Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 39490-AFR

PROJECT APPRAISAL DOCUMENT

ON THREE PROPOSED CREDITS IN THE AMOUNTS OF

SDR 6 MILLION (US$9 MILLION EQUIVALENT) TO THE REPUBLIC OF BENIN

SDR 11.9 MILLION (US$18 MILLION EQUIVALENT) TO THE REPUBLIC OF MALI

Public Disclosure Authorized SDR 88.6 MILLION (US$135 MILLION EQUIVALENT) TO THE FEDERAL REPUBLIC OF NIGERIA

AND TWO PROPOSED GRANTS IN THE AMOUNTS OF

SDR 6 MILLION (US$9 MILLION EQUIVALENT) TO THE REPUBLIC OF GUINEA

SDR 9.9 MILLION (US$15 MILLION EQUIVALENT) TO THE REPUBLIC OF NIGER

FOR THE NIGER BASIN WATER RESOURCES DEVELOPMENT AND Public Disclosure Authorized SUSTAINABLE ECOSYSTEMS MANAGEMENT ADAPTABLE PROGRAM LENDING (APL) PROJECT

IN SUPPORT OF THE FIRST PHASE OF THE

NIGER BASIN WATER RESOURCES DEVELOPMENT AND SUSTAINABLE ECOSYSTEMS MANAGEMENT PROGRAM

June 7,2007

Water and Urban 2

Public Disclosure Authorized Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

(Exchange Rate Effective May 11,2007)

Currency Unit = US$1 1.52493US$ = SDRl

FISCAL YEAR January 1 - December31

ABBREVIATIONS AND ACRONYMS

AAP Africa Action Plan AfDB African Development Bank AFD Agence FranCaise de Dkveloppement (French Development Agency) APL Adaptable Program Lending AGETIER Agence d 'Execution des Travaux d 'Infrastructures et d 'Equipements Ruraux (Agency for the Implementation ofworks, Infrastructure and Rural Equipment) BCM Billion Cubic Meter BMAC Budget Management and Accounting Center CAS Country Assistance Strategy CeRPA Centre Rkgional pour la Promotion Agricole (Regional Centre for Agriculture Promotion) CHSS Conference ofHeads of State Summit CIDA Canadian International Development Agency COM Council ofMinisters CQ Consultant Qualifications DAERA Direction des AmBnagements et Equipements Ruraux Agricoles (Department for Development and Agricultural Rural Equipment) DCC Donors Coordination Committee DNGR Direction Nationale du Gknie Rural (National Rural Engineering Department) DPF Donor Partners Framework EA Environmental Assessment EOA Energy Option Assessment EMF Environmental Management Framework ERR Economic Rate ofReturn ES Executive Secretary ESMF Environment and Social Management Framework ESW Economic Sector Work EU European Union FA Financing Agreement FBS Fixed Budget Selection FCFA Franc de la Communaute' Financiire Africaine (African Financial Community Franc) FMA Financial Management Assessment FMR Financial Management Reports

-1- FOR OFFICIAL USE ONLY FMS Financial Management Specialist GEF Global Environment Facility GPN General Procurement Notice GWh Gigawatt hour HC High Commission HEP Hydroelectric Project IBRD International Bank for Reconstruction and Development IC Individual Consultants ICB International Competitive Bidding IDB Islamic Development Bank IDA International Development Association IFR Interim Financial Report IRR Internal Rate ofReturn ISDS Integrated Safeguards Data Sheet KDF Kuwait Development Funds Km Kilometer kWh Kilowatt hour LCC Local Coordination Committee LCS Least Cost Selection M&E Monitoring and Evaluation MDG Millennium Development Goal MWRD Multipurpose Water Resources Development MW Megawatt NE3A Niger Basin Authority NCB National Competitive Bidding NEPAD New Partnership for Africa's Development NFS National Focal Structure NGO Non-Govemmental Organization NIA National Implementing Agencies NPV Net Present Value NRC Niger River Commission NTDP Nigeria Transmission Development Project O&M Operation and Maintenance PDO Project Development Objective PHCN Power Holding Company ofNigeria PLC PIM Project Implementation Manual PMT Project Management Team POE Panel ofExperts PPF Project Preparation Facility PPMP Pest and Pesticide Management Plan PRSP Poverty Reduction Strategy Paper PWC Permanent Water Commission QCBS Quality- and Cost-Based Selection RAP Resettlement Action Plan RE30 River Basin Organization RCG Regional Consultative Group

