Ruzizi III Regional Hydropower Plant Project Goal : Increase Renewable Energy Generation for the Sustainable Socio-Economic Development of ECGLC Countries
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AFRICAN DEVELOPMENT BANK GROUP MULTINATIONAL RUZIZI III REGIONAL HYDROPOWER PLANT APPRAISAL REPORT Public Disclosure Authorized Authorized Public Disclosure 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 i 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 ii 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