AFRICAN DEVELOPMENT BANK

PROJECT TO IMPROVE ACCESS TO ELECTRICITY IN RURAL AREAS

COUNTRY : COTE D’IVOIRE closure Authorized

Public Dis PROJECT APPRAISAL REPORT

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Public Disclos

RDGW October 2018

Translated Document

TABLE OF CONTENTS

I. STRATEGIC ORIENTATION AND RATIONALE ...... 1 1.1. Project Linkages with Country Strategy and Objectives ...... 1 1.2. Rationale for Bank Intervention ...... 1 1.3. Aid Coordination ...... 2 II. PROJECT DESCRIPTION ...... 3 2.1. Project Description and Components ...... 3 2.2. Technical Solution Adopted and Alternatives Considered ...... 4 2.3. Project Type ...... 5 2.4. Project Cost and Financing Arrangements ...... 5 2.5. Project Area and Beneficiaries ...... 7 2.6. Participatory Approach to Project Identification, Design and Implementation ...... 7 2.7. Bank Group Experience and Lessons Reflected in Project Design ...... 8 2.8. Key Performance Indicators...... 9 III. PROJECT FEASIBILITY ...... 10 3.1. Economic and Financial Performance ...... 10 3.2. Environmental and Social Impact ...... 10 3.3. Impact of Energy Reslience on Fragility Factors ...... 12 IV. PROJECT IMPLEMENTATION ...... 12 4.1. Implementation Arrangements ...... 12 4.2. Procurement Arrangements...... 14 4.3. Financial Management and Disbursement Arrangements ...... 14 4.4. Monitoring ...... 15 4.5. Governance ...... 16 4.6. Sustainability ...... 16 4.7. Risk Management ...... 17 V. LEGAL FRAMEWORK ...... 17 5.1. Legal Instrument ...... 17 5.2. Conditions for Bank Intervention ...... 18 5.3. Compliance with Bank Policies ...... 19 VI. RECOMMENDATION ...... 19

Annex I : Comparative Socio-economic Indicators of Côte d’Ivoire ...... I Annex II : Table of Bank Portfolio in Côte d’Ivoire (June 2018) ...... II Annex III : Major Ongoing Projects in Côte d’Ivoire Financed by the Bank and other Partners ...... IV Annex IV : Map of Côte d’Ivoire ...... V Annex V : Rationale for Côte d’Ivoire’s Counterpart Contribution to Project Financing ...... VI

CURRENCY EQUIVALENTS July 2018

UA 1 = XOF 791.43 UA 1 = EUR 1.21 UA 1 = USD 1.41

FISCAL YEAR 1 January to 31 December

WEIGHTS AND MEASURES

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

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ACRONYMS AND ABBREVIATIONS

ADF African Development Fund AFD French Development Agency AfDB African Development Bank BD Bidding Document BOAD West African Development Bank CSP Country Strategy Paper EBID ECOWAS Bank for Investment and Development EIB European Investment Bank ENPV Economic Net Present Value ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan EU European Union FD Final Design FRR Financial Rate of Return GDP Gross Domestic Product IEC Information, Education and Communication IsDB Islamic Development Bank LV Low Voltage MV Medium Voltage MW Megawatt NGO Non-Governmental Organisation NPV Net Present Value PEPT Electricity for All Programme PND National Development Plan RMC Regional Member Country SME Small- and Medium-sized Enterprise SMI Small- and Medium-sized Industry TOE Tonne of Oil Equivalent UA Unit of Account USD United States Dollar WAEMU West African Economic and Monetary Union WB World Bank

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PROJECT INFORMATION SHEET BORROWER : COTE D’IVOIRE EXECUTING AGENCY : COTE D’IVOIRE ENERGIES Financing Plan

Source Amounts (in EUR million) Instrument AfDB 42.31 Loan GOVERNMENT 6.51 Counterpart Contribution TOTAL 48.82 Key AfDB Financial Information Loan Currency EURO (EUR) Loan Type Fully flexible loan Maturity Up to 25 years, including an 8-year grace period Grace Period 8 years Weighted Average Maturity** 16.75 years Reimbursements 34 half-yearly payments at the end of the grace period Interest Rate Base rate + Financing cost margin + Lending spread + Maturity premium Base Rate Floating (EURIBOR EUR-6 months, set 2 days before the start of the applicable interest period), with a free-floating base rate option Financing Cost Margin The Bank’s financing cost margin revised twice yearly, on 1 January for the half-year ending 31 December, and 1 July for the half-year ending 30 June. This margin is applied at the EURIBOR rate set on 1 February and 1 August Lending Spread 80 basis points (0.8%) Maturity Premium 20 basis points (0.2%) Front-end Fee 0.25% of the loan amount payable latest 60 days following the date of effectiveness of the loan agreements Commitment Fee 0.25% per year of the undisbursed amount. It shall become effective 60 days following date of signature of the loan agreement and shall be payable on the due dates, including the grace period Base Rate Conversion Option* Besides the free fixing option, the Borrower may revert to the floating rate or reset the rate on all or part of the disbursed amount of its loan. Transaction fees apply Rate Cap or Collar Option* : The Borrower may cap or collar the base rate for all or part of the disbursed amount of its loan. Transaction fees apply Loan Currency Conversion Option* The Borrower may change the currency of all or part of its loan, whether disbursed or not, into another loan currency of the Bank. Transaction fees apply FRR (baseline scenario) 12.62 % NPV (baseline scenario) XOF 17.96 billion ERR (baseline scenario) 22.01% ENPV (baseline scenario) XOF 37.20 billion *Conversion options and transaction fees are governed by the Bank’s Conversion Guidelines available at: http://www.afdb.org/fr/documents/document/guidelines-for-conversion-of-loan-terms-july-2014-87643/.

Timeframe – Main Milestones (projected)

Concept Note approval May 2018 Project approval October 2018 ADB loan effectiveness December 2018 Closing date 31 December 2021 Last reimbursement December 2043 iii

PROJECT SUMMARY

1. Project Overview: The Project to Improve Access to Electricity in Rural Areas (PAEMIR) is an investment operation to extend medium-voltage electricity networks and connections in rural areas. The project covers three districts in northern Côte d'Ivoire (Savanes, Woroba and Zanzan), and concerns 426 localities with an estimated population of 259,486. The project’s objective is to increase the electricity access rate in Côte d'Ivoire, and more specifically in the above-mentioned districts where access is lower than the national average currently estimated at 59.50%. The project falls within the National Rural Electrification Programme (PRONER), which aims to electrify all localities with more than 500 inhabitants by 2019 and the entire country by 2025. Capacity building activities will also be organised for CI-ENERGIES staff, and feasibility studies conducted for certain projects. The total project cost is estimated at EUR 48.51 million, and will be co-financed by the Bank (87%) and the Ivorian Government (13%). The project implementation will cover 36 months, from 2019 to 2021.

2. Needs Assessment: Côte d'Ivoire has prepared an investment plan for the electricity sector for the 2015-2030 period, based on detailed studies that have led to the preparation of four (4) Master Plans covering: (i) Generation and Transmission, (ii) Distribution, (iii) Remote Automation, and (iv) Rural Electrification. The implementation of the Generation- Transmission Master Plan has significantly increased the country's generation capacity from 1,421 MW in 2011 to 2,043 MW at the end of 2017, which represents a 44% upsurge. Significant results have also been recorded in the transmission segment in terms of new lines and substations. The National Rural Electrification Programme, which is based on the Rural Electrification Master Plan, provides for the electrification of 1,888 localities over the 2015- 2018 period, as well as an increase in non-domestic uses of electricity to promote the processing of agro-pastoral and forestry products.

3. Bank’s Value Added: This project supplements and reinforces ongoing actions in the sector. The 426 localities covered will add to 40 localities already electrified under the Multinational Electricity Interconnection Project in Côte d'Ivoire, Sierra Leone, Liberia and Guinea (CLSG Project), approved in November 2013, and to the 252 localities being electrified under the Transmission and Distribution Network Reinforcement Project (PRETD) approved in November 2016. In all, the Bank will have contributed to the financing of electrification in 718 rural localities in Côte d'Ivoire, with approximately 500,000 inhabitants as direct beneficiaries in the West and North regions. It should also be noted that the rural electrification operations financed by the Bank in Côte d'Ivoire are in synergy with other operations it has funded, aimed at increasing power generation capacity (AZITO, CIPREL and SINGROBO power plants) and reinforcing the system for evacuating the energy produced (PRETD project).

4. Knowledge Management: A monitoring and evaluation baseline will be established by the executing agency to enable the Bank and other stakeholders to draw lessons from project implementation. The executing agency will identify and update the baseline data that will serve as performance or alert indicators in quarterly progress reports. The main sources of information for the country and the Bank are reports on: (i) monitoring and evaluation; (ii) Bank supervision missions; (iii) the Consulting Engineer in charge of works control; (iv) accounts audit; and (v) procurement audit. The country and the Bank will use lessons from these various reports to design and implement future operations.