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. RDS Rural Development Strategy RIAS Regional Integration Assistance Strategy RPF Resettlement Policy Framework RSC Regional Steering Committee SA Social Assessments SDAP Sustainable Development Action Plan SDN Sustainable Development Network SFIA Strategic Framework for IDA’SAssistance for Africa SHSG Summit of Heads of State and Government SIL Specific Investment Lending SREA Strategic Regional Environmental Assessment sss Single Source Selection TF Trust Fund UN United Nations UNDB United Nations Development Business WA Withdrawal Applications WAEMU West Africa Economic and Monetary Union WAPP West African Power Pool WRDSEM Water Resources Development and Sustainable Ecosystems Management

Vice President: Obiageli K. Ezekwesili Country Director: Mark D. Tomlinson Sector Manager: Eustache Ouayoro Task Team Leader: Ousmane Dione

... - 111 - AFRICA

NIGER RIVER BASIN WATER RESOURCES DEVELOPMENT AND SUSTAINABLE ECOSYSTEMS MANAGEMENT APL PROJECT IN SUPPORT OF THE FIRST PHASE OF THE NIGER RIVER BASIN WATER RESOURCES DEVELOPMENT AND SUSTAINABLE ECOSYSTEMS MANAGEMENT PROGRAM PROJECT APPRAISAL DOCUMENT Africa Region AFTU2

Date: June 7,2007 Task Team Leader: Ousmane Dione Director, Regional Integration: Mark Sectors: Power (40%); General water, sanitation Tomlinson and flood protection sector (55%); Central Sector Manager: Eustache Ouayoro government administration (5%)

Themes: Water resource management (P); Environmental policies and institutions (P); Regional integration (P); Other environment and natural resources management (S) Project ID: PO93806 Environmental screening category: Full Assessment Lending Instrument: Adaptable Program Safeguard screening category: A Lending (APL)

Guarantee For Loans/Credits/Others: Total Bank financing (US$m.): - First Phase: 186.00 - Second Phase: 3 14.00 estimated total US$SOO million equivalent over a period oftwelve years

Republics of Benin, Guinea, Mali, Niger

Republic of Nigeria

- iv - Republics of Guinea, Mali, Niger, Benin, Burkina APL 2 314.00 200.00 514.00 12/03/2011 1013 1/2018 Faso, Cbte d’Ivoire, Chad, Cameroon and Federal Republic of Nigeria. 247.20 747.20 1

Tel: +227-2072-3 102 - Fax: +227-2072-4208 Email: abnsec@,iniaer.ne

Project implementation period (phase 1): 5 years Expected effectiveness date: 11/01/2007 Expected closing date: 01/31/13 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Does the project require any exceptions from Bank policies? [ ]Yes [XINO

Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [XIYes [ ]No Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Project development objective: The project development objective is to enhance regional coordination, development and sustainability ofwater resources management in the Niger River Basin.

Project description: Component 1: NBA institutional strengthening and capacity building: (US$7.77 million). Component 2: Rehabilitation, optimization and development of regional infrastructure (US$l38.45 million). Component 3: Sustainable management of selected degraded ecosystems and rehabilitation of small water infrastructure (US$39.78 million)

’ The US$200 million co-financing for Phase I1will vary based on donors’ commitment with priorities as agreed to in the Sustainable Development Action Plan (SDAP).

-v- Which safeguard policies are triggered, if any?

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [X 1 11 Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [XI [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [I [XI Forests (OP/BP 4.36) [XI [I Safety ofDams (OPBP 4.37) [XI [I Projects in Disputed Areas (OP/BP/GP 7.60) [I [XI Projects on International Waterways (OP/BP/GP 7.50) [XI El Significant, non-standard conditions, if any, for:

Grantshredits effectiveness:

a) The Subsidiary Agreements have been signed between Benin, Guinea, Mali, Niger and Nigeria respectively and NBA;

b) NBA has established a computerized information system for the financial management and procurement of the Project (including software customization, adoption of the Project Manual of Financial, Accounting and Administrative Procedures in form and substance satisfactory to the Association, training in procurement and financial management and short term assistance), in a manner satisfactory to the Association;

c) NBA has recruited an external auditor for the Project with terms of reference, qualifications and experience satisfactory to the Association;

d) NBA has revised the attributions, composition and organization of the existing Regional Steering Committee in form and substance satisfactory to the Association, and has recruited a Regional Coordinator for the Project, with terms ofreference, qualification and experience satisfactory to the Association;

e) NBA has entered into service agreements, in form and substance satisfactory to the Association, with each of the National Implementing Entities (and in the case ofNiger, the Niger Focal Structure, which shall be a party to the service agreement, has been established), for the execution ofthe activities ofComponents 2 and 3 ofthe Project.

