation between the public sector, civil society and technical and financial partners (TFP). These groups meet regularly to monitor and evaluate the implementation of the sector's different development activities. In the case of Ruzizi III, TFP coordination will be mainly carried out by Electricité des Grands Lacs (EGL), an ECGLC specialized institution with a specific mandate for the project's implementation. Since the launching of project development activities, several TFPs have made various contributions channelled 2

through EGL, which makes every effort to improve operations harmonization. At EGL's initiative, several meetings have been held, including one at ministerial level in Abidjan in May 2015 on the sidelines of the ADB Annual Meetings in which the French Development Agency (AFD), the African Development Bank (AfDB), the European Investment Bank (EIB), the World Bank (WB), Kreditanstalt für Wiederaufbau (KfW) and the European Union (EU) participated. At the request of the States and following consultation, the TFPs selected the EIB as leader for the overall coordination of mobilization for project financing. Since then, frequent consultations have been held between the different donors concerned at each project preparation stage.

1.3.2 This project was prepared by the different donors with a high degree of synergy. This led to the retention of the co-financing option that allows each donor to make the best possible contribution to the project.

2 PROJECT DESCRIPTION

2.1 Project Description and Components

The project's sector goal is to tap the energy potential of the Ruzizi cascade to meet demand from the population and the economy in general, in accordance with ECGLC national development strategies, which stress the importance of reliable power supply for sustainable socio-economic transformation. The specific objectives are to: (i) contribute to the development of the Ruzizi III scheme; and (ii) strengthen regional economic integration by creating a market for electricity.

Table 2.1 Project Components and Cost (UA) Component Estimated Cost Component Description Construction of the Ruzizi III hydropower plant with an installed capacity 1. Support for Ruzizi III 435,403,085 of 147 MW in DRC and Rwanda; and implementation of the Implementation Environmental and Social Management Plan 2. Support for Regional Development of national energy markets and their access to the regional Cooperation and Integration in the 4,060,581 energy market; institutional framework for the development of regional Energy Sector energy projects; and support for the development of regional integration. EGL capacity building, PIU operating costs, preparation of a procedures 3. Project Management Support 3,936,626 and training manual, training actions, project audit, and panel of independent experts. Total Project Cost 443,400,292

2.2 Technical Solutions Retained and Alternatives Explored

2.2.1 The technical solution retained consists in the construction of a run-of-river dam located on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower plant, a 147 MW power plant and a distribution station. This facility will supplement the existing cascade by tripling installed capacity on the river. Power will be transmitted to the three countries from the Kamanyola substation by 220 kV transmission lines. It will then be distributed equitably between Burundi's Water and Electricity Generation and Distribution Company (REGIDESO), DRC's National Electricity Company (SNEL) and the Rwanda Energy Group Ltd. (REG) (collectively called the “Buyers”), in accordance with each buyer's long-term power-purchase agreement. The solution is based on the findings of the feasibility study which confirms those of various previous studies. Under the aegis of NELSAP, a comparative study1 was launched in 2005 covering an area encompassing Burundi, Kenya, Uganda, DRC, Rwanda and Tanzania, to assess the economic merit of different sites. The study report concludes that Ruzizi III is one of “the best development options” along with Rusumo Falls or Kabu 16.

1 Strategic/Sectoral, Social and Environmental Assessment of Power Development Options in the Nile Equatorial Lakes Region, Stage II, Synopsis of the Final Report, carried out for NELSAP (November 2005).

Another study conducted for the 2013-2038 period and covering all countries of the Eastern Africa Power Pool, and the PIDA (2011-2040 period) study focused on regional integration prospects conclude that Ruzizi III forms part of the most cost-effective development plan for the energy sector in the Great Lakes Region.

2.2.2 To confirm the selection of Ruzizi III as the adopted technical solution, Table 2.2 below shows the alternatives explored and reasons for their rejection.

Table 2.2: Project Alternatives and Reasons for their Rejection

Options Description and Characteristics Reasons for Rejection - Installation of diesel generators - High operating costs Diesel Thermal - Relevant solution - Negative environmental impacts - Slightly higher costs than Ruzizi III - Option consisting of installing gas turbines fired by - Impacts being assessed Methane Thermal methane gas from Lake Kivu - Little feedback on such technology - Relevant solution - Option could be envisaged in the medium-to-long-term - Option consisting of installing solar panels for - High costs Solar Photovoltaic electricity generation - Unable to supply grid with - Non-relevant solution guaranteed power - Option consisting of installing wind generators for - Unable to supply guaranteed power Wind electricity generation to meet peak demand - Non-relevant solution - Option consisting of producing electricity from - Costs slightly higher than Ruzizi III Geothermal geothermal resources - Option could be envisaged in the - Non-relevant solution medium-to-long-term - Costs higher than for Ruzizi III - Option consisting of generating electricity from Small-scale - High connection costs several smaller hydropower plants hydropower - Fewer impacts - Relevant solution - Not sufficient to cover all needs

2.3 Project Type

The project is an investment operation designed as a public-private partnership (PPP) aimed at optimizing the hydropower potential of the Ruzizi Cascade. For its implementation, a private partner recruited as an investor/developer has been awarded a twenty-five (25) year concession. This partner will be required to develop the project, be a majority partner in a project company (PC) with the three countries concerned, and secure the necessary financing. To cover the risks involved and with a view to reducing the cost of energy, the countries concerned will provide the PC with concessional financing.

2.4 Project Cost and Financing Arrangements

2.4.1 The total project cost, net of taxes and customs duties, is estimated at UA 443.40 million, comprising approximately UA 358.86 million in foreign exchange and UA 84.55 million in local currency. The cost includes a 10% provision for physical contingencies and price escalation. The cost by component is presented in Table 2.3 below.

Table 2.3 Estimated Cost by Component (in UA million)

Foreign Local COMPONENTS Total Cost F.E. % Exchange Currency 1. Support for Ruzizi III Implementation Construction cost 291.83 66.65 358.47 81% Development cost 13.75 0.00 13.75 100% Environmental and social cost 5.54 5.54 11.08 50% Reserve account 2.65 0.66 3.31 80% Revolving fund requirements 6.66 1.66 8.32 80% Component 1 Total 320.41 74.51 394.92 81% 2. Support for Regional Cooperation and Integration in the Energy Sector Development of national energy markets and their access to the 1.49 - 1.49 100% regional energy market Institutional framework for the development of regional projects 1.70 - 1.70 100% Support for regional integration development 0.68 - 0.68 100% Component 2 Total 3.87 - 3.87 100% 3. Support for Project Management EGL capacity building 1.14 1.14 2.28 50% PIU operating cost - 0.96 0.96 0% Preparation of a procedures and training manual 0.03 - 0.03 100% Training activities 0.15 0.04 0.19 80% Project audit - 0.12 0.12 0% Panel of independent experts 0.16 - 0.16 100% Component 3 Total 1.49 2.26 3.75 40% Total Project Base Cost 325.77 76.77 402.54 81% Provision for physical contingencies (5%) 16.02 3.73 19.75 81% Provision for price escalation (5%) 17.09 4.02 21.11 81% Total Project Cost 358.88 84.52 443.40 81%

2.4.2 Project Financing Arrangements: The project will be co-financed by different donors2. The Bank's public sector window contribution is 22%. This contribution comprises grants and loans to the three States concerned which are participating directly in the project through a shareholding in the PC, and the award of concessional loans to the company as provided for under the Bank's on-lending policy (see Annex 5). Therefore, all the project costs are covered by the PC. In addition to this participation, the States concerned will contribute in kind to the operating costs of the national teams. They will cover the acquisition of land located in the project right-of-way, which will be reimbursed by the PC. The financing plan is presented in Table 2.4:

2 For information, the contributions of the other donors (in USD million) to the concessional/commercial debt are as follows: WB (150/0); EIB (120/50); AFD (15/30); KfW (30/0); and EU (46/0)

Table 2.4: Sources of Financing (in UA million)

Cost in Foreign Cost in Local Sources of Financing Total Cost % Total Exchange Currency Component 1 Private Investor 71.24 - 71.24 16% AfDB Group 73.43 17.07 90.50 21% Other Donors 208.59 65.07 273.66 63% Component 1 Total Cost 353.26 82.15 435.40 100% Component 2 AfDB Group 4.06 - 4.06 100% Component 2 Total Cost 4.06 - 4.06 100% Component 3 AfDB Group 1.54 2.40 3.94 100% Component 3 Total Cost 1.54 2.40 3.94 100% Project Total Cost 358.86 84.55 443.40

Table 2.4bis below presents the sources of financing by component. The project cost by expenditure category and expenditure category by component are presented in Tables 2.5 and 2.6.

Table 2.4bis: Sources of Financing by Component (in UA million)

Equity Capital Concessional Debt Commercial Private Total Rwanda Burundi DRC Rwanda Burundi DRC Debt Investor Compo nent 1 Private Investor 0 0 0 71.24 - - - - 71.24 Bank Group - - - 0 - - - - - ADF - - - 0 16.08 19.29 - - 35.37 TSF - - 11.70 0 - - 43.43 - 55.13 AfDB - - - 0 - - - 35.62 35.62 Other Donors 11.70 11.70 - 0 61.80 61.80 61.80 29.26 238.04 Total 11.70 11.70 11.70 71.24 77.88 81.09 105.23 64.88 435.40 Component 2 Bank Group ------ADF - - - - 0.72 0.87 - - 1.59 TSF ------2.47 - 2.47 Total - - - - 0.72 0.87 2.47 - 4.06 Component 3 Bank Group ------ADF - - - - 0.70 0.84 - 1.54 TSF ------2.40 2.40 Total - - - - 0.70 0.84 2.40 - 3.94 TOTAL 1.70 11.70 11.70 71.24 79.30 82.80 110.10 64.88 443.40

Table 2.5: Project Cost by Expenditure Category (in UA million)

Cost in Local Expenditure Categories Cost in Foreign Exchange Total Cost % F.E. Currency Works 320.41 74.51 394.92 81% Goods - 0.15 0.15 0% Services 5.36 1.30 6.65 81% Operation - 0.81 0.81 0% Total base cost 325.77 76.77 402.54 81% Provision for contingencies (5%) 16.02 3.73 19.75 81% Provision for price escalation (5%) 17.09 4.02 21.11 81% Total Project Cost 358.88 84.52 443.40 81%

Table 2.6 : Expenditure Schedule by Component (in UA million)

Components 2016 2017 2018 2019 2020 2021 2022 1. Support for Ruzizi III Implementation Component 1 Total 14.50 113.60 72.42 106.73 57.18 19.06 11.44 2. Support for Regional Cooperation and Integration in the Energy Sector Component 2 Total - 0.16 0.90 1.31 0.63 0.63 0.23 3. Support for Project Management Component 3 Total 0.58 0.94 0.79 0.58 0.36 0.36 0.14 Total Project Base Cost 15.08 114.70 74.12 108.62 58.17 20.05 11.81

2.5 Project Target Areas and Beneficiaries

2.5.1 The project area lies in South-West Rwanda and Eastern DRC between Lake Kivu and Lake Tanganyika. The Ruzizi III hydropower facility is on the Ruzizi River between DRC and Rwanda. The Ruzizi valley is very narrow with steep sides and a difference in level of about 500 metres between the plateaux and the valley bottom. The dam is about 10 km upstream from Bugarama/Kamanyola while the power plant is 5 and 6.5 km from these two localities, respectively. The project area lies in South Kivu Province in DRC, Ruzizi District in Rwanda and Cibitoke Province in Burundi. Agricultural activity in the project area focuses mainly on food crops. Population pressure, which is very strong in the area, is one of the main reasons for the small size of farms (less than 1 hectare per family). The estimated population of the project area is 615,000.