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RESULTS-BASED LOGICAL FRAMEWORK Country and Project Name: Côte d’Ivoire - Project to Improve Access to Electricity in Rural Areas Project Objective : Increase sustainable access to electricity to improve rural living conditions PERFORMANCE INDICATORS Means of RESULTS CHAIN Baseline RISKS AND MITIGATION MEASURES Indicators Targets (2021) Verification Situation (2018)

1. Improved living conditions of Reports: people in the project area 1. National electricity access rate 80.5% 82.6% Ministry of Energy CI-ENERGIES

IMPACT

2.1 Increased national coverage 2.1.1.National coverage rate 70.2% 78 % Reports : Risks

2.1.2.Number of new customers connected - 23 549 Ministry of Energy - Delays in making household connections within the agreed timeframes 2.2 Job creation 2.2.1 Jobs created during the works - 300 (210H/90 F) CI-ENERGIES PND 2.2.2 Jobs created after the works - 1,000 Mitigation Measures (600H/400F) - Connections will be financed by ADB loan resources - Connections will be financed by counterpart resources from the PEPT Fund

OUTCOMES

3.1 HV lines installed 1. Length of HV lines installed - 1. 994 km Reports: Consulting Risks 3.2 MV/LV substations installed 2. Number of MV/LV substations installed - 2. 1033 km engineer, project - Delays in infrastructure delivery due to slippages in procurement, insufficient status, supervision 3.3 LV lines constructed 3. Length of LV lines installed - 3. 446 human resources, and poor knowledge of Bank procedures missions, financial 3.4 Public lighting installed 4. Public lighting units installed 4. 22 600 audits, procurement - Works blockage by project-affected persons for non-payment of compensation 3.5 Household connections 5. Number of new customers connected - 5. 23 549 audits, etc. 3.6 Training of CI-ENERGIES 6. Number of CI-ENERGIES staff trained - 6. 60 (42M/18F) staff 7. Number of studies conducted - 7. 2 Mitigation Measures

PUTS 8. 3 3.7 Number of studies conducted 8. Account audit report 9. 3 - Use of advance contracting procedure 3.8 Accounts audit report 9. Procurement audit report

OUT 3.9 Procurement audit report - Reinforcement of the PMU with a procurement consultant - Training of staff on the Bank’s procurement system - Borrower’s commitment in the Loan Agreement to pay compensation to affected persons before works commencement

Components Resources/Application 1. Infrastructure: (i) Construction of 871 km of 33 kV lines; (ii) construction of 919 km of LV lines; and (iii) installation of Resources

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I 446 H61 substations ADB : EUR 42.31 million 2. Connections and public lighting: (i) 23,435 connections; and (ii) installation of 25,000 public light units Government : EUR 6.51 million 3. Institutional Support: (i) Training (strategic sector planning, project management and project engineering); and (ii) Application

ACTIVIT feasibility studies for future projects Component 1 : EUR 35.25 million 4. Project Management: (i) project environmental and social management; (ii) works control and supervision; (iii) audit of Component 2 : EUR 3.72 million

KEY project accounts; (iv) audit of procurements; (v) Communication, (vi) logistical support to the PIU; and (vii) PIU operating Component 3 : EUR 1.56 million cost. Component 4 : EUR 8.32 million .

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PROJECT IMPLEMENTATION SCHEDULE

2018 2019 2020 2021 Project Activities Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1. Project Approval Board approval Effectiveness of the financing agreements Signing of the financing agreements Effectiveness of the financing agreements Lifting of conditions precedent to disbursement 2. Construction of Infrastructure Preparation and launching of bidding documents for works Signing of works contracts Construction works for HV/LV lines and substations Connection of households 3. Institutional Support Various training courses Conduct of studies 4. Project Management Works control and supervision Audit of project accounts Audit of procurements Information, Education and Communication Compensation of affected persons

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BANK GROUP MANAGEMENT’S REPORT AND RECOMMENDATIONS TO THE BOARD OF DIRECTORS CONCERNING A PROPOSAL FOR AN EUR 42.31 MILLION ADB LOAN TO FINANCE THE PROJECT TO IMPROVE ACCESS TO ELECTRICITY IN RURAL AREAS

Management hereby submits this report and its recommendations concerning a proposal to grant an ADB loan of EUR 42.31 million to the Government of the Republic of Côte d'Ivoire to finance the Project to Improve Access to Electricity in Rural Areas (PAEMIR).

I. STRATEGIC ORIENTATION AND RATIONALE

1.1. Project Linkages with Country Strategy and Objectives

1.1.1 The project aligns with the National Development Programme 2016-2020 (PND 2016-2020) whose overall objective is to make Côte d'Ivoire an emerging country by 2020, with a solid industrial base. The PND is structured around five (5) strategic pillars: (i) Enhance the quality of institutions and governance; (ii) Accelerate the development of human capital and social well-being; (iii) Accelerate structural transformation of the economy through industrialisation; (iv) Develop infrastructure harmoniously distributed throughout the country and protect the environment; and (v) Strengthen regional integration and international cooperation.

1.1.2 Under the PND, the main objective of the energy sector is to develop quality energy infrastructure that meets the growing needs of the economy. For the PND, the main expected outputs of the energy sector are: (i) strengthening the electricity and hydrocarbon subsector governance; (ii) increasing hydrocarbon production, storage and transportation infrastructure; (iii) increasing electricity production, transport and distribution infrastructure; and (iv) adopting an energy saving and efficiency policy. The project is in line with the country's development and sector objectives. It also aligns with strategic pillars (ii), (iii) and (iv) of the PND, and its outcomes are consistent with output (iii) of the energy sector. By 2020, the objectives of the electricity sub-sector are to step up power generation capacity by an additional 863 MW, increase energy delivered to transmission and distribution networks from 8,251 GWh in 2015 to 12,662 GWh in 2020, and raise electricity access rate1 from 74% in 2011 to 82% in 2020.

1.1.3 As regards rural electrification, the Government in July 2013 adopted the National Rural Electrification Programme (PRONER), which aims to provide equitable access to electricity for the population, balance electrification in favour of areas with low access rate, and ensure electrification for all localities with at least 500 inhabitants by the end of 2019. At the end of 2017, PRONER’s implementation helped to electrify 1,373 new localities, bringing the number of electrified localities to 4,614 out of 8,513 localities nationwide, and thereby increasing the coverage rate2 from 33.8% in 2011 to 54.2% in 2017. These Government efforts have resulted in: (i) access to electricity for 1,800,000 people, thus increasing the access rate from 74% in 2011 to 82% in 2017; (ii) local development, which helps to reduce rural poverty; (iii) creation of value added for businesses; and (iv) creation of direct and indirect jobs. PAEMIR will contribute to the achievement of outcomes targeted under PRONER.

1.2. Rationale for Bank Intervention

1.2.1 The primary justification for the Bank's intervention is PAEMIR’s alignment with its strategic objectives in Côte d'Ivoire as set out in CSP 2018-2022 approved in September 2018, which is structured around two pillars: (i) reinforcement of transformative infrastructure and

1 Electricity access rate is the ratio of people living in electrified localities to the country’s total population. 2 Coverage rate is the ratio of electrified localities to the total number of localities in the country. 1

governance for economic competitiveness and investment efficiency; and (ii) development of agro-industrial value chains for inclusive and sustainable growth. Through the construction of electricity infrastructure, particularly the HV and LV networks, PAEMIR falls within pillar (i) of the CSP, and within pillar (ii) through the development of agro-industrial value chains that will be facilitated by access to electricity.

1.2.2 In addition, rural electrification in Côte d'Ivoire is a response to the issue of equitable redistribution of the dividends of economic growth that the country has recorded since 2011. Given that the project will provide access to electricity for low-income households in rural areas, it will also help to make growth inclusive. This is in line with the Bank's Ten-Year Strategy adopted in 2012, which seeks to spur inclusive growth in Regional Member Countries (RMCs). The project is also in tune with the Bank's High 5s, aimed at strengthening and accelerating the implementation and development impacts of its Ten-Year Strategy. More specifically, it will contribute to the achievement of three (3) of the High 5s: (i) Light up and Power Africa; (ii) Industrialise Africa, by providing electricity for the creation of small- and medium-sized industries; and (iii) Improve the quality of life for the people. Lastly, the project is consistent with the New Deal on Energy for Africa (2016-2025) given that it covers three of its seven pillars: (i) access to electricity for the population "at the bottom of the pyramid", which is the main objective of PAEMIR; (ii) capacity building for power companies to ensure their success by training CI-ENERGIES staff in various trades in the sector; and (iii) substantial increase in the number of bankable energy projects, through feasibility studies for future projects.

1.2.3 Finally, the project will enhance the effects of the rural electrification components of two ongoing projects approved in 2013 and 2016, respectively: (i) the Côte d'Ivoire, Liberia, Sierra Leone and Guinea Interconnection Project (CLSG); and (ii) the Transmission and Distribution Network Reinforcement Project (PRETD), which will provide electricity to 292 localities in the western regions of the country. Ultimately, these three operations will help to electrify 718 localities with an estimated total population of 500,000. PAEMIR will also enhance the complementarity of rural electrification operations by extending networks under the off-grid electrification system approved by the Bank in 2018 on the private sector window, which targets areas far away from the networks. In addition, the project will enhance the synergy of all ongoing rural electrification projects with operations financed by the Bank over the past three years to strengthen the generation capacity of CIPREL and AZITO power plants. These operations have helped to increase the country's installed capacity by 515 MW.

1.3. Aid Coordination

1.3.1 Apart from the AfDB Group, several TFPs (bilateral and multilateral) are active in the energy sector in Côte d'Ivoire, in particular AFD, WB, EIB, IsDB, BOAD, EU, KfW, GIZ, USAID, JICA, and China. These TFPs form an active thematic group chaired by the EU Delegation; the Bank is a member of the thematic group. The table below summarises the volume of investments in the electricity sector over the past five years.