Covenants applicable to project implementation: a) No later than four months after the Effective Date, NBA shall enter into a Memorandum of Understanding with the West African Power Pool for the joint supervision of Component 2 of the Nigeria Project Activities;

- vi - NBA shall hrnish to the Association, as soon as available, but in any case no later than September 1 of each year, an annual action plan and budget for the Project for the following year, in form and substance satisfactory to the Association, and of such scope and detail as the Association shall have reasonably requested, except for the annual action plan and budget for 2008, which shall be furnished no later than October 1, 2007 or thirty (30) days after the Effective Date, whichever is latest;

No later than two months after the Effectiveness Date, NBA shall recruit an accountant and a procurement specialist, each with terms of reference, qualifications and experience satisfactory to the Association;

No later than twelve months after the Effectiveness Date, each of Benin, Guinea and Mali shall establish its respective National Focal Structure (NFS) with composition and attributions satisfactory to the IDA;

No later than two months after the Effectiveness Date, the National Implementing Agency of Benin and Niger shall each recruit a procurement consultant with terms of reference, qualifications and experience satisfactory to the Association;

No later than one month after the Effectiveness Date, Mali’s National Implementing Agency shall recruit an accountant with terms of reference, qualifications and experience satisfactory to the Association;

No later than one month after the Effective Date, the Nigeria’s National Implementing Agency shall recruit a consultant to help prepare the bidding documents for the Kainji dam, with terms ofreference, qualifications and experience satisfactory to the Association.

- vii - AFRICA Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

CONTENTS

Page I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues...... 1 B. Rationale for Bank involvement ...... 4 C . Higher level objectives to which the project contributes...... 6 I1. PROJECT DESCRIPTION ...... 6 A . Lending instrument ...... 6 .. B. Program Objective and Phases...... 7 C . Proposed project development objective(s) ...... 9 D. Project components ...... 10 E. Lessons learned and reflected in project design ...... 14 F. Alternatives considered and reasons for rejection ...... 16 I11. IMPLEMENTATION ...... 17 A . Partnership arrangements...... 17 B. Institutional and implementation arrangements ...... 17 C . Monitoring and evaluation of outcomes/results ...... 19 ... D. Sustainabllity...... 20 E. Critical risks and possible controversial aspects ...... 21 F. CreditdGrants conditions and covenants ...... 22 IV. APPRAISAL SUMMARY ...... 24 A . Economic and Financial Analysis ...... 24 B. Technical...... 27 C . Fiduciary ...... 27 D. Social...... 28 E. Environment...... 29 F. Safeguard Policies ...... 30 G. Policy Exceptions and Readiness...... 32

... .vi11 . Annex 1: Country and Sector or Program Background...... 33 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 44 Annex 3: Results Framework and Monitoring ...... 47 Annex 4: Detailed Project Description...... 53 Annex 5: Project Costs ...... 60 Annex 6: Implementation Arrangements ...... 65 Annex 7: Financial Management and Disbursement Arrangements ...... 70 Annex 8: Procurement Arrangements ...... 90 Annex 9: Economic and Financial Analysis ...... 104 Annex 10: Safeguard Policy Issues ...... 118 Annex 11: Communication Strategy Summary ...... 126 Annex 12: Programmatic Approach Note ...... 131 Annex 13: Project Preparation and Supervision ...... 137 Annex 14: Documents in the Project File ...... 139 Annex 15: Statement of Loans and Credits ...... 142 Annex 16: Niger River Basin Countries at a Glance ...... 144 Annex 17: Map IBRD 31840 ...... 145