2.5.2 The project will generate many benefits, including: (i) increased supply of electricity in the region and consequently access to electricity at an affordable cost, the direct beneficiaries of which will be the population, electricity companies and businesses in the countries concerned; (ii) the creation of direct and indirect jobs during works and permanent jobs during the operational phase; (iii) a reduction in subsidies on fossil fuels and development of the industrial fabric for Governments, (iv) the creation of income-generating activities for women and youth; and (iv) improvement of population's living conditions. Regarding climate change adaptation, the project will ensure the annual avoidance of about 151,000 tCO2. Since the river flow is highly dependent on climatic variability and the Ruzizi I and II facilities, a supplementary study and climatic and hydrological parameter monitoring mechanism are planned. The adequate building of EGL’s capacity will ensure that the new structures on the cascade are rapidly put in place. Financially, the different governments will benefit from income generated by their participation in the PC and by the debt on-lent to the PC. This income could be recycled in the sector. The private partner will also be remunerated for its majority participation in the PC.

2.6 Participatory Process

The different Governments concerned have adopted a participatory process fully involving the communities in identifying needs, monitoring activities and assessing them in a spirit of citizen control, knowledge and know-how sharing, and social efficiency. Thus, the preparation of the Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP) in 2012 was carried out using a participatory process. Different consultations were held in the main localities of the project area. They involved the competent government authorities, local authorities, the population including women and youths, project affected persons and non-governmental organizations (NGO). Project Affected Smallholder Committees (CPAP) were established in the localities concerned for consultations with those inhabitants directly concerned by the project. The establishment of CPAPs took into account representativeness, in particular, gender balance with women's participation. Exchanges with project affected persons (PAPs) and neighbouring communities highlighted their concerns and/or wishes, some of which have been taken into account in this project. Furthermore, the project communication strategy will focus on information, sensitization, education, social mobilization and capitalization.

2.7 Bank's Experience and Lessons Reflected in Project Design

2.7.1 The Bank intervenes in the development of the energy sector in Burundi, DRC and Rwanda, where the bulk of the projects are being implemented. At community level, it has intervened since 2008 in the Great Lakes region through the NELSAP project, which concerns the three ECGLC countries plus Kenya and Uganda. This project will contribute to the interconnection between the different countries to facilitate access to the EAPP regional electricity market. No completion report has yet been prepared for the NELSAP project, which is ongoing. However, the main lessons to learn from it to-date are: (i) the need for effective coordination between the different actors; and (ii) the importance of the project implementation structure. NELSAP is implemented by national entities responsible for structures located on their territory. The NELSAP Project Coordination Unit (PCU) only carries out regional coordination to harmonize the different schedules and ensure compatibility of the standards used on the interconnected grid, which is the reason for the lack of works synchronization. Furthermore, the “public” management method retained for the Ruzizi II community power plant has incurred losses. DRC and Burundi's situations as States in transition, confirmed by their weak capacity, and lessons learned in implementing the NELSAP and Ruzizi II projects explain the decision of States involved to entrust the execution of the Ruzizi III project to EGL which has experience of working with the TFPs. It is also the reason for selecting a private operator which will set up a PC for the construction and subsequent operation of the structures.

2.7.2 These experiences are enriched by lessons drawn by the Bank from the portfolio review of the countries concerned and its participation in PPPs (like the Ouarzazate Solar Plant) or multinational projects. The main problems identified relate to: (i) major overruns on the estimated costs; (ii) delays in establishing adequate financial management systems; (iii) the lack of an efficient monitoring/evaluation system; (iv) weakness of project implementation structures; and (v) ineffectiveness of project steering committees. The project addresses these problems by focusing on EGL capacity building and quality at entry of activities through Component 2.

2.8 Key Performance Indicators

2.8.1 The project's key performance indicators are presented in the Results-Based Logical Framework. They concern the construction of structures and conduct of studies planned under the project, but also the facilitation of access to electricity in the Great Lakes Region.

2.8.2 As the project executing agency, EGL will be responsible for establishing a baseline situation for the performance indicators as well as monitoring and analysing their trends by comparing them with the logical framework estimates. At the level of the different countries concerned, the project performance indicators will be integrated into the different periodic activity reports. The indicators will be analysed in relation to the project's target values or any other benchmark considered relevant, in particular, during supervision missions fielded by the Bank and other technical and financial partners. 8

3 PROJECT FEASIBILITY

3.1 Economic and Financial Performance

3.1.1 Burundi, Rwanda and DRC are experiencing significant power deficits. This justifies major investments to increase generation capacity and develop the transmission and distribution grids. Implementation of Ruzizi III falls within this context and constitutes the next stage3 in realizing the optimal hydropower potential of the Ruzizi cascade, reducing the current supply and demand imbalance which ranges from 20 to 65%, and meeting future demand.

3.1.2 Ruzizi III was retained following a preliminary review of the costs and benefits of exploitable sites in the region. Despite the outdated basic figures, the results remain valid given the costs and technical constraints concerning alternative generation methods. The project financial and economic evaluation is carried out from 2016 over a thirty-year period (5 years of construction and 25-years of operation).

3.1.3 The findings of the analysis show that the project is financially and economically viable. Based on a weighted average price of USD 0.124/kWh and an energy sales volume of GWH 663.4 per year, the project's estimated financial internal rate of return will be 7.84% and its financial net present value (calculated on the basis of a weighted average cost of capital of 6.55%) USD 63.13 million. In addition to the fact that it is part of a long-term development plan for the region at an affordable cost, the economic justification of the Ruzizi III project may be proved by calculating the economic costs avoided in the event of no project implementation. Economic agents who are not supplied with electricity from the grids use individual generators or kerosene lamps. The cost per kWh of these different alternative energies may be considered as an indicator of consumers’ willingness to pay (WTP) for access to electricity supply services. Based on an average WTP of USD 0.22, USD 0.29 and USD 0.23 per kWh in Burundi, Rwanda and DRC respectively, the project shows an economic internal rate of return (EIRR) of 13.35% and an economic net present value (ENPV) estimated at USD 36.13 million. The table below summarizes the main economic and financial results. The detailed calculations and assumptions are presented in Annex B7.

Table 3.1: Key Financial and Economic Indicators

PARAMETERS VALUES FIRR 7.84% FNPV USD 63.13 million EIRR 13.35% ENPV USD 36.13 million

3.2 Environmental and Social Impacts

3.2.1 Environment

3.2.1.1 In accordance with the Bank's Integrated Safeguards System, the project was classified in Category 1 because of the scale of the works and negative environmental and social impacts identified. The comprehensive ESIA and Full Resettlement Plan (FRP) were prepared in 2012. The ESIA and FRP summaries were posted on the Bank's website on 14 August 2015. In view of the project's restructuring as a PPP, the existing studies will be updated in accordance with the Environmental and Social Action Plan (ESAP) following the establishment of the PC. These updates constitute conditions precedent to disbursement.

3 The Ruzizi I (constructed in 1959 with installed capacity of 29.8 MW) and Ruzizi II (commissioned in 1989 with installed capacity of 43.8 MW) plants are already operational in the Ruzizi valley.

3.2.1.2 During the works, the main negative impacts will concern: (i) the quantitative and qualitative degradation of the river's water resources downstream from the works area; (ii) the destruction of property affecting 4,300 people in DRC and Rwanda; (iii) the destruction of plant species and wildlife habitat on the right-of-way planned for the reservoir and different facilities; and (iv) other risks related to health, hygiene and security of employment for employees. In the operational phase, the reservoir is likely to cause: (a) a proliferation of water-borne diseases; (b) accidents and drownings; and (c) landslides up to the equilibrium period. The most significant cumulative negative impacts relate to: (1) successive dam failures (Ruzizi I, II and III); (2) erosion and sedimentation created by various activities in the catchment area; and (3) those relating to the hydro-ecological continuity of the water course mainly for barbels (Barbus altianalis).

3.2.1.3 TO mitigate these negative impacts, the contractors selected will be required to prepare, on the basis of the Project ESMP and PC, environmental and social management system, detailed and specific environmental and social plans, in particular: (i) Hygiene, Health, Safety and Environment Plans (HHSEP); (ii) erosion and sedimentation control; (iii) site replanting and rehabilitation; (iv) quarry and borrow site management; (v) management of fortuitous discoveries; (vi) initial filling of the reservoir; (vii) monitoring of water quality; (viii) environmental and social training of personnel; and (ix) site dismantling. Project affected persons will be compensated and assisted in compliance with the resettlement plan. During the operational phase, an operations and maintenance plan as well as an emergency preparedness plan will be implemented to manage the impacts during this phase. The estimated cost of the ESMP measures is USD 17.14 million. Hence, an appropriation of USD 17.14 million was made for updating the ESIA/ESMP and FRP. The project will also generate many positive impacts. Specifically, through complementary actions under the aegis of ABAKIR, it will contribute to the implementation of lasting solutions to the basin-wide problems of erosion and sedimentation as well as to those relating to hydro-ecological continuity, including for Ruzizi I and II.

3.2.2 Climate Change

3.2.2.1 The project was classified in Category 1 with respect to climate change. The impact assessment indicates that the Ruzizi flow rate depends mainly on the level of Lake Kivu. This level has been falling for several years due to a downward trend in rainfall, expansion of its catchment area and anthropic activities which are accelerating erosion and sedimentation in the river. The analyses indicate average temperature increases of 1.9°C and 2.5°C by 2050 and 2060, respectively. Climate variability will have an impact on the cascade's energy production and the choice of flow control equipment for Ruzizi III. Adaptation measures will be integrated in the project's design.

3.2.2.2 It is also recommended to update the hydrological study and monitor the climatic and hydrological parameters, in order to ensure the smooth operation of the plant. The monitoring indicators will be updated in the quarterly ESMP implementation reports. Based on the AFD methodological approach, GHG emissions during works are estimated at 39,000 tCO2 for the dam's construction. Methane gas emissions from the reservoir during the operational phase will be significantly reduced due to the fact that: (i) very little vegetation will be submerged; and (ii) the water retention time in the reservoir will be very short. These emissions particularly concern the first two years. They will be mitigated by: (a) a reduction in the amount of plant cover submerged by the reservoir; and (b) the planting of 3,000 trees/ ha over 15 ha, which will serve as protection of the catchment area. Therefore, the implementation of Ruzizi III would help prevent the emission of over 7.5 million tCO2 over 50 years.