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Volume Sub-Sector GDP Exports Labour Electricity NA NA NA Stakeholders – Annual Public Expenditure (average) 2014-2017 Government Donors - Exim Bank of 32% UA 1895.7 UA 129.78 million UA 1765.9 million China million (6.85%) (93.15%) - EIB 16% (100%) - WB 13% - AfDB 11% - IsDB 9% - EU 6% - BOAD 6% - AFD 5% - Others 3% Level of aid coordination Existence of thematic work groups Yes Existence of an overall sector programme Yes AfDB’s role in aid coordination Member

1.3.2 Four of these TFPs actively participate in financing PRONER as indicated in the table below. As regards the Bank Group, this ADB loan proposal will increase its contribution to PRONER’s financing to XOF 57.30 billion, representing 28% of resources mobilised to date for the programme.

Number of Approval TFP Financing Localities Year Exim Bank of China 500 65.1 2015 WB 201 37.6 2015 AfDB 292 29.55 2013 and 2016 EU/AFD 350 44.9 2014 CI-ENERGIES 43 4.3 2016 Total 1 346 181.45

II. PROJECT DESCRIPTION

2.1 Project Description and Components

2.1.1 The project's development objective is to increase access to electricity in Côte d'Ivoire, and more specifically in the rural areas of Savanes, Woroba and Zanzan Districts. The project aims to extend the medium-voltage networks from existing source substations and build distribution networks in the 426 localities concerned, make 23,549 connections for households, and install public lighting units.

2.1.2 The project has four components: (A) Power Infrastructure; (B) Social Connections; (C) Institutional Support; and (D) Project Management. The details and cost estimates of these components are shown in the table below.

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Table 2.1 Project Components and Costs (in EUR million)

Components Cost Description of Components

Construction of 994 km of 33 kV 54 mm² overhead lines A) Power - Installation of 303 H61 50 kVA H61 substations Infrastructure - - Installation of 70 H61 100 kVA substations 35.25 - Installation of 48 H61 160 kVA substations - Construction of 1,033 km of LV 3x70+54.6+16 mm² overhead lines

B) Social - 23,549 LV connections Connections 23,549 indoor installations 3.72 - - 23,549 subscriptions - Installation of 22,960 street lighting units C) Institutional - Capacity building (training) Support - Rural electrification studies for Comoé District 1.53 - Rural electrification studies for Vallée de Bandama District - Recruitment of a Procurement Expert to support the PMU

- Project environmental and social management - Works control and supervision - Audit of project accounts - Audit of procurements D) Project 8.32 - Information, Education and Communication Campaign Management - PIU operating costs - Allowances for Steering Committee members - Salary of PIU staff - Logistical support

TOTAL 48.82

2.2 Technical Solution Adopted and Alternatives Considered

2.2.1 The technical solution adopted is the extension of existing HV networks through diversion or extension of the 33 kV lines to supply power to the selected localities. The lengths of the new lines will not exceed 20 km. The alternative solution considered is off-grid electrification, consisting either in building small isolated photovoltaic or diesel power plants that would supply power to one or two localities through a mini grid, or providing family solar kits to households. The reasons for rejecting these two options are given in the table below.

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Table 2.2 Alternatives Considered and Reasons for Rejection Alternatives Brief Description Reasons for Rejection Off-grid electrification Build isolated - Availability of the national interconnected grid and by isolated mini power thermal or solar HV lines near the localities to be electrified; studies plants through small power plants have shown that only 86 localities in Côte d'Ivoire networks associated with are far from the grid to justify extension of 33 kV mini grids for each lines ; these localities will be electrified by off-grid locality or group of systems. localities - Justify and make investments in centralised energy production profitable. - Small size of the off-grid market for solar kits in view of development of HV network in Côte d'Ivoire (23,516 km of HV lines) Provide individual Electrification by solar solar kits to kits - Solar kits limit the use of electricity to basic households domestic needs only and do not allow electricity to be used for the processing of agro-pastoral products or to lighten women's household chores.

2.3 Project Type

The Project to Improve Access to Electricity in Rural Areas is an investment operation involving the extension of HV lines and the construction of distribution networks in 426 localities. The proposed financing instrument is a loan from ADB resources to be granted to the Republic of Côte d'Ivoire and on-lent under similar conditions to CI-ENERGIES.

2.4 Project Cost and Financing Arrangements

2.4.1 The total project cost, excluding taxes and customs duties, is estimated at EUR 48.82 million, comprising EUR 28.73 million in foreign exchange (58.85%) and EUR 20.09 million in local currency (41.15%). The cost has been estimated based on updated unit prices for similar supplies and works from recent bids received by CI-ENERGIES under Bank-financed projects. It includes provisions of 5% for physical and technical contingencies and 5% for price escalation. Project costs by component, source of financing and expenditure category, as well as the estimated disbursement schedule, are provided in the tables below. The conversion rates used are those indicated on page (i).

Table 2.3 Cost Estimate by Component (in EUR million) Foreign Local Components Total Cost % F.E. Exchange Currency Power Infrastructure 22.43 9.61 32.05 70.00% Social Connections 2.05 1.33 3.38 60.75% Institutional Support 0.56 0.84 1.39 40.00% Project Management 1.07 6.49 7.56 14.20% Total Base Cost 26.11 28.27 44.38 58.85% Physical Contingencies 1.31 0.91 2.22 Price Escalation 1.31 0.91 2.22 Total Project Cost 28.73 20.09 48.82 58.85%

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2.4.2 The project is co-financed by the Bank and the Government of Côte d'Ivoire. The Bank's financing amounts to EUR 42.31 million, or 87% of the total project cost, and will be provided through a sovereign loan from the ADB window. The rationale behind the breakdown of the total project cost financing between AfDB and the Government is detailed in Annex V, in accordance with the Senior Vice-President's Directive of 10 December 2014 on implementation of the Bank Group's Eligible Expenditures Policy. The key financial information on this ADB loan is provided on page (iii). The remaining project financing, which amounts to EUR 6.51 million, will come from the counterpart contribution.

Table 2.4 Sources of Financing (in EUR million) Foreign Local Sources of Financing Total % F.E. Exchange Currency ADB 28.27 14.04 42.31 66.82% CI GOVERNMENT 0.46 6.05 6.51 7.04% Total 28.73 20.09 48.82 58.85%

2.4.3 The project cost by expenditure category is as follows:

Table 2.5 Costs by Expenditure Category (EUR million) Cost in Cost in Expenditure Categories Total Cost % F.E. For. Exch. Local Curr. Works 24,07 10,32 34,38 70.00% Goods - 0,50 0,50 0.00% Services 2,05 3,07 5,12 40.00% Operating Costs - 2,39 2,39 0.00% Compensation - 1,99 1,99 0.00% Total Base Cost 26,12 18,26 44,38 58.85% Physical Contingencies 1,31 0,91 2,22 Price Escalation 1,31 0,91 2,22 Total Project Cost 28,73 20,09 48,82 58.85%

2.4.4 The estimated project expenditure schedule by component is as follows:

Table 2.6 Expenditure Schedule by Component (in EUR million)

Components 2019 2020 2021 2022 Total Power Infrastructure 8.81 15.86 7.05 3.53 35.25 Social Connections 0.93 1.67 0.74 0.37 3.72 Institutional Support 0.38 0.69 0.31 0.15 1.53 Project Management 2.08 3.75 1.66 0.83 8.32 TOTAL 12.20 21.97 9.76 4.88 48.82

2.4.5 The ADB loan resources will be used to finance part of the infrastructure and project management components, and fully finance the institutional support component. Details of the ADB loan resource allocation and breakdown for the various expenditure categories are given in Section B2 of the Technical Annexes. 6

Table 2.7 ADB Resources by Expenditure Category Amounts in EUR million Expenditure Categories Foreign Local Total % F.E. Exchange Currency Works 26.47 11.35 37.82 70% Services 1.80 2.69 4.49 40 % Total 28.27 14.04 42.31 67%

2.5 Project Area and Beneficiaries

2.5.1 This project covers three districts of the country: Woroba District (85 localities), Zanzan District (94 localities), and Savanes District (247 localities). These three districts were chosen because of their low coverage rates compared to the national average. This choice is in line with the regional balancing objective to achieve an access rate at least equal to the national average estimated at 59.5%. Savanes, Woroba and Zanzan districts have access rates of 48%, 39% and 34%, respectively. The beneficiary population is estimated at 259,486 according to data from the 2014 General Population and Housing Census. The map of the project area is presented in Annex IV.

2.5.2 The direct project beneficiaries are the 23,459 households that will be directly connected to the power grid through the project, and will thus have access to electricity. There are several dozen schools and training centres in the project area that will also be direct beneficiaries through their connection to the power grid, thanks to the project. In addition, these communities host several health facilities with small storage and sterilisation facilities (refrigerators, stoves, etc.) that operate intermittently with kerosene. Electricity supply to the health centres will significantly enhance safe storage of pharmaceuticals, vaccines, blood, and other medical products. It will also facilitate the installation of new laboratory, minor surgery and radiology equipment. This will improve the working conditions of health personnel, ensure better conservation of medical products, improve the quality of health care, and thereby increase the attendance rate of health facilities.