.ix . I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

Regional context and key development issues 1. The Niger River provides the economic mainstay for its nine riparian countries - Benin, Burkina Faso, Cameroon, Chad, C6te d’Ivoire, Guinea, Mali, Niger and Ni eria. It is Africa’s third longest river (4,200 km) with a basin area of nearly 1.5 million kmK . Despite the Basin’s tremendous potential for development and investment, it still remains under- developed, limiting economic growth and the means to improve the livelihoods of its population. The potential to harness the water resources from the river for hydropower, imgable lands, productive agriculture, fisheries and improved navigation to promote flow of goods and people across borders has still to be developed. To date, seven out of the nine Basin countries are among the bottom 20 poorest countries in the world’. Close to 85 percent of the Basin population lives in rural areas where food security and social well-being directly depend on the river and on the existing water resources. This heavy dependence on the use ofthe Niger River’s water resources places the Niger Basin Authority (NBA) at the center ofany meaninghl regional development process. The pressing issues facing the Niger Basin are:

0 Increasing population and vulnerable groups: The Basin’s population is approximately 110 million with an average annual growth rate of 2.8 percent. The biggest share of the population is taken up by Nigeria with more than 80 million people whose livelihoods directly depend on the resources of the rivershed. Women and children under the age of 15 represent more than half of this population. They remain vulnerable and deprived oftheir means of livelihood because of the degraded watershed and the inadequate level ofdevelopment ofwater infrastructure in the river basin. With declining per capita income, poverty has reached critical levels in most of the Niger Basin countries, especially those in the Sahelian and landlocked areas. Furthermore, vulnerability to droughts and poverty has increased and most of the population lives without sustainable access to basic services such as potable water, health and adequate food. The Basin’s rural poor represent a significant population in the riparian countries (63.8 percent in Mali, 40.2 percent in Cameroon, 40 percent in Guinea, 64 percent in Chad and 63 percent in Niger)3. Improving living conditions in the basin will require multifaceted interventions addressing infrastructure development, income generating activities, restoring the natural environment and strengthening the management ofwater and natural resources in the basin.

0 Degraded environment: Poor land and water management practices coupled with high water variability basin-wide, contribute to severe ecosystems degradation in an already poverty-stricken environment. The increased needs for energy and limited access to electricity compel the Basin population to use wood and charcoal for domestic purposes. This over-exploitation results in deforestation and biodiversity loss. In Guinea, 67 percent of the forests in the Niger River headwaters are degraded

* The Human Development Report, 2006, UNDP Human Development Index Ibid

1 while in the Niger Republic, more than three percent of the portion of the basin is annually deforested, mainly because of human activities and climatic effects. This process has resulted in land degradation, loss of fertility of agricultural areas and pasturelands for sustainable cattle grazing. Cumulatively, these factors are perpetuating a vicious cycle of environmental degradation which in turn directly threatens rural communities whose livelihood depends on these ecosystems. Over the years, these factors have further increased poverty and put severe pressure on land and water resources. Reversing the Basin’s environmental degradation calls for concrete actions that will offset the poor land and water resources management practices which are holding back productive activities and the performance of the existing water infrastructure facilities.

Unutilized development potential: The Niger River Basin is endowed with abundant natural resources. However, inadequate management and development of water resources have resulted in sub-optimal benefits. Therefore, optimizing benefits from the existing water infrastructure will improve both agriculture and livestock production - the primary sectors ofthe basin. Furthermore, adequate water resources development and management can facilitate incremental benefits associated with increased productivity and income. Current development opportunities in the Basin include: (i)2.5 million ha of irrigable land of which only 20 percent are developed; (ii)30,000 GWh of hydropower potential of which only 6,000 GWh are developed, mostly in Nigeria; (iii)6,000 km ofnavigable waterways ofwhich less than 200 km are currently exploited, mainly in the Niger Delta in Nigeria; and (iv) an annual river discharge of 200 km3 or billion cubic meters (BCM) of which less than 30 km3 is stored in water infrastructure. Additional opportunities for economic development in the basin include the development of fisheries, watershed management and ecotourism, all ofwhich could provide incremental benefits associated with new and rehabilitated water infrastructure. It is ofutmost importance for the riparian countries that immediate actions are carried out to assist the Niger Basin Authority and the countries develop a clear framework that will, in an integrated and optimized manner, tap into these opportunities.