3.2.3 Gender

3.2.3.1 Women, girls and children are still paying a heavy price for the different crises that have affected the region. Despite the existence of favourable legislation, women's rights are not evenly enforced in the three countries. The project's implementation will have the following positive impacts on 10

women, girls and children: (i) strengthen women's income-generating activities (IGA), in particular, through the development of small businesses during the construction phase; (ii) at least 20% of unskilled direct and indirect jobs will benefit women and girls; (iii) promote agricultural produce artisanal processing activities mainly carried out by women; and (iv) access to electricity and the use of lighting will improve the well-being of women and girls especially, in terms of education. The likely negative impacts on women are: (s) increase in water-related health problems (accidents and drownings); (b) impact on sexually transmitted infections-HIV/AIDS; and (c) changing vectors of disease due to modifications of the habitat.

3.2.3.2 To mitigate the negative impacts, the project will pursue the following actions: (i) sensitization campaigns on different themes (STI-HIV/AIDS) for workers and communities settled in the project area, in particular women and children; (ii) support for the promotion of IGAs will be factored into the local development plans and the Plan to Restore and Improve Living Conditions financed and implemented by the PC; and (iii) support for the promotion of well-being through the rehabilitation and equipping of schools, health centres and women's promotion centres planned in the local development plan. The financing of women's promotion activities is included in the project costs and their implementation entrusted to the PC. The Bank's contribution will be used to provide EGL with a specialized expert on social and gender issues responsible for preparing and implementing the different plans.

3.2.4 Social

3.2.4.1 The Great Lakes Region is one of Africa's fragile areas. The main factors associated with fragility and analysed in relation to the Ruzizi III project are: (i) the volatility of the security situation and political instability; (ii) the different forms of social exclusion: identity crisis, ethnic divides and land tenure conflicts; (iii) the weak water resource governance capacity; (iv) gender-based violence; and (v) extreme poverty and unemployment, especially among young people. This situation of fragility, mainly perceived at the social level, poses risks for the project's implementation, which are to be found among the potential negative impacts referred to in paragraph 3.2.1.2. However, the experience of existing infrastructure shows that this risk is relative and that the project could serve as an instrument of dialogue to encourage peace consolidation and stabilization activities in the region. The availability of energy in this region could help to restore peace by developing highly remunerative economic activities.

3.2.4.2 The project's implementation will have the following positive social impacts: (i) improved access of households to electricity; (ii) economic diversification; and (iii) creation of 800 to 1000 direct and indirect permanent and temporary jobs in favour of local but unskilled labour, with a proportion of 20% for women. To optimize its social impact, the project will help affected households to rediscover or sustainably create satisfactory living conditions. In this regard, a Plan to Restore and Improve Living Conditions (PRRV) and a local development plan (PDLC) will be rolled out. These two plans will be finalized by the PC in close collaboration with the competent local authorities. The estimated cost of implementing these two plans is USD 7 million.

3.2.5 Involuntary Resettlement

Clearing of the works right-of-way, estimated at 115 hectares by the technical studies, will a priori affect no fewer than 636 households in Rwanda and in RDC, i.e. about 4500 people, 64% of whom are living in DRC and 36% in Rwanda. Affected property mainly comprises unbuilt land, crops (food and market garden), fruit trees and various other plants. The Resettlement Action Plan prepared in 2012, a summary of which will be published on the Bank's website, will be updated by the PC prior to the launching of invitations to bid for EPC contracts, in accordance with the Bank's requirements.

4 PROJECT IMPLEMENTATION

4.1 Implementation Arrangements

4.1.1 Through a Panel of Experts, Burundi, DRC and Rwanda shall establish the project steering body. This committee will comprise, for each country, representatives of the ministries responsible for energy, environment, finance and electric power utilities. Project implementation is entrusted to EGL - an ECGLC specialized institution with a specific mandate to implement the Ruzizi III project as a public-private partnership (cf. special delegation of powers conferred upon EGL to implement Ruzizi III, on 12 November 2010, by the three States). It is planned that infrastructure construction will be awarded to a project company and that the implementation of related activities will be awarded to EGL.

4.1.2 The three countries and the private partner, investor/developer have jointly and severally agreed to establish a project company to finance the construction and operation of the Ruzizi III plant. One third (1/3) of the PC's share capital will be held in equal parts by the three countries and two thirds (2/3, i.e. USD 100 million) of the share capital will be held by an investor/developer. Pending the signing of the project agreement for the establishment of the PC expected by end-2015, preliminary procurement operations will be carried out by EGL, supported by the Steering Committee established in 2013 and comprising two experts/representatives per country. The treaty, internal rules and shareholders' agreement were established by the three governments assisted by international lawyers. Establishment of the PC will be a condition precedent to first disbursement of the Bank's financing.

4.1.3 Since the related “capacity building/project management” and “regional integration” activities transcend the individual States, they will be implemented by EGL. The three countries have agreed to on- lend the related financial resources to EGL. In light of the mandate assigned to EGL and to ensure the quality of its investments, there is a real need to build its capacity in order to enhance the performance of the executing agency. Thus, in addition to the international consultants recruited to assist EGL, the key personnel will include technical, legal, economic and financial experts. The additional human resources will be recruited through a competitive process and will comprise at least a financial expert, a procurement expert and electromechanical/electrical engineer, a civil engineer, a legal counsel, a computer specialist, an environmental expert and expert on social and gender issues. A monitoring/evaluation expert will be recruited for EGL to monitor project activities. From an institutional standpoint and in view of the project's scope, EGL will work closely with the other regional entities operating in the river basin's management (Regional Dispatching Centre (CDR) and the Ruzizi River Cascade Coordination Centre (CC)).

4.1.4 Procurement

4.1.4.1 The procurement process for the selection of the developer/investor was launched in 2012. It was approved by the Bank as well as the choice of the future developer.

4.1.4.2 However, the future developer and EGL agreed to adopt a competitive selection procedure for a turnkey contract for engineering, supplies and construction of the Plant (EPC contract) [Component 1: Support for the implementation of Ruzizi III]. To that end, this contract was awarded in compliance with the relevant WB Guidelines subject to a waiver by the Bank's Board of Directors. Joint financing was chosen because: (i) to date, the fiduciary safeguard policies of both the Bank and WB are almost identical; and (ii) the Bank's Procurement Rules and Procedures and WB Guidelines as well as their standard bidding documents (SBDs) are closely harmonized. It should be noted that, like other donors, AfDB will carry out a prior review of procurement documents during the selection process (pre- qualification, bidding, bid evaluation and contract negotiation phases, etc.). Thus, for the EPC contract, the procurement of goods, works and services (other than consulting services) will be carried out in compliance with the WB's “Guidelines for the Procurement of Goods, Works and Non-Consulting Services” using the WB's relevant SBDs as well as with the provisions stipulated in the Financing Agreement.

4.1.4.3 All procurement of goods, works and consulting services for project Components 2 and 3 which are fully financed by the Bank will be made in accordance with “Bank Rules and Procedures for the Procurement of Goods and Works”, May 2008 Edition, revised in July 2012, and “Bank Rules and Procedures for the Use of Consultants”, May 2008 Edition, revised in July 2012, using the Bank's standard bidding documents (SBDs) as well as with the provisions stipulated in the Financing Agreement.

4.1.4.4 EGL will be responsible for the award of all contracts for project activities, in particular monitoring the selection of the EPC (Component 1) and implementation of the procurement activities planned under Components 2 and 3. The assessment of EGL's capacity indicates a need for capacity building by a procurement expert, whose qualifications and experience are deemed satisfactory by the Bank. A draft procurement plan prepared by EGL will be submitted to the Bank for review and approval prior to negotiations. The procurement details are set out in Annex B5.

4.1.5 Financial Management and Audit Arrangements

4.1.5.1 Based on the review carried out, the project's overall financial management risk at entry was considered substantial. Mitigation measures proposed in the financial management action plan (Annex B4 and B6) aim to support EGL for the rapid establishment of a project financial management mechanism. The recruitment of a financial expert and accountant to strengthen the Administrative and Financial Department, the updating of EGL's accounting procedures manuals, the preparation of an accounting procedures manual for the PC prior to first disbursement and speedy implementation of actions agreed in the action plan will help to lower the residual risk to a moderate level and at EGL, to meet the Bank's minimum project financial management requirements. It will also be necessary to acquire software configured to meet the project's accounting needs no later than six (6) months following project effectiveness.

4.1.5.2 Thus, in accordance with the implementation arrangements, responsibility for project financial management will fall within the remit of EGL, which will also use the PC’s financial statements. In this regard, EGL will establish an adequate financial management system which meets international standards, with qualified and experienced financial staff, to maintain general, cost and budgetary accounting with adequate software. The project's financial management will be based on the entire financial management system to be established at EGL, especially the following systems: (i) budgetary management; (ii) accounting and reporting; (iii) internal control and external audit; and (iv) cash and funds flow management system. Compliance by EGL with the arrangements agreed upon in the financial management action plan will ensure that the funds provided to the project are used for project purposes. In addition, recruitment of the external auditor six months after project effectiveness and all other measures contained in the financial management action plan constitute other financing conditions. EGL accounts will be maintained separately from the project accounts. EGL has undertaken to produce and regularly submit to the Bank quarterly financial monitoring reports as well as annual financial statements on the due dates agreed upon, in a format to be determined during negotiations. Furthermore, the PC will be responsible for the establishment and operation of infrastructure, including its own financial management following signature of the term sheets of the project agreement establishing the PC. The Bank will ensure the adequacy of the PC's financial management capacity during the project launching mission.

4.1.5.3 The PC will put in place appropriate and well-documented internal control procedures, in particular relating to accounting entries, financial transactions, commitment and justification of expenditure, safeguarding of financial data and project assets. Internal auditing will be carried out by an internal auditor or an audit committee as required. A detailed reporting system will enable EGL to report on financial management to the Bank.

The annual financial statements will be produced for EGL on time in accordance with International Public Sector Accounting Standards (IPSAS). The PC will produce the agreed upon periodical financial statements in compliance with International Financial Reporting Standards (IFRS). These reports will include a balance sheet, income statement, a statement of equity, a cash flow table as well as accounting principles and notes to the financial statements.

4.1.5.4 The project and EGL financial statements prepared separately will be audited annually by an external auditor. The auditing of the project and EGL's accounts will be performed in compliance with International Auditing Standards (IFAC). EGL will publish a request for proposals and will appoint international external auditors no later than six (6) months after project effectiveness to conduct the annual audit based on the Terms of Reference agreed upon with the Bank during the negotiations. The audit report will be submitted to the Bank latest six months after the end of the fiscal year concerned. The PC will recruit auditors for the project's financial and technical audit.