2.5.3 In addition to the above-mentioned direct beneficiaries, the entire population living in the neighbouring localities will benefit from the indirect effects of the project, particularly as a result of improvement of the quality of basic public social services (education, training, health, hygiene and sanitation, drinking water) with the availability of modern and more reliable energy to ensure proper operation. The same applies to small businesses, shops, administrative and municipal services, workshops and other processing units (grain mills).

2.6 Participatory Approach to Project Identification, Design and Implementation

2.6.1 Stakeholders were consulted during the Strategic Environmental and Social Assessment (SESA). Subsequently, CI-ENERGIES and ANDE organised consultations with representatives of beneficiaries and administrative and customary authorities from the regions concerned during the ESA validation workshop in Abidjan from 13 to 16 August 2018. During the project appraisal mission, public meetings were held in the presence of the decentralised authorities (prefects, service heads and regional directors), CI-ENERGIES, municipal authorities, local chiefdoms and representatives of the beneficiary population in twelve (12) localities in Poro and Tchologo regions (Savanes District). The meetings showed the stakeholders’ strong support for the project, of which they are the primary requesters and beneficiaries. The following expectations were identified: (i) adopt a special social price for 7

electricity connection to allow for access for all households, particularly vulnerable ones; (ii) equip health centres and public schools located in undeveloped areas bordering the project area (provision of solar kits); (iii) involve municipalities and associations in project management, particularly through information, sensitisation and mobilisation of the communities concerned, and facilitation of works execution; and (vii) provide public lighting for all streets in the project area.

2.6.2 CI-ENERGIES and the Steering Committee will ensure that the participatory process is maintained throughout project implementation. Thus, CI-ENERGIES and contracting firms will organise information, education and communication campaigns on worksite security themes before works start-up. Other information campaigns on risks related to the use of electricity and consumption control will be carried out by CI-ENERGIES and the Steering Committee before powering the electricity networks in the various districts. Finally, campaigns will be organised to collect information and identify new subscribers in an effort to promote household connection operations. During these campaigns, people's concerns and expectations will be identified and appropriate actions taken.

2.7 Bank Group Experience and Lessons Reflected in Project Design

2.7.1 The Bank's active portfolio in Côte d'Ivoire comprised 23 operations as at 30 April 2018, with net commitments of UA 930.5 million, mainly for transport and energy infrastructure. The portfolio sector breakdown highlights transport (56.3%) and energy (28.8%), ahead of the other sectors, namely agriculture (11.8%), governance (2.8%), finance (0.2%) and water and sanitation (0.1%).

2.7.2 The portfolio review conducted in April 2018 concluded that the portfolio performance is satisfactory with a rating of 3 on a scale of 1 to 4. Performance indicators show a reduction in the age of the portfolio, whose average dropped from 6.6 years in 2011 to 2.5 years in 2018, due mainly to the recent approval of 8 new operations and the closure of 5 older projects. The performance also highlights an increase in the portfolio disbursement rate to 23% at the end of May 2018 (13% for national projects, 15.7% for regional projects, and 54% for the private sector), as well as the absence of projects at risk. The review identified some persistent challenges, particularly for the energy sector: (i) poor quality at entry due to lack of studies; (ii) failure to set up teams dedicated exclusively to projects; (iii) weak capacity of local companies and individual consultants in project implementation; (iv) delays in the procurement process due to poor understanding and knowledge of Bank rules and procedures; (v) weak monitoring and evaluation system; and (vi) difficulties encountered by rural households in paying connection fees, which delays achievement of project objectives. Measures provided for in this project to address the challenges are shown in the table below:

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No. Challenges or Constraints Measures Provided in the Project - The project has preliminary sketches that are enough for this 1 Poor quality at entry due to lack of studies type of project (rural electrification). - The appointment of key PMU staff will be a condition Difficulties and delays in setting up teams 2 precedent to project presentation to the Board of Directors, dedicated exclusively to projects in accordance with PD 02/15. Weak capacity of local companies and - The works procurement amounts have been determined in such a manner as to attract the best companies in the country 3 individual consultants in project and sub-region, while discouraging small national implementation companies with no proven experience.

- Use of the advance contracting procedure Delays in the procurement process due to poor - Reinforcement of the PMU with technical assistance: 4 understanding and knowledge of Bank rules two consulting engineering firms and a procurement and procedures expert

- A monitoring and evaluation expert will be recruited for the Weak monitoring and evaluation mechanism PMU; his/her profile (CV) will be submitted to the Bank for 5 prior opinion.

- Financing of connections with project resources - Use of the connection arrangements under the Electricity for All Programme (PEPT). The arrangements require that the future subscriber be Difficulties encountered by households in provided with a connection kit (cost: XOF 41,450) at 6 paying connection and subscription fees a social rate (the most common in rural areas) against the payment of XOF 1 000, with the balance deducted from consumption bills over ten years.

2.8 Key Performance Indicators

2.8.1 The project performance will be measured using the indicators of the results-based logical framework. The output indicators are: (i) distance covered by the HV networks built; (ii) number of suspended MV/LV transformer substations installed; (iii) distance covered by the LV networks built; (iv) number of connections made; (v) number of public lighting units installed; (vi) number of studies conducted; (viii) number of workers trained; and (ix) number of audits conducted. The core outcome indicator is the number of subscribers connected in the 426 localities. The project impact indicator is the national electricity access rate that will be included in national reports: Ministry of Planning and Development, Ministry of Energy, CI- ENERGIES and in the periodic PND results matrix reviews.

2.8.2 Through the project implementation unit, the executing agency will monitor progress towards achievement of project outcomes. Data on project performance indicators will be provided in: (i) periodic progress reports to be prepared by the consulting engineers responsible for works control and supervision; (ii) quarterly progress reports of the project management unit; (iii) CI-ENERGIES activity reports; (iv) reports of Bank supervision missions; and (v) project completion reports (from the Borrower and the Bank). An analysis of the indicators will help to measure their progress and make appropriate adjustments, if necessary, to achieve the target values.

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III. PROJECT FEASIBILITY

3.1 Economic and Financial Performance

Table 3.1 Key Project Economic and Financial Data FRR 12.62 % NPV XOF 17.96 billion Baseline scenario ERR 22.01 % ENPV XOF 37.20 billion

3.1.1 Project Financial and Economic Performance: The performance was analysed in terms of the financial rate of return (FRR) and the economic rate of return (ERR), respectively. The FRR calculation is based on the project's financial costs and its share of proceeds from the sale of electricity to new customers. The ERR calculation is based on the economic costs (investment costs adjusted for conversion factors other than financial contingencies) and the economic benefits expected from the project, particularly further reduction in undistributed energy and the sale of electricity to new subscribers.

3.1.2 Sensitivity of the project’s financial and economic performance: Sensitivity was analysed in relation to: (i) a 10% increase in investment costs; (ii) a 10% increase in operating costs; and (iii) a 10% decrease in electricity selling prices. Following the analysis, it was noted that the financial rate of return remained above 5% (weighted average cost of the project's financing resources) and that the economic rate of return, although more sensitive to a decrease in the average selling price of electricity than other factors, remained above the economic cost of capital estimated at 10%, thus confirming the project’s financial and economic viability (details are provided in Technical Annex B.7).

3.2 Environmental and Social Impact

3.2.1 Environmental and Social Category: The project has been classified in Category 2, taking into account the identified negative environmental and social impacts ranging from low to medium. In light of the preliminary studies conducted, reservations on this aspect could be lifted since the project will essentially use existing power corridors and road easements.

3.2.2 Environment: In accordance with CI-ENERGIES commitments, a Strategic Environmental and Social Assessment (SESA), an Environmental Management Framework Plan (EMFP), and a Resettlement Framework Plan (RFP) have been prepared for each of the three regions concerned and submitted to the Bank. The environmental and social compliance certificate was issued by the Ministry of Environment.

3.2.3 The foreseeable negative environmental impacts include: felling and pruning of trees for the installation of power poles and running of cables, inconvenience and access problems especially as regards farms, risks of falling poles and other construction site accidents, risks of emergence and/or spread of STD-HIV/AIDS as a result of mixing of the local population with migrants attracted by employment opportunities. Furthermore, the extension, reinforcement and densification of electricity distribution networks in villages crossed by medium-voltage lines will disrupt the soil structure, particularly at points where power poles are installed. In addition, the transportation of materials and equipment by construction vehicles to the appropriate areas will aggravate soil degradation in areas where depots are located. During the preparation and construction phase, the project's water requirements will be low, met mainly by surface water. Therefore, groundwater will not be subject to significant impact in terms of quantity reduction. The potential acoustic impacts of the line will come from project activities during the construction phase, as well as from a slight increase in traffic. With respect to staff safety, there

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is a real risk of employees falling from the top of some high workstations during the installation of electricity poles, as well as increased risk of electric shock if activities do not comply with operating instructions and safety measures. The operating phase generates fewer environmental risks, but these are permanent and must be properly managed to curb negative impacts.

3.2.4 The EMFP and RFP provide for the preparation and implementation of an ESMP and Summary Resettlement Plan (SRP) for each of the sub-projects to ensure that appropriate measures are applied, taking into account the main impacts that will be identified. These measures will be included in the bidding documents and specifications for the companies (specific technical clauses, environmental requirements, and objectives to be achieved). It will be recommended that the companies submit a site environmental protection plan (PPES) and an environmental quality assurance plan (PAQE) for overall site management, based on the ESMP that was prepared for the project. The PPES and PAQE must indicate: (i) the work methods, with the transportation of materials, to reduce pollution of the human environment (safety, noise, accident risks); and (ii) the measures taken to curb effects on the natural environment and prevent accidental damage.