Inadequate operation and maintenance of existing water infrastructure: Insufficient water infrastructure and inadequate operation and maintenance are heavily overtaxing existing infrastructure by deferring maintenance resulting in sub-optimal utilization of water resources which might otherwise have generated multiple benefits. While it is clear that additional infrastructure is required to effectively mitigate the seasonal and annual variability of the Niger River, improved operation and maintenance of the existing ones will ensure greater efficiency in the use ofthe existing assets and ensure their long-term sustainability. Adequate o eration and maintenance of existing large water infrastructure such as Kainji (15 kmP ), Jebba (3.8 km3)and Shiroro (6 km3)are constrained by multiple issues ranging from inappropriate maintenance, conflicting planning and lack of funding. The situation is similar for small water infrastructure. Funding is required to rehabilitate and upgrade existing infrastructure, establish a clear framework of interventions promoting sustainable management of valuable assets, and develop the existing water resources potential.

2 0 Competitive unilateral development and the NBA ’s ineficiencies: The lack of sufficient robust legal instruments for effective cooperation among the Basin countries is the main reason behind the inclination of many countries for unilateral development of the river’s resources. Over the last decades, this unilateral development has limited the NBA’s ability to coordinate regional development. To optimize the Basin’s opportunities, it is imperative for the Niger Basin riparian countries to empower the NBA by adopting key legal instruments and institutional mechanisms that promote cooperative development of major water infrastructure in the Basin, overall coordination, management and optimization of activities across the Basin.

Progress in revitalizing the Niger Basin Authority. 2. Established in 1963, the Niger River Commission (NRC) was commissioned to promote cooperation between the member states and to ensure integrated development, particularly in the areas of energy, water, agriculture, forestry, transportation, communication and industry. The revised convention of 1980 transformed the NRC into the Niger Basin Authority (NBA), and was further strengthened in 1987. It provided a powerful platform to promote, facilitate and coordinate water resources development in the Niger River Basin by empowering the NBA to play a lead role in assisting the riparian countries to coordinate the Basin’s development. Despite this clear mandate, the NBA’s performance was modest as the institution engaged in a variety of small projects and activities that allowed it to survive. During this period, the NBA moved away from its core mandate to manage and strategically develop the river basin. Consequently, the institution underwent a severe crisis, until the end of the 199Os, when the Heads of States decided to revitalize the cooperative framework of the Niger Basin. The nine riparian countries acknowledged that planning for the use ofwater resources exclusively at the national level would prevent them from maximizing the opportunities the river could offer if developed cooperatively. Therefore, the development of a cooperative framework supported by joint actions promoting regional cooperation and growth became a high priority.

3. In outlining this process, the riparian countries agreed to revitalize the Niger Basin Authority. They also agreed to focus on concrete actions which pave the way for broad regional cooperation and investment across the Basin as described in the following political and technical milestones: February 2002, Abuja - the 7th Heads of State Summit acknowledged the danger of unilateral planning and committed to pursue a regional dialogue and seek support for cooperative, sustainable development of the Niger River. They agreed to develop a Shared Vision supported by a Sustainable Development Action Plan (SDAP) for the Basin. Subsequently, the Chairman ofthe Heads ofState Summit requested the World Bank to support this cooperative initiative; January 2004, Yaound6 - the NBA’s Council ofMinisters (COM) agreed to undertake an institutional and organizational audit of the NBA with the World Bank and other donors’ support; April 2004, Paris - the NBA’s Heads of State signed the Paris Declaration launching the Shared Vision process supported by the Sustainable Development Action Plan

3 (SDAP) and called upon donors to support concrete actions that pave the way for the preparation and implementation of the SDAP. They also approved the Niger Basin Partners Framework to foster harmonization of donors’ interventions, and designated the World Bank as the lead agency; 0 January 2005, Bamako - the NBA’s COM approved the preliminary finding of the regional priority actions to be developed in the Basin and instructed the NBA to liaise with the World Bank and other partners for concrete initial actions on the ground; May 2005, Abuja - the NBA’s COM approved the institutional and organizational reform ofNBA, including the complete revamping ofits human resources; 0 February 2006, Fada Ngounna - the first Niger Basin Civil Society Forum reasserted the needs, aspirations and dynamics of stakeholders contributing to the cooperative development and management ofthe Niger Basin as a common heritage; 0 September 2006, Niamey - the NBA’s COM approved progress made in the SDAP and called upon the World Bank and other partners to speed up the preparation of a regional program as an initial step towards the implementation ofthe SDAP.