4.1.6 Disbursement Mechanism and Modalities

Within the project implementation framework, the special account and direct payment disbursement methods have been retained. EGL will open a special account in a bank deemed acceptable by the Bank, for financing all eligible expenditure under Components 2 (“Support cooperation and regional integration in the energy field”) and 3 (“Project management”). The special account will be managed in compliance with the provisions of the procedures manual and those of the grant protocols of agreement and loan agreements. The direct payment method will be used for payments related to: (i) resources on- lent to the PC under Component 1 (“Support for Ruzizi III implementation”); and (ii) Components 2 and 3 expenditures ineligible for special account financing. In accordance with the provisions of the financing agreements and its Disbursement Rules and Procedures, the Bank will disburse resources to cover expenditure. Disbursements to the PC shall comply with the Bank’s on-lending policy for concessional loans.

4.2 Project Monitoring

The main project stages are presented in Table 4.1 below. The activities will be implemented as set out on the project implementation schedule. EGL will use the services of a monitoring/evaluation expert to monitor the status.

Table 4.1: Main Project Implementation Stages Duration Stages Monitoring Activities/Feedback Loop Approval of loans and grants Approval and General Procurement Notice 3 months effectiveness Signature of financing agreements and effectiveness AfDB launching mission Review and approval of bidding documents Bidding and award of contracts 8 months Procurement Signature of project agreements PC's establishment Signature of EPC contract Contract execution Preparation of periodic project status reports Project's physical 72 months Supervision missions by the Bank and other partners implementation Project social and environmental monitoring Bank's mid-term review Auditing of Project Recruitment of the auditor to conduct annual audits 6 months Accounts Conduct of annual audits Borrower's and Donees' Project Completion Report 3 months Project Completion Preparation of the Bank’s Project Completion Report

4.3 Governance

Governance risk for this project is low and could occur in the course of implementing activities entrusted to EGL. EGL has already implemented this type of operation with other partners as well as the Bank, through NEPAD/IPPF. The risk is mitigated by the involvement of donors. The same will apply to the recruitment of personnel where the Bank's opinion will be required prior to appointments. Procurement- related risks are minimal since an agreement was reached to award the largest contract in accordance with WB procedures. Moreover, the Bank's supervision and technical and financial audits will ensure conformity between the specifications, outputs, disbursements and financing agreements. The involvement of the countries concerned in the project's management will also strengthen governance.

4.4 Sustainability

4.4.1 Project sustainability will depend principally on the commitment of the three governments through the specific mandate entrusted to EGL. Furthermore, since the launching of the feasibility study, the three countries have established a monitoring and dialogue mechanism with a view to achieving optimal and sustainable development of the Ruzizi Cascade. Thus, in terms of ownership, other actions such as the institutional study on the cascade management or on the rehabilitation of the Ruzizi I and II structures are ongoing. These actions should contribute to optimal integrated water resource management.

4.4.2 The adoption of a PPP project stems from the determination of the countries to avoid the management problems encountered with Ruzizi II, reason for which the facility now needs rehabilitation.

4.5 Risk Management

4.5.1 Risk management: EGL undoubtedly has experience of Ruzizi II but has no previous history of monitoring and implementing a PPP project of Ruzizi III's complexity. This risk will be mitigated by building EGL's capacity, support from high-calibre consultants, analyses and opinions of the Bank and other donors on the project implementation process. The project costs include provisions for contingencies and price escalation.

4.5.2 Fiduciary risk: The project's initial fiduciary risk was deemed high. EGL, which will implement the project, is not yet sufficiently operational to ensure effective project financial management at this stage. The project has also become somewhat complex as a result of the need to find a joint management mechanism for the resources mobilized from different donors - a further risk factor for the Bank. Fulfilment of conditions precedent related to the financing will help to mitigate this risk to a moderate and acceptable level. In addition to the operationalization of EGL, it will be necessary for the Bank to confirm or obtain evidence of the establishment of a satisfactory financial management mechanism for project implementation. Another aspect of fiduciary risk lies in the confirmation of the investor/developer since the IPS/Sithe Global Consortium retained in 2012 does not offer all the guarantees of its determination to pursue the process towards establishment of the PC. The withdrawal of this consortium or of one of the firms could delay the project by requiring a new bidding process.

4.5.3 Co-financing risk: This risk is real despite the coordination efforts. Slippage or default on implementation of part of its commitments could undermine the smooth execution of the entire project. This risk will be mitigated by the collaborative attitude of all the co-financiers but also by the communication efforts made and which will continue.

4.5.4 Political risk: This risk is the result of the fragility of the ongoing peace process and political instability in the region, which could impede the implementation of project activities. This risk will be mitigated by the ongoing political developments, in particular, the consultative process and regional and

internal mediation. The dialogue pursued by the technical and financial partners to encourage governments in their efforts to restore State authority over their respective national territories is another contributory factor, as is the presence of MONUSCO in Eastern DRC.

4.5.5 Technical risk: this risk concerns the availability of distribution networks for energy or water from Lake Kivu through upstream facilities. These risks will be mitigated by the works being prepared or implemented, which are expected to be commissioned in 2017 as well as the establishment of ABAKIR which will work in concert with the Kamanyola Coordination Centre. Ruzizi I and II rehabilitation and restructuring studies are also being finalized.

4.6 Knowledge Building

4.6.1 The project provides an opportunity to disseminate new knowledge for the Bank and for the ECGLC through EGL. For the Bank, it is an illustration of support to a sub-regional organization for the preparation of a complex project. Implementation of this project will build the Bank's capacity to prepare and support PPP projects. It is also an example of cooperation among technical and financial partners.

4.6.2 New knowledge will be mainly acquired through interaction between partners and also with the beneficiaries. The documentation stemming from these meetings and supervision reports, periodic status reports as well as the reports following the different controls will provide the basis for knowledge building.

4.6.3 Ruzizi III will build EGL's capacity and is expected to facilitate the development of the Ruzizi IV project on a much larger scale than Ruzizi III.

5 LEGAL FRAMEWORK

5.1 Legal Instrument

The Bank will use the following instruments: (i) for Burundi: a grant of UA 21 million from ADF-13 resources (of which UA 7 million PBA and UA 14 million RE); (ii) for DRC: a grant of UA 45 million (of which UA 15 million TSF allocation (Pillar 1) and UA 30 million RE) and a loan of UA 15 million (of which UA 5 million TSF allocation (Pillar 1) and UA 10 million RE); and (iii) for Rwanda: a loan of UA 17.5 million from ADF-13 resources (of which UA 7 million PBA and UA 10.5 million RE) to co-finance the project.

5.2 Conditions for Bank's Intervention

A. Conditions Precedent to Grant/Loan Effectiveness:

Effectiveness of the ADF and TAF grant protocols of agreement is subject to their signature by the Donee, the ADF and the Bank. Effectiveness of the ADF and TSF loan agreements is subject to fulfilment by the Borrower of the conditions stipulated in Section 12.01 of the General Conditions Applicable to Loan Agreements and to Guarantee Agreements of the African Development Fund, to the Fund’s satisfaction.

B. Conditions Precedent to First Disbursement of the Grants/Loans:

Conditions Precedent to First Disbursement of Component 1

In addition to effectiveness of the grant protocols of agreement and the loan agreements, the first disbursement of each grant or loan for financing Component 1 shall be subject to fulfilment of the following conditions by the Donee/Borrower, to the full satisfaction of the ADF/TSF:

(i) Provide the Bank (or the Fund) with evidence of completing project financing arrangements by showing proof of approval of project financing by other donors;

(ii) For each loan/grant, present to the Bank the original or certified true copy of the attestation for an account opened by the PC through which the resources of each loan/grant shall transit, and comprising the full bank account references and indication of persons authorized to make disbursements therefrom; and

(iii) Provide the Bank to its satisfaction, with a certified true copy of: (a) the signed and registered Articles of Association of the PC; (b) the Certificate of Registration of the PC; (c) the power purchase contract between Buyers and the PC; and (d) the agreement on- lending all or part of grant and loan resources allocated to project Component 1 to the PC, stating inter alia that: (1) the PC shall forward financial and accounting information to EGL on a half-yearly basis; and (2) the PC’s annual financial statements shall be audited by its external auditors in accordance with applicable norms and taking into consideration the Bank’s terms of reference.

Conditions Precedent to First Disbursement of Components 2 and 3

Apart from effectiveness of the grant protocols of agreement and the loan agreements, the first disbursement of each grant or loan for financing Components 2 and 3 shall be subject to fulfilment of the following conditions by the Donee/Borrower, to the full satisfaction of the ADF/TSF:

(i) For each loan/grant, provide the Bank with the original or certified copy of the certificate proving the opening by EGL of a special account in the name of the project in a Bank acceptable to the Fund for payment of the ADF and TSF grants and loans (paragraph 4.1.6.1), and containing full banking details of the account and the names of persons authorized to make disbursements;

(ii) Provide the Bank with a certified true copy of the agreement on-lending to EGL the ADF/TSF grant and loan resources allocated for financing project Components 2 and 3.

C. Other Conditions:

In addition, the Donees/Borrowers shall, to the Fund’s satisfaction:

(i) Provide, as works advance and in any event prior to the start of works on a given zone, evidence of compensating project-affected persons in the said zone, in accordance with the Comprehensive Resettlement Plan (CRP) and the relevant Fund rules and procedures, especially the Fund’s Involuntary Resettlement Policy and Integrated Safeguards System; and

(ii) Provide, no later than six months after the financial closure, all the documents relating to environmental and social aspects (ESIA, FRP, PRRV, PDLC, etc.) (Paragraphs 3.2.1.1).

D. Undertakings:

To the satisfaction of the Fund/TSF, each Borrower or Donee shall undertake to:

(i) Provide the Fund/TSF with all documents reasonably required for the project's implementation;

(ii) Have prepared by EGL the project implementation and administrative and financial management procedures manuals (Paragraph 4.1.5.1) ;

(iii) Implement the Project and ESMP as revised and have them implemented by the PC and its contractors in compliance with national laws, the recommendations, requirements and procedures contained in the ESMP as well as with the related Fund/TSF rules and procedures (Paragraph 3.2.1.2); and (iv) Provide the Fund/TAF with quarterly reports on the implementation of the revised ESMP including, as required, weaknesses and remedial action taken or to be taken.

5.3 Compliance with Bank Policies

The Ruzizi III Regional Hydropower Plant Project complies with all applicable Bank rules and regulations.

6 RECOMMENDATION

Management recommends that the Boards of Directors: (i) waive, on an exceptional basis, the application of the Bank's rules and procedures in favour of those of the World Bank for the procurement of goods, works and services for the EPC contracts; and (ii) approve: (a) for Burundi: a grant of UA 21 million from ADF-13 resources; (b) for DRC: a grant and loan from TSF resources (Pillar I), of UA 45 million and UA 15 million; and (c) for Rwanda: a loan of UA 17.50 million from ADF-13 resources to finance the Ruzizi III Regional Hydropower Plant.