3.2.5 Monitoring and supervision of ESMP implementation and capacity: Under the leadership and coordination of an environmentalist, the PMU will be responsible for monitoring the ESMP implementation with the support of the control mission, in close collaboration with the relevant regional government departments and local administrative and traditional authorities. The PMU will be required to submit half-yearly reports on the ESMP implementation. ANDE will be responsible for environmental and social monitoring by virtue of its mandate. ANDE will also produce quarterly reports on the project’s compliance with environmental and social safeguards. To that end, a memorandum of understanding will be concluded between the PMU and ANDE.

3.2.6 Climate Change: The main positive environmental impact of the project stems from the benefits that access to electricity in rural areas will offer to households, in particular: (i) alternatives that are less polluting than the use of wood fuels (firewood and coal) and kerosene lamps, which today represent their main source of energy for lighting and cooking; and (ii) opportunities for the processing and conservation of perishable products and, consequently, optimum use of natural resources in their production. In addition, the project will help to reduce emissions of polluting gases generated by kerosene lamps and small individual generators currently used in the project area. Electricity provided to users under this project (households, shops, workshops, processing units, administrative and municipal services, schools and health centres) will come from the national electricity mix, consisting of 43% hydroelectric energy and 57% natural gas-based thermal energy, which is less polluting than fuel oil.

3.2.7 The project is not vulnerable to climate risks, which justifies its classification in Category 3 in terms of climate change. All transformer substations will be suspended in the air (H61), and will be free from any risk of flooding. The size of reinforced concrete power poles will take prevailing winds into account. As mentioned above, the project will offer less polluting alternatives to households, thereby helping to reduce greenhouse gas emissions.

3.2.8 Gender: Access to electricity will help to lighten women's domestic chores and enable them to gain time, which they can use to engage in income-generating activities, particularly by reducing the loss of food and perishable products, and lightening certain domestic chores, including the transformation of a number of foodstuffs (cereals, manioc or yams) into flour using mills. It will also offer women the possibility of setting up small craft units (sewing, processing of agricultural products, shops, etc.), while improving children's learning conditions thanks to the availability of electric lighting. Access to electricity will also have a positive

11

impact on maternal and neonatal health, and contribute to reducing gender-based violence (city lights will help to reduce attacks on women).

3.2.9 Social: 23,549 households will be directly connected to the power grid under the project. Connections, including indoor installation works and subscription, will be covered by counterpart resources under the PEPT, which allows connection of households through pre- financing, with the payment of XOF 1,000 instead of XOF 41,550 at the time of connection. The households will reimburse the balance ten years on their electricity consumption bills.

3.2.10 In addition, the project will benefit small- and medium-sized enterprises, small businesses, administrative and municipal services, and all basic social services (education, training, health, hygiene and sanitation, drinking water). The project will connect social infrastructure (schools, training centres, health centres, etc.) located in the project area to the power grid, and will thus have access to more reliable electricity for various uses (domestic, industrial, commercial, pumping, cultural, security, etc.). Therefore, the availability of electricity will improve the quality of social services in the project area. The project will help to promote recreational and family activities for better well-being. It will enhance the safety of people and their property through home and street lighting. Electricity will facilitate the emergence of new job-creating activities in various areas, in particular food processing, new information and communication technologies, carpentry, maintenance, sewing, embroidery, handicraft, small businesses and services. The project will also have significant positive socio- economic impacts in the project area. It will generate 350 temporary jobs (30% of which will be for women) during construction of power networks and connections. It will also create 60 permanent jobs (including 15% for women) for operation of the facilities and customer management of new subscribers.

3.2.11 Involuntary Resettlement: The project will not lead to any involuntary physical displacement of people since no houses will be affected and no agricultural and/or building land will be expropriated. Almost all the works will be carried out on public land. The impact on people in the right-of-way is essentially temporary and concerns expenses for which compensation will be granted in accordance with the Resettlement Framework Plan (RFP) submitted by CI-ENERGIES. The RFP defines the procedures for preparing and implementing a summary resettlement plan (SRP) that will describe measures that will be taken to address losses. The SRP should be submitted to the Bank for validation prior to implementation.

3.3 Impact of Energy Resilience on Fragility Factors

3.3.1 The project will adopt a dynamic approach because the activities proposed will trigger sources of social and economic resilience for communities in the project area. Indeed, the level of public and private investment opportunities in socio-economic infrastructure will increase. Furthermore, the number of individuals or households with access to basic social services, particularly drinking water, electricity, transport, education, health and market infrastructure, will also rise. Application of the fragility spectrum to the project appraisal shows a high capacity for community resilience in addressing the various forms of pressure faced, according to the five dimensions covered by the Peacebuilding and State-building Goals (Legitimate Politics, Security, Justice, Economic Foundations, Revenue and Services).

IV. PROJECT IMPLEMENTATION

4.1 Implementation Arrangements

4.1.1 The project executing agency will be Côte d’Ivoire Energies (CI-ENERGIES), which will be under the supervisory authority of the Ministry of Petroleum, Energy and Renewable Energy. CI-ENERGIES is a State corporation in charge of managing Government assets in the 12

electricity sector, monitoring financial and energy flows, and overseeing Government capital works. CI-ENERGIES has competent human resources to implement projects. However, to address certain weaknesses, its operational capacity will be strengthened with two consulting engineering firms to monitor field works, and a procurement specialist to oversee the recruitment of companies in charge of works.

4.1.2 A Project Management Unit (PMU), a Technical Committee, and a Steering Committee have been set up. The PMU will be responsible for day-to-day management of the project during its implementation phase from project approval to completion, and will report to the CI-ENERGIES Central Director of Infrastructure and Works. As regards the technical aspects of works design and supervision, the PMU will be supported by two consulting engineering firms, one for Savanes District and the other for Woroba and Zanzan Districts. The main responsibilities of the PMU are as follows: (i) planning and coordination of project activities; (ii) day-to-day supervision and control of project activities, with the support of consulting engineering firms; (iii) management of the procurement process for all project activities, including the preparation of contracts, which will be submitted to the country’s authorities for signature; (iv) preparation of payment requests for contractors and submission to authorised persons for signature; (v) monitoring of implementation of environmental safeguard measures, including management of compensation for project-affected persons (PAPs), in close collaboration with local administrative and traditional authorities, and representatives of the Ministry of Agriculture; and (vi) presentation of quarterly project progress reports as well as audit reports for project accounts to all stakeholders.

4.1.3 The PMU staff comprises: a coordinator, a legal adviser, a monitoring and evaluation expert, a contract administrator, an accountant, a procurement specialist, an environmental specialist, a social development specialist, and an administrative assistant. Furthermore, in each district there will be a Works Monitoring Unit comprising a project manager, an engineer with expertise in rural distribution networks, two inspectors for each engineer, and a driver. Members of the PMU will be drawn from CI-ENERGIES staff. Their CVs were submitted to the Bank for opinion and approved.

4.1.4 The Technical Committee is responsible for supervising and monitoring PMU's activities. Its main responsibilities will include: (i) approval of the PMU's annual work programme and budget; and (ii) approval of the project's annual reports. The Technical Committee will meet twice quarterly, or as often as necessary, to ensure timely implementation of the project. Meetings could be held formally or virtually, depending on the circumstances. The Steering Committee comprises three (3) CI-ENERGIES Directors (Central Director of Infrastructure and Works, Central Director of Management and Finance, and Director of the Procurement Department); two (2) representatives of Compagnie Ivoirienne d’Electricité (CIE), and a representative of the General Directorate of Energy. The Technical Committee will be chaired by the CI-ENERGIES Central Director of Infrastructure and Works, and the PMU Coordinator will provide secretarial services.

4.1.5 The main responsibility of the Steering Committee is to ensure the smooth running of the project and, where necessary, to provide strategic orientation to help achieve project objectives. It comprises representatives of the following ministries: Energy (Committee Chair), Planning and Development, Interior, Environment, Agriculture, and Construction as well as the Secretariat of State in the Prime Minister’s Office in charge of the State Budget and Portfolio, and CI-ENERGIES. The Committee meets twice yearly, or as often as necessary. The Project Coordinator will provide secretarial services.

4.1.6 The relevant departments of CI-ENERGIES will be involved in: (i) procurement and contract management; (ii) financial and accounting management; (iii) monitoring and

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evaluation; and (iv) communication. Two works control and supervision missions will be recruited. The project’s procedures manual will determine the working relationships between the various project stakeholders.

4.2 Procurement Arrangements

4.2.1 Goods (including non-consultancy services), works and consultancy services, financed by the Bank under the project, will be procured in accordance with the Procurement Framework for Operations Financed by the Bank Group, October 2015 edition, and the provisions set out in the Financing Agreement. More specifically, procurements will be made in accordance with:

- The Borrower’s procurement system: The procurement methods and procedures in Côte d'Ivoire's procurement system (Decree No. 2009-259 of 6 August 2009 on the Public Procurement Code, as amended by Decrees No. 2014- 306 of 27 May 2014 and No. 2015-525 of 15 July 2015), using the National Standard Bidding Documents (DNSAO) or other bidding documents as approved during the project negotiations for low-value, low-complexity, routine works and goods contracts provided for in the project and generally available in Côte d'Ivoire, and for which the fiduciary risk is deemed relatively low.