4. These decisions endorsed by the NBA’s highest political level decision-makers and civil society organizations alike provide clear evidence of the nine riparian countries’ ownership and readiness to undertake cooperative actions in the Niger Basin. This willingness to cooperate is also clearly confirmed by riparian countries’ agreement to rehabilitate the Kainji and Jebba dams using regional resources within the Niger Basin Authority framework. It is also demonstrated by the funding of the preparatory studies of Kainji and Jebba dams and other relevant studies within the Basin through financing incurred by the Niger Republic on behalf ofthe other countries. There is a clear recognition from the riparian countries that involving Nigeria, as the downstream riparian country, in the development of the program is critical to any collaborative efforts to manage the Basin’s water resources given its population within the basin, the importance of its economy and its political clout in the Region. Furthermore, following its organizational reform, the NBA now has the technical and institutional mechanisms to adequately implement its mandate to the satisfaction of its local, national and regional constituencies. The strengthening of the NBA’s capacity means it is increasingly viewed as an effective institution able to coordinate the development ofthe Basin’s water resources.

B. Rationale for Bank involvement

5. The project fits within the World Bank’s Africa Region’s strategy to provide support for regional integration efforts that: (i)have economic and social benefits going across country boundaries; (ii)present clear evidence ofboth country and regional ownership; and (iii)provide a platform for a high level policy harmonization among countries. The riparian countries’ ownership and firm commitment are motivated by the successful reforms of the NBA, and by the World Bank’s involvement, from inception, in the renewal of the new cooperative framework. The importance of the Niger Basin’s water resources for a population representing more than half of the population of West Africa requires a coordinated and integrated approach for the management ofthese resources for the common benefit of all water users. The high variability of the Niger Basin’s water resources and the chronic energy crisis has led to increasing competition for dams’ development with the risk

4 of triggering conflicts among countries in a volatile region which has already experienced armed conflicts in the last 1.5 years. A coordinated approach to dam development under a clear framework offers the best alternative to inefficient development of the common resources and their rapid degradation. The Bank, with its history and long standing involvement in the Basin, is well placed to move the regional integration process forward. The Strategic Framework for IDA’S Assistance for Africa (SFIA) recognizes regional approaches as a means to increasing opportunities for poverty reduction, especially through the management of shared resources. The NBA and the riparian countries have identified regional priority issues consistent with the nine Country Assistance Strategies (CAS - Benin: May 29, 2003; Guinea: March 26, 2003; Mali: July 31, 2003; Niger: January 31, 2003; Nigeria: June 28,2005) and Poverty Reduction Strategy Paper (PRSP) goals for good governance and sustainable development. The identified interventions are closely connected with the World Bank’s newly established Sustainable Development Network (SDN), and provide opportunities to consolidate synergies between water-infrastructure-energy and environmental sustainability. The First Phase Project of the Niger Basin Program qualifies for support from the special provision for selected regional integration projects approved under the International Development Agency (IDA) 14 Replenishment Agreement. Under this special provision, one-third of the total project resources come from each participating country’s IDA allocation, while the two-thirds come from regional funding from the special provision.

6. The NBA’s riparian countries have specially requested the Bank’s assistance in financing this project based on its ability to gather other donors who can finance large investment needs. The Bank’s experience in preparing and funding similar water resources management projects, and regional river basin organizations in the Region and worldwide have been critical determinants in its selection as the lead agency under the donors’ collaborative framework to support the NBA and for this project. In addition, the Bank has been active through different Global Environmental Facility (GEF) operations that have paved the way for the current institutional strengthening ofthe NBA.

Proven lessons for engagement 7. The First Phase Project of the Niger Basin Program design builds on multiple analytical works across the Basin to identify relevant and strategic priorities that demonstrate effective benefits of multi-country and multipurpose activities, promote economic development and regional stability. It also encapsulates lessons learnt from regional, national to local level experiences ranging from integrated multipurpose water resources development to ecosystems management and income generation activities associated with environmental protection. These lessons combined with the Bank’s long term involvement in the Niger River Basin demonstrate that regional and coordinated approaches are crucial in the development of natural resources in international river basins. As such, the First Phase Project of the Niger Basin Program provides a unique opportunity to jointly develop the water resources, promote shared benefits and foster regional integration. In accordance with the New Partnership for Africa’s Development (NEPAD), the Africa Action Plan (AAP),and the NBA’s Donor Partners Framework (DPF), it will also contribute to the harmonization ofdonors’ interventions.