Annex 1(a) Comparative Socio-Economic Indicators for Burundi Burundi COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Burundi Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2014 28 30 067 80 386 53 939 Total Population (millions) 2014 10,5 1 136,9 6,0 1,3 2500 Urban Population (% of Total) 2014 11,8 39,9 47,6 78,7 2000

Population Density (per Km²) 2014 376,7 37,8 73,3 24,3 1500 GNI per Capita (US $) 2013 260 2 310 4 168 39 812 1000 Labor Force Participation - Total (%) 2014 82,7 66,1 67,7 72,3 Labor Force Participation - Female (%) 2014 51,4 42,8 52,9 65,1 500

Gender -Related Dev elopment Index Value 0

2008 2011 2012 2005 2007 2009 2010 2013 2007-2013 0,904 0,801 0,506 0,792 2000 Human Dev elop. Index (Rank among 187 countries) 2013 180 ...... Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 81,3 39,6 17,0 ... Burun di Africa Demographic Indicators Population Grow th Rate - Total (%) 2014 3,1 2,5 1,3 0,4 Population Grow th Rate - Urban (%) 2014 5,6 3,4 2,5 0,7 Population < 15 y ears (%) 2014 44,8 40,8 28,2 17,0 Population Growth Rate (%) Population >= 65 y ears (%) 2014 2,4 3,5 6,3 16,3 4,0 Dependency Ratio (%) 2014 66,8 62,4 54,3 50,4 3,5 Sex Ratio (per 100 female) 2014 97,6 100,4 107,7 105,4 3,0 Female Population 15-49 y ears (% of total population) 2014 23,7 24,0 26,0 23,0 2,5 Life Ex pectancy at Birth - Total (y ears) 2014 54,5 59,6 69,2 79,3 2,0 Life Ex pectancy at Birth - Female (y ears) 2014 56,6 60,7 71,2 82,3 1,5 Crude Birth Rate (per 1,000) 2014 44,3 34,4 20,9 11,4 1,0 0,5 Crude Death Rate (per 1,000)

2014 12,5 10,2 7,7 9,2 0,0

2000 2009 2012 2008 2010 2011 2013 2014 Infant Mortality Rate (per 1,000) 2013 54,8 56,7 36,8 5,1 2005 Child Mortality Rate (per 1,000) 2013 82,9 84,0 50,2 6,1 Total Fertility Rate (per w oman) 2014 5,9 4,6 2,6 1,7 Burundi Africa Maternal Mortality Rate (per 100,000) 2013 740,0 411,5 230,0 17,0 Women Using Contraception (%) 2014 26,5 34,9 62,0 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2012 2,8 46,9 118,1 308,0 Life Expectancy at Birth Nurses (per 100,000 people)* 2004-2012 19,1 133,4 202,9 857,4 (years) Births attended by Trained Health Personnel (%) 2009-2012 60,3 50,6 67,7 ... 80 Access to Safe Water (% of Population) 2012 75,3 67,2 87,2 99,2 70 60 Healthy life ex pectancy at birth (y ears) 2012 48,0 51,3 57 69 50 Access to Sanitation (% of Population) 40 2012 47,5 38,8 56,9 96,2 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 1,0 3,7 1,2 ... 20 Incidence of Tuberculosis (per 100,000) 10

2013 128,0 246,0 149,0 22,0 0

2000 2009 2010 2014 2008 2011 2012 2013 Child Immunization Against Tuberculosis (%) 2013 95,0 84,3 90,0 ... 2005 Child Immunization Against Measles (%) 2013 98,0 76,0 82,7 93,9

Underw eight Children (% of children under 5 y ears) 2005-2013 29,1 20,9 17,0 0,9 Burun di Africa Daily Calorie Supply per Capita 2011 1 604 2 618 2 335 3 503 Public Ex penditure on Health (as % of GDP) 2013 4,4 2,7 3,1 7,3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2011-2014 134,1 106,3 109,4 101,3 Primary School - Female 2011-2014 134,5 102,6 107,6 101,1 Infant Mortality Rate Secondary School - Total 2011-2014 33,1 54,3 69,0 100,2 ( Per 1000 ) Secondary School - Female 2011-2014 29,2 51,4 67,7 99,9 100 90 Primary School Female Teaching Staff (% of Total) 2012-2014 52,8 45,1 58,1 81,6 80 Adult literacy Rate - Total (%) 2006-2012 86,9 61,9 80,4 99,2 70 60 Adult literacy Rate - Male (%) 2006-2012 88,8 70,2 85,9 99,3 50 Adult literacy Rate - Female (%) 2006-2012 84,6 53,5 75,2 99,0 40 30 Percentage of GDP Spent on Education 2009-2012 5,8 5,3 4,3 5,5 20 10

2000 2010 2013 2008 2009 2011 2012 Environmental Indicators 2005 Land Use (Arable Land as % of Total Land Area) 2012 42,8 8,8 11,8 9,2 Agricultural Land (as % of land area) 2012 0,8 43,4 43,4 28,9 Forest (As % of Land Area) 2012 6,6 22,1 28,3 34,9 Burun di Africa Per Capita CO2 Emissions (metric tons) 2012 0,0 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : novembre 2015 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available.

Annex 1(b) Comparative Socio-Economic Indicators for DRC Congo, Dem. Republic COMPARATIVE SOCIO-ECONOMIC INDICATORS

Congo, Develo- Develo- Year Dem. Africa ping ped Republic Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2014 2 345 30 067 80 386 53 939 Total Population (millions) 2014 69,4 1 136,9 6,0 1,3 2500 Urban Population (% of Total) 2014 35,9 39,9 47,6 78,7 2000

Population Density (per Km²) 2014 29,6 37,8 73,3 24,3 1500 GNI per Capita (US $) 2013 430 2 310 4 168 39 812 1000 Labor Force Participation - Total (%) 2014 72,0 66,1 67,7 72,3 Labor Force Participation - Female (%) 2014 49,8 42,8 52,9 65,1 500

Gender -Related Dev elopment Index Value 0

2008 2011 2012 2005 2007 2009 2010 2013 2007-2013 0,822 0,801 0,506 0,792 2000 Human Dev elop. Index (Rank among 187 countries) 2013 186 ...... Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 87,7 39,6 17,0 ... Cong o, Dem. R epublic Demographic Indicators Population Grow th Rate - Total (%) 2014 2,7 2,5 1,3 0,4 Population Grow th Rate - Urban (%) 2014 4,3 3,4 2,5 0,7 Population < 15 y ears (%) 2014 44,8 40,8 28,2 17,0 Population Growth Rate (%) Population >= 65 y ears (%) 2014 2,9 3,5 6,3 16,3 3,5 Dependency Ratio (%) 2014 91,6 62,4 54,3 50,4 3,0 Sex Ratio (per 100 female) 2014 98,7 100,4 107,7 105,4 2,5 Female Population 15-49 y ears (% of total population) 2014 23,0 24,0 26,0 23,0 2,0 Life Ex pectancy at Birth - Total (y ears) 2014 50,3 59,6 69,2 79,3 1,5 Life Ex pectancy at Birth - Female (y ears) 2014 52,0 60,7 71,2 82,3 1,0 Crude Birth Rate (per 1,000) 2014 42,3 34,4 20,9 11,4 0,5

Crude Death Rate (per 1,000) 2014 15,2 10,2 7,7 9,2 0,0

2000 2009 2012 2005 2008 2010 2011 2013 2014 Infant Mortality Rate (per 1,000) 2013 86,1 56,7 36,8 5,1 Child Mortality Rate (per 1,000) 2013 118,5 84,0 50,2 6,1 Congo, Dem. Republic Total Fertility Rate (per w oman) 2014 5,8 4,6 2,6 1,7 Africa Maternal Mortality Rate (per 100,000) 2013 730,0 411,5 230,0 17,0 Women Using Contraception (%) 2014 23,0 34,9 62,0 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2012 10,7 46,9 118,1 308,0 Life Expectancy at Birth Nurses (per 100,000 people)* 2004-2012 52,9 133,4 202,9 857,4 (years) Births attended by Trained Health Personnel (%) 2009-2012 80,4 50,6 67,7 ... 80 Access to Safe Water (% of Population) 2012 46,5 67,2 87,2 99,2 70 60 Healthy life ex pectancy at birth (y ears) 2012 44,0 51,3 57 69 50 Access to Sanitation (% of Population) 40 2012 31,4 38,8 56,9 96,2 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 1,1 3,7 1,2 ... 20 Incidence of Tuberculosis (per 100,000) 10

2013 326,0 246,0 149,0 22,0 0

2000 2009 2010 2014 2008 2011 2012 2013 Child Immunization Against Tuberculosis (%) 2013 78,0 84,3 90,0 ... 2005 Child Immunization Against Measles (%) 2013 73,0 76,0 82,7 93,9 Underw eight Children (% of children under 5 y ears) 2005-2013 24,2 20,9 17,0 0,9 Cong o, Dem. Republic Daily Calorie Supply per Capita 2011 ... 2 618 2 335 3 503 Africa Public Ex penditure on Health (as % of GDP) 2013 1,9 2,7 3,1 7,3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2011-2014 110,9 106,3 109,4 101,3 Primary School - Female 2011-2014 103,6 102,6 107,6 101,1 Infant Mortality Rate Secondary School - Total 2011-2014 43,3 54,3 69,0 100,2 ( Per 1000 ) Secondary School - Female 2011-2014 32,2 51,4 67,7 99,9 140 Primary School Female Teaching Staff (% of Total) 2012-2014 25,5 45,1 58,1 81,6 120 Adult literacy Rate - Total (%) 2006-2012 61,2 61,9 80,4 99,2 100 Adult literacy Rate - Male (%) 2006-2012 76,9 70,2 85,9 99,3 80 Adult literacy Rate - Female (%) 2006-2012 46,1 53,5 75,2 99,0 60 Percentage of GDP Spent on Education 2009-2012 1,6 5,3 4,3 5,5 40 20

2000 2010 2013 2008 2009 2011 2012 Environmental Indicators 2005 Land Use (Arable Land as % of Total Land Area) 2012 3,1 8,8 11,8 9,2 Agricultural Land (as % of land area) 2012 0,1 43,4 43,4 28,9 Forest (As % of Land Area) 2012 67,7 22,1 28,3 34,9 Cong o, Dem. Republic Africa Per Capita CO2 Emissions (metric tons) 2012 0,0 1,1 3,0 11,6

Annex 1(c) Comparative Socio-Economic Indicators for Rwanda

Rwanda COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Rwanda Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2014 26 30 067 80 386 53 939 Total Population (millions) 2014 12,1 1 136,9 6,0 1,3 2500 Urban Population (% of Total) 2014 20,0 39,9 47,6 78,7 2000

Population Density (per Km²) 2014 459,4 37,8 73,3 24,3 1500 GNI per Capita (US $) 2013 630 2 310 4 168 39 812 1000 Labor Force Participation - Total (%) 2014 85,7 66,1 67,7 72,3 Labor Force Participation - Female (%) 2014 52,3 42,8 52,9 65,1 500