- The Bank’s procurement methods and procedures: The Bank's standard procurement methods and procedures, based on the relevant standard bidding documents for works, goods and consultancy services of greater scope and complexity, and for which the country’s fiduciary risk is deemed substantial.

4.2.2 Assessment of procurement risks and capacity: The risks at country, sector and project level, as well as the procurement capacity of the executing agency (EA) were assessed for the project3, and the results were used in choosing the procurement system (Borrower or Bank) to be used for specific activities or group of similar activities. Appropriate risk mitigation measures have been included in the PERCA action plan indicated in Section B.5.9 of Annex B5. Procurements made under the project will be subject to an annual external audit.

4.2.3 The Government has requested and obtained from the Bank agreement for the use of the Advance Contracting (AC) procedure, on which basis calls were launched for expressions of interest for the recruitment of control missions in August 2018, and competitive bidding for network extension works in September 2018. The first contracts will be signed upon approval by the Bank's Board of Directors.

4.3 Financial Management and Disbursement Arrangements

4.3.1 Financial Management: The PMU will perform all project administrative and financial management tasks, i.e. budget management, internal control, accounting, quarterly financial reports and annual financial statements, disbursements from the Bank and counterpart funds, and annual external audit of the project. The project’s budget will be adopted by CI- ENERGIES authorities and submitted to the Bank's task manager before the end of Year n-1 for execution. CI-ENERGIES administrative, financial and accounting project management procedures manual will be adapted to the project before its implementation, and the CI- ENERGIES accounting management software will be configured for use by the project. Finally, the project will, latest within 45 days following the end of the quarter, produce financial monitoring reports on its progress and submit them to the Bank's task manager.

3 For more details, see the Technical Annexes. 14

4.3.2 Disbursements: The Bank's financing resources will be disbursed using the direct payment (for payments for works and services contracts) and the special account method (for payments related to training and communication). This requires the opening of an account in a bank acceptable to AfDB. In addition, the Government of Côte d'Ivoire and CI-ENERGIES will provide counterpart resources to supplement the Bank's financing. These resources will be collected through an account opened in a commercial bank acceptable to AfDB. The project's bank accounts will be managed through regular production of monthly reconciliation statements and quarterly reconciliation statements for the Bank's special account.

4.3.3 Annual External Audit of Financial Statements: The project accounts will be subject to an annual external audit conducted by an independent auditor whose terms of reference will be approved by the Bank. The auditor's reports comprise the report on financial statements and the report on internal control, which must be submitted to the Bank within six (6) months following closure of the fiscal year. As such, the first and last audits may cover a maximum of 18 months depending on whether the first disbursement occurs in the second half of the year of first disbursement or whether the closing date is set in the first half of the closing year. The project will cover the audit cost.

4.4 Monitoring

Throughout its implementation and based on the baseline situation established by CI- ENERGIES, an operational monitoring and evaluation system will cover all project activities:

(i) The PMU will regularly monitor the execution of all project activities (procurement, management of various contracts, coordination between the consulting engineer in charge of works control and supervision and the companies, coordination with all the structures and public services concerned, the population and other stakeholders, approval of progress reports, acceptance and commissioning of works carried out, etc.) and will make recommendations, if necessary, to the Steering Committee to ensure proper and timely project implementation;

(ii) The PMU will submit quarterly project progress reports to the Bank. The reports will detail the physical status of the project, financial implementation including approved commitments and disbursements by component and source of financing, the major problems or constraints identified that could affect timely project implementation, and the recommended solutions. The reports will also highlight the results of the logical framework progressively obtained from project indicators. The reports of Bank supervision missions and the Government's monitoring missions, the consulting engineering firms responsible for works control and supervision, and the various audits will help to ensure proper project implementation or identify constraints or delays, and take appropriate actions to ensure that the project is implemented within the agreed timeframes and achieves its overall objectives;

(iii) The Bank will monitor the project through activities summarised in the table below. These activities will be carried out in line with the implementation schedule presented on page (vi). The project will be subject to at least one Bank supervision mission per year;

(iv) At project completion, the PMU, with the support of two monitoring missions, will prepare and submit a completion report to the Bank. In turn, the Bank will prepare its own project completion report. A project performance evaluation

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report will also be prepared by the Bank to measure the impacts of the project at least three years after completion.

Period Milestones Monitoring/Feedback Loop August 2018 – Recruitment of works - Approval of bidding documents January 2019 contractors and two control - Publication of competitive bidding notices missions - Approval of bid evaluation reports - Signing of the contracts - Publication of the Call for Expression of Interest - Approval of the short list and bidding documents - Approval of the bid evaluation report - Signing of the contract February 2019 - Works control and - Approval of the engineering studies September 2021 supervision - Implementation of the ESMP - Compensation of affected persons - Works execution - Works control and supervision - Bank supervision mission - Borrower’s monitoring mission July - December Recruitment of the financial - Publication of the Call for Expression of 2019 – auditor Interest Recruitment of the - Approval of the short list and bidding procurement auditor documents Recruitment of consulting - Approval of the bid evaluation report - Signing of contracts firms - Services provided Recruitment of training firms December 2020 – Project completion - Borrower’s project completion report March 2021 - Bank’s project completion report

4.5 Governance

The main potential governance risks could arise during implementation of the procurement plan, particularly in the recruitment of construction and consulting engineering firms. The risks could concern transparency of the process and compliance of materials, goods and works with the specifications in the bidding documents. In view of the weaknesses identified in the country's internal procurement systems, and to ensure the application of relevant good governance rules, international competitive bidding will be subject Bank rules and procedures for the procurement of goods, works and consultancy services. To ensure that equipment standards are respected and that the works are executed in accordance with accepted norms, the selected companies will work under the supervision and control of a single consulting engineering firm, in collaboration with the technical assistance for the project owner and the PMU. Prior Bank review and approval of certain procurement activities will be required. In addition, the project provides for independent auditors to audit its procurements and financial statements.

4.6 Sustainability

The project infrastructure will be sustained with resources generated by the sale of electricity. The infrastructure will form part of the Government’s power infrastructure portfolio currently managed by the CIE through a 15-year leasing contract concluded in 1990 and renewed in 2005 for the same period. Under the contract, the CIE bears all the operating, routine maintenance and management costs, and carries out maintenance works. The CIE has qualified staff to ensure the efficient operation of the project infrastructure. In addition, for a power company, CIE’s key efficiency indicators such as energy sold/worker (1.61 GWh/worker), number of customers 16

per worker (388 customers/worker), charges collection rate (93%), distribution (84.9%) and transmission (93.1%), network efficiency and outage time (23h50) are well above the African average4. The expansion of networks and connection of new subscribers in 426 localities will increase the operating costs. The project intends to minimise these costs by using equipment similar to or compatible with that currently in operation on the Ivorian HV/LV networks, thereby reducing stocks of spare parts. By using prepaid meters, it will also eliminate the cost of meter reading for billing purposes.

4.7 Risk Management

The potential project risks and the proposed mitigation measures are as follows:

Risks Mitigation Measures - Use of the advance contracting procedure to save time Delay in the delivery of infrastructure, - Reinforcement of the PMU with an individual consultant to and insufficient CI-ENERGIES human manage the procurement process resources - Training of staff in the Bank's procurement systems. Blockage of works by project-affected Commitment by the Borrower in the Loan Agreement to pay persons for non-payment of compensation to affected persons before works commencement compensation Delays in making connections due to - The mobilisation of counterpart resources for connections will be difficulties in mobilising the a condition precedent to disbursement of the ADB loan resources. counterpart contribution Difficulties in collecting payments for - Use of prepaid meters to connect households bills from customers in rural areas - Prepayments of consumption through mobile phone operators.

4.8 Knowledge Building

4.8.1 The project provides for knowledge-building activities through training for CI- ENERGIES staff in various areas of project management, energy sector planning, and the use of mechanical power line calculation software.

4.8.2 Quarterly and annual project progress reports, financial audit reports and procurement audit reports will be sources of information on the project. The same applies to reports by Bank supervision missions and Government monitoring missions. All these reports and the project completion reports will provide opportunities for learning and sharing lessons about project implementation. The Bank's publication of the Project Completion Report and the Project Performance Evaluation Report will help to share knowledge gained from implementing the project with Bank staff and the public. Lessons learned will enhance the design of similar Bank operations in its regional member countries in future.

V. LEGAL FRAMEWORK

5.1 Legal Instrument

5.1.1 To finance the project, the Bank will grant an ADB loan to the Government of Côte d’Ivoire.

4 CIE statistics for 2017. 17

5.2 Conditions for Bank Intervention

A. Conditions Precedent to Effectiveness

5.2.1 Effectiveness of the Loan Agreement shall be subject to the Borrower fulfilling, to the Bank's satisfaction, the conditions set out in Section 12.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the African Development Bank.

B. Conditions Precedent to First Disbursement of Loan Resources

5.2.2 In addition to effectiveness of the Loan Agreement, the first disbursement of the ADB loan resources shall be subject to the Borrower/Donee fulfilling, to the Bank's satisfaction, the following conditions:

(i) Provide the Bank with evidence of the signing of the agreement for on-lending the loan resources to CI-ENERGIES under terms and conditions acceptable to the Bank.

C. Special Condition Precedent to the Disbursement of Loan Resources in Connection with Works Involving the Temporary Displacement of the Population

5.2.3 Besides the effectiveness of this Agreement and fulfilment of the condition precedent to first disbursement of loan resources, the disbursement of loan resources for works involving an involuntary resettlement shall be subject to the Borrower’s fulfilment of the following condition, to the Bank’s satisfaction:

As works advance and prior to the start of any works in a given area, show evidence of compensating project-affected persons on the said area in line with the Environmental and Social Management Plan (ESMP), the Resettlement Action Plan (RAP), and applicable Bank rules and procedures, especially the Involuntary Resettlement Policy and the Integrated Safeguards System. Whenever such compensation is not possible either totally or partially due to the impossibility of identifying rightful claimants, or in case of litigation or any other impossibility independent of the Borrower’s will duly justified and acceptable to the Bank (hereafter called "Litigious Cases"), this condition could be deemed fulfilled if the Borrower shows evidence that the resources allocated to the compensation and/or resettlement of Litigious Cases have been transferred and deposited in a bank account acceptable to the Bank and specially meant for such compensation and/or resettlement, or transferred to a trusted third party acceptable to the Bank.

D. Other Conditions

5.2.4 In addition, the Borrower shall, to the Bank’s satisfaction, fulfil the following conditions:

(i) Provide the Bank, six months following issuance of the first service order for the works, with evidence of provision of 50% of the resources for household connections and indoor installations;

(ii) Provide the Bank, twelve months following issuance of the first service order for the works, with evidence of provision of the balance of resources for household connections and indoor installations. 18

E. Undertakings

5.2.5 The Borrower undertakes to:

(i) Implement the project and the Environmental and Social Management Plan (ESMP), and have them implemented by contractors in accordance with national law, as well as the recommendations, requirements and procedures contained in the ESMP and the Bank's relevant rules and procedures;

(ii) Submit to the Bank quarterly reports on the ESMP implementation, including, where applicable, deficiencies and corrective actions taken or to be taken; and

(iii) Submit to the Bank any document reasonably required for monitoring the project.

5.3 Compliance with Bank Policies

The project complies with all applicable Bank policies.

VI. RECOMMENDATION

Management recommends that the Board of Directors approve the proposed EUR 42.31 million ADB loan to the Government of Côte d'Ivoire to finance the Project to Improve Access to Electricity in Rural Areas (Savanes, Woroba and Zanzan Districts), under the terms and conditions set out in this report.

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Annex I: Comparative Socio-economic Indicators of Côte d’Ivoire

Côte d'Ivoire COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Côte Year Africa ping ped d'Ivoire Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2017 322 30 067 80 386 53 939 Total Population (millions) 2017 23,8 1 184,5 5 945,0 1 401,5 2500 Urban Population (% of Total) 2017 51,9 39,7 47,0 80,7 2000

Population Density (per Km²) 2017 74,9 40,3 78,5 25,4 1500 GNI per Capita (US $) 2016 1 520 2 045 4 226 38 317 1000 Labor Force Participation *- Total (%) 2017 67,1 66,3 67,7 72,0 Labor Force Participation **- Female (%) 2017 52,6 56,5 53,0 64,5 500

Sex Ratio (per 100 female) 0

2000

2005

2010

2011

2012

2013

2014 2015 2017 103,2 0,801 0,506 0,792 2016 Human Dev elop. Index (Rank among 187 countries) 2015 171 ...... Popul. Liv ing Below $ 1.90 a Day (% of Population) 2015 27,9 39,6 17,0 ... Côte d'Ivoire A frica Demographic Indicators Population Grow th Rate - Total (%) 2017 2,4 2,6 1,3 0,6 Population Grow th Rate - Urban (%) 2017 3,5 3,6 2,6 0,8 Population < 15 y ears (%) 2017 42,1 41,0 28,3 17,3 Population Growth Rate (%) Population 15-24 y ears (%) 2017 20,4 3,5 6,2 16,0 3,0 Population >= 65 y ears (%) 2017 3,0 80,1 54,6 50,5 2,5 Dependency Ratio (%) 2017 82,5 100,1 102,8 97,4 Female Population 15-49 y ears (% of total population) 2017 23,6 24,0 25,8 23,0 2,0 Life Ex pectancy at Birth - Total (y ears) 2017 52,6 61,2 68,9 79,1 1,5 Life Ex pectancy at Birth - Female (y ears) 2017 53,6 62,6 70,8 82,1 1,0 Crude Birth Rate (per 1,000) 2017 36,4 34,8 21,0 11,6 0,5

Crude Death Rate (per 1,000) 2017 12,9 9,3 7,7 8,8 0,0

2000

2005

2010

2012

2013

2014

2015 2016 Infant Mortality Rate (per 1,000) 2016 66,0 52,2 35,2 5,8 2017 Child Mortality Rate (per 1,000) 2016 91,8 75,5 47,3 6,8 Total Fertility Rate (per w oman) 2017 4,8 4,6 2,6 1,7 Côte d'Ivoire A frica Maternal Mortality Rate (per 100,000) 2015 645,0 411,3 230,0 22,0 Women Using Contraception (%) 2017 20,5 35,3 62,1 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2008 14,3 46,9 118,1 308,0 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2008 47,9 133,4 202,9 857,4 (years) Births attended by Trained Health Personnel (%) 2012 59,4 50,6 67,7 ... 80 Access to Safe Water (% of Population) 2015 81,9 71,6 89,1 99,0 70 60 Access to Sanitation (% of Population) 2015 22,5 51,3 57 69 50 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 40 2016 2,7 39,4 60,8 96,3 30 Incidence of Tuberculosis (per 100,000) 2016 153,0 3,8 1,2 ... 20 Child Immunization Against Tuberculosis (%) 10

2016 95,0 245,9 149,0 22,0 0

2000

2005

2010

2012

2013

2014

2015 2016 Child Immunization Against Measles (%) 2016 77,0 84,1 90,0 ... 2017 Underw eight Children (% of children under 5 y ears) 2012 15,7 76,0 82,7 93,9

Prev alence of stunding 2012 29,6 20,8 17,0 0,9 Côte d'Ivoire A frica Prev alence of undernourishment (% of pop.) 2015 15,4 2 621 2 335 3 416 Public Ex penditure on Health (as % of GDP) 2014 1,7 2,7 3,1 7,3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2016 96,7 106,4 109,4 101,3 Primary School - Female 2016 91,3 102,6 107,6 101,1 Infant Mortality Rate Secondary School - Total 2016 46,1 54,6 69,0 100,2 ( Per 1000 ) Secondary School - Female 2016 38,8 51,4 67,7 99,9 120 Primary School Female Teaching Staff (% of Total) 2016 28,0 45,1 58,1 81,6 100 Adult literacy Rate - Total (%) 2014 43,9 61,8 80,4 99,2 80 Adult literacy Rate - Male (%) 2014 50,7 70,7 85,9 99,3 60 Adult literacy Rate - Female (%) 2014 36,8 53,4 75,2 99,0 40 Percentage of GDP Spent on Education 2015 4,8 5,3 4,3 5,5 20

0

2000

2005

2010

2011

2012

2013

2014 2015 Environmental Indicators 2016 Land Use (Arable Land as % of Total Land Area) 2015 9,1 8,6 11,9 9,4 Agricultural Land (as % of land area) 2015 64,8 43,2 43,4 30,0 Forest (As % of Land Area) 2015 32,7 23,3 28,0 34,5 Côte d'Ivoire A frica Per Capita CO2 Emissions (metric tons) 2014 0,5 1,1 3,0 11,6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : May 2018 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+)

I

Annex II: Table of Bank Portfolio in Côte d’Ivoire (June 2018)

A. National Projects

Amount Amount Disburs. Disbursement Sector / Operation Approval Date Approved Disbursed Rate Deadline (UA Million) (UA Million)

ENERGY Electricity Transmission and Distribution Networks 1 16-Nov-16 114.38 12.16 10.6 31-Dec-20 Strengthening Project (PRETD) - ADB Sub-Total 114.38 12.16 10.6%

AGRICULTURE Agricultural Infrastructure Support Project in Indénié- 2 01-March-12 21.60 15.32 70.9 28-Feb.-19 Djuablin Region (PAIA-ID) - ADF Agro-industrial Pole Project in Belier Region (2PAI-

BELIER)- 25-Jan-17 53.41 2.12 3.9% 31-Dec-22 3 ADB 25-Jan-17 26.04 0.89 3.4% 31-Dec-22 ADF (Loan) 25-Jan-17 3.40 0.79 23.2% 31-Dec-22 ADF (Grant) 4 PPF – Enable Youth Côte d’Ivoire - ADF 07-July-16 1.00 0.10 10.5% 31-Dec-18

Value Chain Development Project in Indénié – 5 21-Oct-16 4.00 0.00 0% 30-June-20 Djuablin Region (PDC-ID) - NTF Sub-Total 109.45 19.22 17.5%

TRANSPORT Abidjan Urban Transport Project (PTUA) - ADB 16-Dec-16 197.13 0.0 0% 31-Dec-21 6 GEF-Global Envi. Facility 16-Dec-16 4.99 0.03 0.5% 31-Dec-21 Air Côte d’Ivoire Project - ADB 8-Nov-17 42.46 33.81 79.6% 31-Dec-23 7 ADF (Guarantee) 8-Nov-17 14.15 0.00 0% 31-Dec-23 ADF (loan) 8-Nov-17 3.55 0.00 0% 31-Dec-23 Sub-Total 262.28 33.84 12.9%