Gender -Related Dev elopment Index Value 0

2008 2011 2012 2005 2007 2009 2010 2013 2007-2013 0,950 0,801 0,506 0,792 2000 Human Dev elop. Index (Rank among 187 countries) 2013 151 ...... Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 63,0 39,6 17,0 ... Rw anda Africa Demographic Indicators Population Grow th Rate - Total (%) 2014 2,7 2,5 1,3 0,4 Population Grow th Rate - Urban (%) 2014 4,3 3,4 2,5 0,7 Population < 15 y ears (%) 2014 42,1 40,8 28,2 17,0 Population Growth Rate (%) Population >= 65 y ears (%) 2014 2,4 3,5 6,3 16,3 8,0 Dependency Ratio (%) 2014 84,7 62,4 54,3 50,4 7,0 Sex Ratio (per 100 female) 2014 95,5 100,4 107,7 105,4 6,0 Female Population 15-49 y ears (% of total population) 2014 25,2 24,0 26,0 23,0 5,0 Life Ex pectancy at Birth - Total (y ears) 2014 64,5 59,6 69,2 79,3 4,0 Life Ex pectancy at Birth - Female (y ears) 2014 66,2 60,7 71,2 82,3 3,0 Crude Birth Rate (per 1,000) 2014 34,5 34,4 20,9 11,4 2,0 Crude Death Rate (per 1,000) 2014 6,9 10,2 7,7 9,2 1,0

0,0

2000 2009 2012 2008 2010 2011 2013 2014 Infant Mortality Rate (per 1,000) 2013 37,1 56,7 36,8 5,1 2005 Child Mortality Rate (per 1,000) 2013 52,0 84,0 50,2 6,1 Total Fertility Rate (per w oman) 2014 4,4 4,6 2,6 1,7 Rwanda Africa Maternal Mortality Rate (per 100,000) 2013 320,0 411,5 230,0 17,0 Women Using Contraception (%) 2014 52,5 34,9 62,0 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2012 5,6 46,9 118,1 308,0 Life Expectancy at Birth Nurses (per 100,000 people)* 2004-2012 68,9 133,4 202,9 857,4 (years) Births attended by Trained Health Personnel (%) 2009-2012 69,0 50,6 67,7 ... 80 Access to Safe Water (% of Population) 2012 70,7 67,2 87,2 99,2 70 60 Healthy life ex pectancy at birth (y ears) 2012 55,0 51,3 57 69 50 Access to Sanitation (% of Population) 40 2012 63,8 38,8 56,9 96,2 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 2,9 3,7 1,2 ... 20 Incidence of Tuberculosis (per 100,000) 10

2013 69,0 246,0 149,0 22,0 0

2000 2009 2010 2014 2008 2011 2012 2013 Child Immunization Against Tuberculosis (%) 2013 99,0 84,3 90,0 ... 2005 Child Immunization Against Measles (%) 2013 97,0 76,0 82,7 93,9

Underw eight Children (% of children under 5 y ears) 2005-2013 11,7 20,9 17,0 0,9 Rw anda Africa Daily Calorie Supply per Capita 2011 2 148 2 618 2 335 3 503 Public Ex penditure on Health (as % of GDP) 2013 6,5 2,7 3,1 7,3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2011-2014 133,8 106,3 109,4 101,3 Primary School - Female 2011-2014 135,3 102,6 107,6 101,1 Infant Mortality Rate Secondary School - Total 2011-2014 32,6 54,3 69,0 100,2 ( Per 1000 ) Secondary School - Female 2011-2014 33,7 51,4 67,7 99,9 120 Primary School Female Teaching Staff (% of Total) 2012-2014 53,1 45,1 58,1 81,6 100 Adult literacy Rate - Total (%) 2006-2012 65,9 61,9 80,4 99,2 80 Adult literacy Rate - Male (%) 2006-2012 71,1 70,2 85,9 99,3 60 Adult literacy Rate - Female (%) 2006-2012 61,5 53,5 75,2 99,0 40 Percentage of GDP Spent on Education 2009-2012 4,8 5,3 4,3 5,5 20

2000 2010 2013 2008 2009 2011 2012 Environmental Indicators 2005 Land Use (Arable Land as % of Total Land Area) 2012 47,9 8,8 11,8 9,2 Agricultural Land (as % of land area) 2012 0,8 43,4 43,4 28,9 Forest (As % of Land Area) 2012 18,4 22,1 28,3 34,9 Rw anda Africa Per Capita CO2 Emissions (metric tons) 2012 0,1 1,1 3,0 11,6

III

 Annex 2a: Status of Bank Group's Active Portfolio in Burundi as at 26 October 2015  National Project Division Full Name Sector Name Window Approval Signature Net Loan Amount Disb. Ratio Age Date Date Disbursed OITC2 THE NYAKARARO -MWARO-GITEGA ROAD (RN18) Transport [ ADF ] 24Sep14 19Nov14 19,420,000 1,640,990 8.5% 1.1

IMPROVEMENT AND ASPHALTING PROJECT OITC2 THE GITEGA-NYANG ROAD IMPROVEMENT AND Transport [ ADF ] 29Jun11 16Mar12 10,000,000 2,172,000 21.7% 4.3

ASPHALTING PROJECT OITC2 THE GITEGA-NYANG ROAD IMPROVEMENT AND Transport [ ADF ] 29Jun11 16Mar12 32,000,000 26,832,000 83.9% 4.3

ASPHALTING PROJECT OITC2 MAKEBUKO RUYIGI ROAD PROJECT Transport [ ADF ] 18Dec13 18Feb14 8,940,000 787,614 8.8% 1.9 ONEC2 JIJI AND MULEMBWE HYDROPOWER PLANTS Power [ ADF ] 23Jun14 31Jul14 14,340,000 - 0.0% 1.4

DEVELOPMENT PROJECT ONEC2 MASTER PLAN STUDY OF ELECTRICITY Power [ ADF ] 30Apr14 14Aug14 414,000 - 0.0% 1.5 GENERATION, TRANSMISSION AND DISTRIBUTION IN BURUNDI WATERSHED MANAGEMENT AND CLIMATE Environment [OTHERS] 22Apr13 28May13 2,191,126 929,257 42.4% 2.5 OSAN3 RESILIENCE IMPROVEMENT PROJECT Environment [ ADF ] 22Apr13 28May13 6,230,000 3,939,229 63.2% 2.5 OSGE2 PRIVATE SECTOR DEVELOPMENT SUPPORT Multi-Sector [ ADF ] 09Nov12 01Mar13 884,730 393,801 44.5% 3.0

PROJECT (PADSP) OSGE2 PUBLIC FINANCE MANAGEMENT CAPACITY Multi-Sector [ ADF ] 09Nov12 01Mar13 1,244,681 472,841 38.0% 3.0

BUILDING PROJECT OSHD1 CAPACITY BUILDING FOR COLLECTION OF DATA Multi-Sector [ ADF ] 09Nov12 01Mar13 400,920 399,995 99.8% 3.0

ON LABOUR AND SOCIAL PROTECTION OSHD1 INSTITUTION CAPACITY BUILIDING -EMPLOYMENT Multi-Sector [ ADF ] 12Nov12 01Mar13 1,347,796 1,162,045 86.2% 3.0

AND ENTREPRENEURSHIP 97,413,253 38,729,771 40% 2.6  Regional Projects

Division Full Name Sector Name Window Approval Signature Net loan Amount Disb. Ratio Age

Date Date Disbursed OITC2 NYAMITANGA-RUHWA-NTENDEZI-MWITYAZO Transport [ ADF ] 16Dec08 16Mar09 49,380,000 45,878,958 93% 6.9

ROAD PROJECT OITC2 ISAKA-KIGA/KEZA-MUSONGATI RAILWAY Transport [ ADF ] 17Nov09 12Feb10 1,670,000 1,240,977 74% 6.0

PROJECT-PHASE 2 OITC2 BURUNDI- MUGI ROADS IMPROVEMENT AND Transport [ ADF ] 27Jun12 23Jul12 27,500,000 5,731,000 21% 3.3

ASPHALTING PROJECT OITC2 PROJECT PREPARATORY STUDY FOR Transport [OTHERS] 14Oct13 13Dec13 826,652 233,860 28% 2.0

DEVELOPMENT OF BUJUMBURA PORT ONEC2 NELSAP INTERCONNECTION PROJECT - BURUNDI Power [ ADF ] 27Nov08 16Mar09 15,150,000 1,818,000 12% 6.9 [ ADF ] 27Nov13 18Feb14 16,700,000 93,520 1% 1.9 ONEC2 REGIONAL RUSUMO HYDROPOWER - BURUNDI Power [OTHERS] 21Nov13 23Sep14 10,196,085 - 0% 1.9 OSAN1 BUGESERA INTEGRATED REGIONAL Agriculture [ ADF ] 25Sep09 04Nov09 15,020,000 8,062,736 54% 6.1 DEVELOPMENT PROJECT OWAS2 LAKE VICTORIA WATER AND SANITATION Water [ ADF ] 17Dec10 04Apr11 14,000,000 700,000 5% 4.9 PROGRAM Supply/Sanitation OSHD1 TECHNICAL ASSISTANCE AND CAPACITY Multisector [ TSF] 15Jul13 08Nov13 1,485,048 579,428 39% 2.3 BUILDING TO ICGLR (REGIONAL) 151,927,785 64,338,479 42% 4.2

Annex 2b Status of Bank Group's Active Portfolio in DRC as at 30 September 2015 Approved Total % Source of Approval Signature Effectivenes Closing Project Name SAP Code Amount in Disbursed Disburse % sect. Status Financing. Date Date s Date Date MUA in MUA d. AGRICULTURE SECTOR 49.46 10.39 21.00% 7.06% NPP/NPP 1 P-CD-AB0-001 ADF grant 10/11/2011 20.01.2012 20.01.2012 31.12.2017 49.46 10.39 21.00% RURAL INFRASTRUCTURE DEVELOPMENT SUPPORT P 40.75 TRANSPORT AND ICT SECTOR 285.63 75.96 26.59% % NPP/NPP 2 P-CD-DA0-001 ADF grant 29/09/2010 02.11.2010 02.11.2010 31.12.2015 88.60 60.77 68.59% PRIORITY AIR SAFETY PROJECT P NPP/NPP 3 P-CD-DB0-002 ADF grant 13/06/2012 07.08.2012 07.08.2012 31.12.2017 53.55 15.19 28.36% BATSHAMBA-TSHIKAPA ROAD REHABILITATION PROJECT P NPP/NPP 4 P-CD-DB0-008 ADF grant 10/12/2013 07.01.2014 07.01.2014 31.12.2019 13.26 0.00 0.00% BATSHAMBA ROAD- LOVUA SECTION- IMPROVEMENT PROJECT P ADF loan 10/12/2013 07.01.2014 31.12.2019 0.66 0.00 0.00%

ADF grant 22/10/2014 26.03.2015 26.03.2015 31.12.2019 55.56 0.00 0.00%

PROJECT TO IMPROVE THE TSHIKAPA-MBUJI MAYI ROAD 5 (TSHIKAPA-KAMUESHA SECTION) AND REHABILITATE RELATED P-CD-DB0-009 ADF grant 17/12/2014 26.03.2015 26.03.2015 31/12/2019 74.00 0.00 0.00% NPP/NPP RURAL AND AGRICULTURAL INFRASTRUCTURE. P 15.16 WATER AND SANITATION SECTOR 106.26 1.26 1.19% % REINFORCEMENT OF SOCIO-ECONOMIC INFRASTRUCTURE IN THE 6 CENTRAL P-CD-E00-002 ADF grant 27/11/2013 26.03.2015 26.03.2015 31.12.2019 43.53 0.98 2.26% REGION ADF loan 27/11/2013 26.03.2015 31.12.2019 1.47 0.00 0.00%

TSF Grant 27/11/2013 26.03.2015 26.03.2015 31.12.2019 55.00 0.21 0.39%

RWSSI 27/11/2013 26.03.2015 26.03.2015 31.12.2019 4.76 0.06 1.32%

FEASIBILITY STUDY ON THE EXPANSION OF DRINKING WATER SUPPLY SERVICES 7 AWF 25/06/2015 31.12.2017 1,50 0.00 0.00% TO WEST KINSHASA PRIVATE SECTOR 42.72 17.72 41.48% 6.10% NPP/NPP 8 P-CD-B00-001 ADB loan 12/02/2014 27.11.2014 42.72 17.72 41.48% NYUMBA CEMENT PLANT PROJECT P 15.04 ENERGY SECTOR 105.39 36.09 34.2% % 9 INGA HYDROPOWER REHAB. PROJECT-PMEDE P-CD-FA0-001 ADF grant 18/12/2007 10.04.2008 10.04.2008 30.06.2016 35.70 16.42 46.00% PPP NPP/NPP 10 P-CD-FA0-003 TSF Grant 15/12/2010 10.03.2011 10.03.2011 31.12.2017 60.00 15.78 26.30% RURAL & PERIURBAN ELECTRIFICATION PROJECT P RURAL & PERIURBAN ELECTRIFICATION PROJECT P-CD-FA0-003 ADF grant 15/12/2010 10.03.2011 10.03.2011 31.05.2017 9.69 3.89 40.14% ESTABLISHMENT OF INGA SITE DEVELOPMENT AND PROMOTION NPP/NPP 11 P-CD-FA0-005 TAS 17/04/2013 31.05.2013 31.05.2013 30.11.2016 1.99 0.00 0.00% AUTHORITY P

NPP/NPP 12 P-CD-FA0-009 TAS 13/05/2013 31.05.2013 31.05.2013 30.11.2016 1.5 1.39 92.46% INGA3 DEVELOPMENT PROJECT -INGA/PATCD P 11.49 MULTISECTOR (GOVERNANCE) 80.50 21.13 26.2% % NPP/NPP 13 P-CD-KF0-002 ADF grant 25/04/2010 29.05.2012 29.05.2012 31.12.2015 10.00 5.80 58.03% PUBLIC FINANCE MODERNIZATION SUPPORT PROJECT P NPP/NPP 14 P-CD-KZ0-004 ADF grant 21/01/2011 04.05.2011 05.05.2011 31.12.2015 20.00 13.83 69.14% MOBILIZATION OF PUBLIC ADMINISTRATION HUMAN RESOURCES P NPP/NPP 15 P-CD-K00-009 ADF grant 23/10/2013 26.03.2015 26.03.2015 31.12.2016 10.96 1.23 11.26% STATISTICS AND PUBLIC FINANCE INSTITUTIONAL SUPPORT P NPP/NPP 16 P-CD-KF0-008 TAS grant 18/07/2013 06.11.2013 06.11.2013 30.06.2016 1.54 0.26 16.95% BUILDING CAPACITY TO STEER REFORMS P PRIVATE SECTOR DEVELOPMENT AND JOB CREATION SUPPORT 17 P-CD-KB0-001 ADF grant 03/06/2015 05/08/2015 05/08/2015 30.06.2019 38.00 0.00 0.00% PROJECT SOCIAL 16.25 0.00 0.0% 2.32%

18 GENERAL POPULATION CENSUS AND SOCIAL DATABASES P-CD-KF0-007 ADF grant 26/11/2014 28/05/2015 28/05/2015 31/12/2017 15.00 0.00 0.00% CONSOLIDATION SUPPORT PROJECT 19 P-CD-IZ0-005 TAS grant 22/06/2015 09/09/2015 09/09/2015 31/12/2015 1.25 0.00 0.00% SUPPORT FOR PREPARATION OF CWIQ SURVEY ENVIRONMENT 14.67 0.36 2.5% NPP/NPP 20 P-CD-AAD-003 FIP 11/09/2013 15.08.2014 15.08.2014 31.07.2018 14.67 0.36 2.46% REDD- KIS INTEGRATED PROJECT P National Operations 700.87 162.90 23.24% EMERGENCY ASSISTANCE 1.34 1.34 100.0% 0.19% EMERGENCY ASSISTANCE TO DISPLACED PEOPLE IN KATANGA 1 P-CD-AA0-005 SRF 20/02/2014 20/08/2014 20/08/2014 30.06.2015 0.67 0.67 100.0% PROVINCE 2 P-CD-IBE-001 SRF 22/09/2014 30/09/2015 0.67 0.67 100.0% EMERGENCY ASSISTANCE FOR THE FIGHT AGAINST EBOLA CONGO BASIN FOREST FUND (CBFF) 23.31 13.92 59.7% 1 SANKURU FAIR TRADE CARBON INITIATIVE P-Z1-C00-021 CBFF 07/04/2010 14.02.2011 10.03.2011 31.12.2015 1.05 0.95 90.14% PPP 2 CONSERVATION INTERNATIONALE FOUNDATION P-Z1-C00-025 CBFF 09/06/2010 26.07.2001 10.11.2011 30.09.2015 1.07 0.45 42.36% PPP NPP/NPP 3 P-Z1-C00-026 CBFF 12/07/2011 31.08.2011 31.08.2011 30.06.2016 1.98 1.05 53.01% ECOMAKALA P NPP/NPP 4 P-Z1-C00-027 CBFF 12/07/2011 31.08.2011 31.08.2011 30.09.2016 1.98 1.77 89.40% SOUTH KWAMOUTH REDD AGROFORESTRY PILOT PROJECT P NPP/NPP 5 P-Z1-C00-028 CBFF 19/05/2011 08.06.2011 17.08.2011 30.06.2016 1.83 1.57 85.91% ISANGI REDD PILOT PROJECT P NPP/NPP 6 P-Z1-C00-029 CBFF 13/07/2011 31.08.2011 15.10.2011 30.09.2016 2.54 0.94 37.04% CIVIL SOCIETY AND GOVERNANCE CAPACITY BUILDING P NPP/NPP 7 P-Z1-C00-031 CBFF 22/07/2011 31.08.2011 31.08.2011 31.12.2016 1.86 1.05 56.70% LUKI REDD PROJECT P

NPP/NPP 8 P-Z1-C00-032 CBFF 27/04/2011 08.06.2011 17.08.2011 30.06.2016 2.35 1.89 80.60% MAMBASA REDD PROJECT P NPP/NPP 9 P-Z1-C00-043 CBFF 16/11/2011 09.12.2011 30.12.2011 30.06.2016 1.25 0.99 78.50% VAMPEEN VALORIZATION OF AFRICAN MEDICINE P 10 AGROFORESTRY DEVELOPMENT SUPPORT P-CD-C00-035 CBFF 02/04/2012 12.06.2012 30.08.2012 31.12.2015 5.30 3.25 61.29% PPP PROJECT TO REDUCE DEFORESTATION AND ALLEVIATE POVERTY NPP/NPP 11 P-CD-C00-037 CBFF 28/11/2014 17.04.2015 31.12.2017 2.10 0.00 0.00% IN THE VIRUNGA-HOYO REGION P MULTINATIONAL 89.56 8.70 9.7% STUDY ON THE ROAD-RAIL BRIDGE BETWEEN KINSHASA (DRC) NPP/NPP P-Z1-D00-016 1 AND BRAZZAVILLE (CONGO) ADF grant 03/12/2008 13.05.2009 13.05.2009 31.12.2015 3.59 1.86 51.77% P 2 STUDY ON THE EXTENSION OF THE KINSHASA-ILEBO RAILWAY P-Z1-DC0-014 IPPF grant 15/07/2012 13.08.2012 13.08.2012 30.06.2015 0.71 0.30 42.61% STUDY ON THE OUSSO-BANGUI-NDJAMENA ROAD AND RIVER NPP/NPP P-Z1-D00-066 3 NAVIGATION ADF grant 01/12/2010 29.04.2011 29.04.2011 30.11.2016 0.44 0.06 12.79% P 4 NELSAP INTERCONNECTION PROJECT - DRC P-Z1-FA0-035 ADF grant 27/11/2008 28.05.2010 28.05.2010 31.12.2016 27.62 2.16 7.81% PPP 5 INTERCONNECTION OF BOALI ELECTRIC POWER GRIDS P-Z1-FA0-047 ADF grant 19/09/2012 20.02.2013 20.02.2013 31.12.2017 5.55 0.08 1.39% INGA SITE DEVELOPMENT AND ELECTRICITY ACCESS SUPPORT ADF grant 20/11/2013 07.01.2014 07.01.2014 31.12.2019 39.40 2.14 5.44% P-Z1-FA0-045 6 PROJECT TAS grant 5.00 2.11 42.17% STUDY ON EXTENSION OF NORTH KIVU 220KV TRANSMISSION P-Z1-FAD-005 7 LINES IPPF grant 07/06/2013 20.10.2014 20.10.2014 30.06.2015 1.25 0.00 0.00% LAKE EDWARD AND ALBERT INTEGRATED FISHERIES AND P-Z1-AF0-006 8 WATER RESOURCES MANAGEMENT (LEAF II)* ADF grant 20/06/2015 31.12.2019 6.00 0.00 0.00% GRAND TOTAL 815.08 186.87 22.93%

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Annex 2c Status of Bank Group's Active Portfolio in Rwanda as at 03 September 2013

Disb. Undisbursed PROJECT Window Total approved Date Approved Closing Date Amt. disb. rate amount