GOVERNANCE Industrial Sector Competitiveness Support Project 8 30-Sep-15 10.00 1.49 14.9% 30-Nov-19 (PARCSI) - ADF Economic and Financial Management Support 30-March-17 6.55 0.00 0% 31-Dec-19 Project - ADF (Loan) 30-March-17 0.21 0.00 0% 31-Dec-19 9 ADF (Grant) 30-March-17 9.61 0.13 1.3% 31-Dec-19 TSF (Loan) 30-March-17 0.03 0.02 95.3% 31-Dec-19 TSF (Grant) Sub-Total 26.40 1.64 6.2%

FINANCE Entrepreneurship Development Support Project – 10 16-Dec-14 0.67 0.39 59.4% 30-June-18 FAPA Sub-Total 0.67 0.39 59.4%

WATER AND SANITATION Support project for liquid waste recovery and 11 employment promotion in Bouake and Katiola 4-Sep-13 1.04 0.26 25.5% 31-Dec-18 (AWF) Sub-Total 1.04 0.26 25.5% TOTAL 514.22 67.51 13.1%

II

B. Regional Projects

Amount Amount Disb. Disbursement Sector / Operation Approval Date Approved Disbursed Rate Deadline (UA Million) (UA Million)

ENERGY 1 CLSG-Interconnection - Cote d'Ivoire-Transco -ADF 6-Nov-13 26.17 1.60 6.1% 31-Oct-20 2 CLSG - WAPP- Cote d'Ivoire – ADF 6-Nov-13 0.72 0.43 59.5% 31-Oct-20 3 CLSG – Rural Electrification Project - ADF 06-Nov-13 6.10 3.11 50.9% 31-Oct-20 Sub-Total 32.99 5.14 15.6%

TRANSPORT Road Development and Transport Facilitation Programme - Mano River Union (PARFT/UFM) - 18-Dec-14 42.64 7.62 17.9% 30-June-20 ADF (initial) 18-Dec-14 22.82 4.07 17.9% 30-June-20 4 TSF (TSF) 3-June-15 31.18 5.59 17.9% 30-June-20 ADF (Additional Loan) CI - Transport Development and Facilitation Project 5 on the Bamako-Zantiebougou Corridor – ADB 26-Nov-15 42.58 6.13 14.4% 30-June-21 ADF 26-Nov-15 30.00 3.10 10.3% 30-June-21 Sub-Total 169.22 26.51 15.6% TOTAL 202.21 31.66 15.6%

C. Private Sector Projects

Amount Amount Disburs. Disbursement Sector / Operation Approval Date Approved Disbursed Rate Deadline (UA Million) (UA Million)

ENERGY Power Plant Extension Project (CIPREL)- ADB 24-July-13 41.18 41.18 100% 13-Aug-28 1 TSF 24-July-13 12.44 0.00 0% 13-Aug-28 2 AZITO Power Plant Expansion Project - ADB 19-Dec-12 25.53 25.53 100% 27-Feb-20 3 Singrobo Hydroelectric Power Plant Project - ADB 06-Dec-17 41.49 0.0 0% 01-Jan-21 Sub-Total 120.64 66.71 55.3%

FINANCE 4 MCI Equity Participation - FAPA 16-April-10 0.70 0.59 84.5% 31-May-18 Sub-Total 0.70 0.59 84.5%

TRANSPORT 5 Air Côte d'Ivoire Project Private - ADB 8-Nov-17 35.20 0.00 0% 19-Jan-21 Henry Konan Bédié Toll Bridge - ADB 01-March-12 46.06 46.06 100% 28-June-27 6 TSF 4-Nov-15 8.76 0.00 0% 28-June-27 Riviera Toll Bridge Stand By - AfDB 1-March-12 2.07 2.07 100% 28-June-27 7 TSF 4-Nov-15 0.63 0.00 0% 28-June-27 Sub-Total 92.72 48.13 51.9% TOTAL 214.06 115.43 53.9%

III

Annex III: Major Ongoing Related Projects in Côte d'Ivoire Financed by the Bank and Other Development Partner

AMOUNT No. TFP PROJECTS (XOF Billion) Reinforcement of the Man HV substation Reinforcement of the Gagnoa HV substation Underground passage of the Abidjan HV network Replacement of annealed HV CPI cables with 240mmm² HV 1 World Bank CIS cables 102.20 Extension and strengthening of the 2nd group of 12 regional capitals Extension and reinforcement of 15 departmental capitals in the West and connection of 53,991 households Duplication of the 225 kV Man-Buyo-Duekoué line Construction of the 225/90/33 kV substation in Bondoukou Construction of the 90/33 kV substation in Touba 2 Exim Bank China Construction of the 225 kV substation in Sérébou 150.88 Construction of the Katiola substation Construction of 491 km of 93 mm² HV lines and 365 km of 148 mm² HV lines around 12 source stations Creation of MACA 2 and MACA 3 departures at Yopougon substation Creation of 11 departures at Anoumambo substation and HV restructuring Creation of 12 departures at Azito substation and HV restructuring Creation of 15 departures at Djibi substation and HV restructuring 2 BOAD 38.90 Construction of 151 public distribution substations in Abidjan Creation of 9 departures at Bassam substation and HV restructuring Creation of 10 departures at Anani substation and HV restructuring Restructuring of HV network in the industrial zones of Abidjan Extension, reinforcement and remote control of Abidjan's HV networks Extension, reinforcement and remote control of San Pedro’s HV networks 4 EIB/EDF 119 Extension, reinforcement and remote control of Bouake's HV networks Extension and strengthening of the first group of 10 regional capitals Extension and strengthening of the 1st group of 12 regional 5 AFD 39 capitals TOTAL 449.98

IV

Annex IV: Map of Côte d’Ivoire

This map has been drawn by the staff of the African Development Bank exclusively for use by 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 judgement concerning the legal status of a territory or any approval or acceptance of its borders.

V

Annex V: Rationale for Côte d’Ivoire’s Counterpart Contribution to Project Financing

The proposed project will be jointly financed by the Bank and the Government of Côte d'Ivoire. The Bank's contribution covers 87% of the total project cost excluding taxes in the country, and will be provided through an ADB loan of EUR 42.31 million. The Government's counterpart contribution is estimated at EUR 6.51 million, or 13% of the project cost. The counterpart contribution amount has been determined by mutual agreement with the Government based on the following three criteria, in accordance with the provisions of Section 4.2.2 of the Bank Group’s Eligible Expenditures Policy (revised version of 19 March 2008):

1. The country’s commitment to implement its development programme: In 2016, the Government of Côte d'Ivoire adopted its second National Development Plan (PND 2016-2020), which draws lessons from the implementation of PND 2012- 2015 and aims to make Côte d'Ivoire an emerging country by 2020. The growth rate is expected to average 8.8% within a stable macroeconomic framework. The new strategy will be based on the structural transformation of the economy. The Government's commitment to implement the PND was demonstrated by its organisation of a Consultative Group Meeting in Paris in May 2016 to mobilise resources for implementation of PND 2016-2020. The cost of PND 2016-2020 is estimated at XOF 30,000 billion, comprising XOF 12,284 billion for public investment and XOF 18,716 billion for private investment. In its determination to implement the PND, the Government, in partnership with the TFPs in Côte d'Ivoire, set up a Technical Secretariat last May to monitor the implementation of PND 2016- 2020 and strengthen dialogue with the TFPs for greater resource mobilisation.

2. The financing allocated by the country to the sector targeted by the Bank's assistance: The cost of investments for the energy sector in PND 2016-2020 is estimated at XOF 4,589 billion, or 15% of the total PND cost. To date, the Government has mobilised XOF 1,635 billion, comprising XOF 1,508 billion from its multilateral and bilateral development partners, and XOF 127 billion from its own resources. TFP resources include part that was mobilised during PND 2012- 2015 and whose financed activities are still being implemented. The mobilised resources have helped to increase the country's energy generation capacity (from 1391 MW in 2011 to 2200 MW in 2017), strengthen the transmission and distribution networks, and increase the people’s access to electricity from 77% to 82%.

3. The country's fiscal situation and debt level: The macroeconomic framework, supported by a three-year IMF programme, remained stable in 2017 and 2018, with a sound fiscal policy within a medium-term expenditure framework. Nevertheless, the 2017 Amending Finance Law introduced cuts in capital expenditure in favour of ordinary expenditure, which was increased to meet social demands, particularly those of civil servants and the military. The debt restructuring under the HIPC Initiative helped to maintain the public debt level as a percentage of GDP at 45.6% in 2015, with external public debt service representing 12% of government revenue. The country’s debt remains sustainable in light of the IMF staff's sustainability analysis in 2015 and the AfDB staff's country risk assessment in the same year. The 2016-2020 medium-term debt management strategy, backed by the Bank through institutional support, will ensure that debt sustainability is maintained. This is necessary in order not to negate efforts to mobilise external resources to finance PND 2016-2020. The Government has also put in place a three-year plan (2016-2018) to strengthen the capacity of staff of the Public Debt Department.

VI

In conclusion, in light of the foregoing and at Government’s request, it is proposed that the counterpart contribution be set at 13% of the total project cost, excluding taxes. The contribution of the Government of Côte d'Ivoire (EUR 6.51 million) will thus be used to fully finance household connections, expropriation costs, and executing agency’s operating costs.

VII