AGRICULTURE 1 Livestock Infrastructure Support Programme-LISP (SBS) ADF loan 21,810,000 29-Jun-11 31-Dec-15 21,810,000 100.0% 0 WATER 2 Rural Water and Sanitation-Phase II (AEPA) ADF Grant (UA10 M) 10,000,000 1-Jul-09 31-Aug-15 9,955,960 99.6% 44,040 Rural Water and Sanitation-Phase II (AEPA) RWSSI ( EURO 6.960 M ) 6,127,084 1-Jul-09 31-Aug-15 6,127,080 100.0% 4 Sub-total Water 16,127,084 16,083,040 99.7% 44,044 TRANSPORT 3 Base Nyagatare 49,000,000 Sub Total Transport ENERGY 3 Scaling Up Energy Access Project ADF Grant 11,871,000 596,293 5.0% Scaling Up Energy Access Project ADF Loan 15,494,000 0 0.0% SUB-TOTAL INFRASTRUCTURE 92,492,084 16,083,040 17.4% 76,409,044 HUMAN DEVELOPMENT 4 Support to Skills Dev in Science & Tech ADF loan 6,000,000 11-Nov-08 31-Dec-13 2,596,832 43.3% 3,403,168 5 Regional ICT Centre of Excellence 8,600,000 14-Dec-10 30-Jun-16 589,874 6.9% 8,010,126 SUB-TOTAL HUMAN DEV 14,600,000 3,186,706 21.8% 11,413,294 6 Support to EICV-4 ADF Grant 820,000 18-Sep-09 30-Sep-13 590,194 72.0% 229,806 EAC-CoE 12,000,000 7 SEEP II ADF Loan 34,000,000 34,000,000 100.0% 0 8 Support to the Energy Sector (FAPA) FAPA Grant 800,000 30-Nov-13 16-Dec-15 168,571 21.1% 631,429 SUB-TOTAL MULTI-SECTOR 47,620,000 34,758,765 73.0% 12,861,235 Total National Operations - Public 176,522,084 75,838,511 43.0% 100,683,573 PRIVATE SECTOR 9 KivuWatt ADB loan (UA5.3M& FAPA Grant UA 491,834) 15,892,693 3-Feb-11 NA 15,892,693 100.0% 0 10 BRD (LOC & FAPA) ADB loan (UA7.6& FAPA Grant UA 246,799) 7,600,000 19-Nov-10 NA 7,600,000 100.0% 0 11 BRD FAPA) FAPA Grant 480,789 1-Nov-11 31-03-2016 82,237 17.1% 398,553 12 BK (ADF) ADF Loan 12,000,000 19-Nov-10 NA 12,000,000 100.0% 0 BK (FAPA) FAPA Grant 547,200 1-Nov-11 NA 220,296 40.3% 326,904 Sub-TOTAL PRIVATE SECTOR 36,520,682 35,574,930 97.4% 725,457 Total National Operations - Public + Private 213,042,766 111,413,440 52.3% 101,629,326 MULTINATIONAL 13 Isaka-Kigali Railway Study (Phase 2) ADF grant 1,670,000 17-Nov-09 31-Dec-15 1,250,927 74.9% 419,073 14 Rwanda-(Nyamitanga-Ruhwa-Ntendezi-Mwityazo Rd) ADF grant 50,620,000 16-Dec-08 30-Jun-16 34,521,036 68.2% 16,098,964 15 Regional Rusumo Falls 25,384,000 0.0% NELSAP NBI ADF grant 1,210,000 27-Nov-08 31-Dec-16 1,191,536 98.5% 16 NELSAP Interconnection ADF grant 30,470,000 27-Nov-08 31-Dec-16 21,264,666 69.8% 9,205,334 17 Bugesera Multinational Project ADF loan 14,980,000 25-Sep-09 31-Dec-17 9,010,492 60.2% 5,969,508 18 Rubavu-Gisiza Road Project ADF loan (UA40.525) & ADF grant (UA4.525) 40,050,000 25-Jul-12 31-Dec-17 5,932,906 14.8% 34,117,094 Rubavu-Gisiza Road Project 4,525,000 25-Jul-12 31-Dec-17 312,320 6.9% 4,212,680 Sustainable management of woodlands and restoration of natural forests 19 of Rwanda ADF grant 4,015,424 29-Nov-11 31-May-14 1,590,083 39.6% 2,425,341 20 Lake Victoria Water and Sanitation Programme ADF grant 15,110,000 17-Feb-10 31-Dec-15 8,316,224 55.0% 6,793,776 21 Payment and Settlement Systems Integration Project ADF grant 3,690,000 5-Dec-12 1-Jun-17 - 0.0% 3,690,000 SUB-TOTAL MULTINATIONAL 191,724,424 92,400,682 48.2% 82,931,770 GRAND TOTAL 404,767,190 203,814,123 50.4% 184,561,096

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Annex 3 - Development Partners' Operations in the Electricity Sub-Sector in the Great Lakes Countries

DONORS PROGRAMME OR PROJECT AMOUNT

ADB Kamanyola (RDC) – Bujumbura 220KV UA 15.15 million Interconnection Line ADB/WB/EU Master Plan for the Transmission and Distribution of Affordable Electrical Energy in UA 2 million Burundi (Burundi) EU/WB/ADB/EIB Jiji Mulembwe Hydropower Plant (Burundi) UA 172.22 million CHINA Ruzibazi Hydropower Plant in Burundi (17MW) USD 60 million EXIM INDIA Kabu 16 Hydropower Plant in Burundi (20 MW) USD 80 million EU/KFW Ruzizi II Rehabilitation- Regional Project EUR 76 million EU/WB/ADB Rusumo Falls Hydropower Plant UA 305.5 million EU/KFW Rwanda, DRC, Burundi Interconnection – EUR 15.8 million Regional Project ADB, KFW, EU, NELSAP Interconnection Project connecting JICA Burundi, DRC, Kenya, Rwanda and Uganda EUR 317.6 million (Bank contribution is 30.47MUA ADB Scaling-up Energy Access Project UA 30 million ADB KIVUWATT (Bank contribution is 25MUSD) UA 184 million WB Regional and Domestic Power Markets Development Project (PMEDE) USD 937,000,000 Southern African Power Market Project (SAPMP) KfW - Project for the Rehabilitation and Strengthening of the Inga Hydropower Stations and Kinshasa Distribution Grid (Inga II Financing being generator 27) prepared - Kamanyola Substation Project under the Ruzizi III Project EIB - Southern African Power Market Project (SAPMP) - Project for the Rehabilitation of the Inga EUR 110,000,000 Hydropower Plants and Kinshasa Distribution Grid (PMEDE) Belgian Technical - Rehabilitation of the Tshopo Hydropower EUR 13,500,000 Cooperation Plant and Kisangani Distribution Grid Chinese - Construction of Zongo II Hydropower Plant EUR 360,000,000 Cooperation (150 MW) Netherlands - Project for Consolidating the Interconnection of Cooperation the Electric Grids of Nile Equatorial Lakes 10,000,000 Countries

Annex 4 Map of Project Area

This map has been provided by the staff of the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank Group and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

ANNEX 5 On-lending of ADF Resources to the Project Company and Impact on the Project

The Bank's existing policy on the on-lending of loans:

1) The basic principle relating to the on-lending of resources allocated by the Bank is to meet market conditions as closely as possible (paragraph 21);

2) In particular, in the case of ADF resources, which will be on-lent under this project, paragraphs 29 and 30 of the Policy stipulate that ADF concessional resources may be on- lent to take into account certain factors or specific situations;

3) The on-lending policy completes these provisions by point (viii) on page 12, which raises the specific case of companies operating in the basic infrastructure sector.

This Ruzizi III project concerns basic infrastructure and has a strong social dimension due to the transformational nature of energy on the population's living conditions. The availability of energy in the Great Lakes Region confronted by armed conflict for over a decade, may contribute to the restoration of peace through the development of highly remunerative activities. It is also necessary to facilitate access to this energy from both technically and in terms of price. The issue of pricing has been raised by all the national electricity companies which, as signatories of the future power purchase contracts, are seriously concerned about the sustainability of the operation for them. The simulations carried out by EGL and the future private partner have confirmed the significant impact of on-lending concessional resources to the Project Company (PC). As an illustration, the on-lending of concessional resources to the PC at a rate of 2% could reduce the cost of energy from USD/kWh 0.19 to USD/kWh 0.11. These cost levels are sustainable for electricity companies given their energy mix, and should lead to the emergence of more affordable prices for households and the economy in general. Therefore, this project comes under the category of projects for which the on-lending of ADF resources to a non-State entity directly benefits the population and national economies, especially for two countries in transition.

Financing Plan:

ANNEX 6: Factors of Fragility Addressed by the Project

The matrix below, which provides a summary of the fragility assessment presented in the technical annexes, shows how the project takes into consideration the following factors of fragility identified at appraisal: (i) the volatility of the security situation and political instability; (ii) the different forms of social exclusion: identity crisis, ethnic divides and land tenure conflicts; (iii) weak water resource governance capacity; (iv) gender-based violence; (v) extreme poverty and unemployment especially among young people; and (vi) EGL's weak institutional capacity.

Factors of Situations of Fragility Measures Project's Planned Activities Fragility Volatility of Because of the Obtain information The project is an important instrument for the security regionalization of the regularly on the political dialogue in the political and security situation and conflicts in Great Lakes, the situations and include stabilization process in the Great Lakes region. political political context of the political risk in the This aspect is strengthened by the strategic instability 2015-2017 period marked project's monitoring and nature of the sector covered by the project by tension due to the evaluation system. (Energy) and also by its multi-donor nature. electoral process does not The project has made provision for a preclude further implosions monitoring/evaluation expert who will in the short-to-medium establish a mechanism that takes into account term, which could affect the the monitoring of security and political risks. project. The different The Great Lakes region in Develop a resettlement A resettlement action plan was prepared in forms of social general, and the zone plan which does not 2012. It will be updated by the Project exclusion: covered by Burundi, exacerbate existing social Company (PC) before the launching of bidding identity crisis, Rwanda and DRC, in exclusions but helps to for the EPC contracts in compliance with the ethnic divides particular, is characterized reduce them. Bank's requirements. The update will take into and land by different forms of social account the analysis on the different forms of tenure exclusion and inequalities social exclusion, and will implement measures conflicts marked by ethnic divides, not to exacerbate them but instead reduce identity crises and land them. tenure conflicts that represent real sources of recurring tension. Weak water Construction of the project Prepare a water resource To mitigate the negative impacts of the resource dam could create conflicts governance strategy which project, including those concerning water governance between the use of water factors in the need to management, contractors will be required to capacity for energy and for develop the agriculture submit comprehensive specific environmental agricultural purposes. The sector in the project area. and social management plans based on the hydropower release Project ESMP and the PC Environmental and schedule is not necessarily Social Management System. the same as that for water for agricultural purposes. Such competition between users could occur within each country or at regional level in the three countries. Gender-based The Great Lakes region is In the project, include The project includes activities with positive violence one of the areas with the related activities impacts on women, girls and children: (i) the highest cases of gender- concerning women's emergence or strengthening of income- based violence or empowerment and the generating activities (IGA) for women; (ii) the discrimination. combat against gender- creation of works-related direct and indirect based violence and jobs with at least 20% of the unskilled jobs for discrimination. women and girls; and (iii) promotion of artisanal agricultural produce processing activities mainly carried out by women.

XII

Extreme Extreme poverty and youth Develop an electricity The project makes provision for a Plan to poverty and unemployment are price-fixing policy that Restore and Strengthen Living Conditions unemployment generally considered to be will maintain social (PRRV) as well as a Local Development Plan especially the key factors of structural balances and reduce (PDLC). The project also aims to improve among young violence and conflict in the exclusion in access to household access rate to electricity and to people region, and specifically in energy. Also ensure that create 800 to 1000 permanent and temporary the border zone shared by the project will contribute direct and indirect jobs in favour of local DRC, Rwanda and Burundi. to job creation especially labour. for young people. EGL's weak EGL, which will be Provide for specific The institutional capacity building activities institutional responsible for the project's support to EGL to build its planned under the project concern the capacity implementation, is project implementation recruitment of international consultants for experiencing serious capacity. technical assistance to EGL but also an operational difficulties adequate skills mix among EGL key staff which prevent it from members. securing adequate human resources.

XIII