5 C. Higher level objectives to which the project contributes

Accordance with the Bank’s regional integration, water sector, and country assistance strategies 8. The First Phase Project of the Niger Basin Program will contribute to the objectives of the SDAP which promotes coordinated and cooperative development of the Niger Basin in order to achieve a sustainable increase in the overall productivity ofwater resources. It is anticipated that this will lead to an improvement in the livelihoods of people in the nine riparian countries. The riparian countries’ commitment to cooperation is confirmed by their endorsement of the NBA’s reform. The countries regard a strong NBA as essential to their strategy to collectively improve the living conditions of their population through the productive use of the Basin’s natural resources. Improving the living conditions of their population by reducing poverty are embedded in the main pillars of the Basin countries’ respective PRSPs. The Bank’s Country Assistance Strategies (CAS) for each country advocates sustainable natural resources management, strengthening of governance and institutional capacity, and inclusion ofyouth and gender dimensions4.

Youth, Gender and Poverty 9. In the Niger Basin, poverty largely impacts groups (including women and youth) that are already deeply affected by the lack of concrete initiatives promoting income generating activities and addressing unemployment. This project will improve their livelihoods by promoting wide-ranging activities including the creation ofeconomic activities that depends on a reliable power supply from rehabilitated infrastructure. It will restore degraded ecosystems and secure the main productive activities in fishing, irrigation and agro-forestry. It is also anticipated that this development will promote job creation, reduce the rural exodus and immigration of youth to the coastal countries and abroad. In addition, the involvement of women and youth in the overall management of the basin is crucial as they are the main users and the ones most affected. Their representation and the participation of fishermen, farmers, herders and other stakeholder associations is a critical step for civil society ownership as reflected in the Fada Ngourma Declaration.

11. PROJECT DESCRIPTION

A. Lending instrument

10. Provision of IDA financing is being proposed using an Adaptable Program Lending (APL) instrument. This APL will provide ‘horizontal’ support across the region to help the NBA consolidate its institutional and legal reforms and ‘vertical’ support to countries to improve water resources development and management activities at local and national

Main PRSP pillars to which this program contribute: Nigeria: Improved environment and services for non-oil growth; Njgg: Development of productive sectors, especially in rural areas; Mali: Development of infrastructure and support for key productive sectors; Benin: Strengthening the macro-economic framework over the medium- term; Guinea: Development of water resources and environmental protection; Cameroon: Develop basic infrastructures and natural resources; Chad: Ensuring strong and sustained economic growth; Burkina Faso: Accelerate growth based on equity; C6te d’Ivoire: Promotion of the private sector and rural development.

6 levels. The APL will span 12 years and be implemented in two successive phases. Phase I lasting five years, and Phase I1 seven years. The rationale for using the APL instrument is to ensure long term support to the NBA countries. In compliance with IDA 14 requirements, Grants would be provided to Niger and Guinea while Credits would be given to Mali, Benin and the Federal Republic of Nigeria. This long term perspective is consistent with the specificity of developing collaborative cooperation among countries and developing large infrastructure that takes time to implement. Developing a collaborative framework for water infrastructure development and adequate water resources management for the benefit ofsuch a large population requires the strengthening of regional institutions to manage common goods. The process takes time for institutions like the NBA, and is essential for long term sustainability. Long term commitment from the donors is to be balanced with the needs for the countries to make clear progress on setting the basis for sustainability so that investments are not neglected and their benefits lost due to lack of proper management, operation and maintenance. Steady progress is critical for fostering this long term commitment, and allowing the Bank and other donors to continue financing the Program.

11. The phased approach will facilitate a prioritization of investments aligned with appropriate funding and specific incentives for the countries to move on some ofthe critical prerequisites of long term sustainable development and management of the Niger Basin’s water resources. The scope, magnitude, and timing of the second phase will depend on the successful implementation of the first phase and on the prioritized investments identified in the SDAP. The NBA and its member countries know that the Bank’s support for the second phase depends on the triggers from the first phase being met and a consensus built on the selected priorities within the SDAP.

B. Program Objective and Phases

12. The overall Program development objective is to enhance regional coordination, development and sustainability of water resources management in the Niger River Basin. The expected outcomes would include: (i)improved institutional coordination for regional management and development of water resources in the Niger River Basin; (ii)improved performances of rehabilitated hydroelectric plants in targeted areas; (iii)improved irrigated agriculture in targeted areas; and (iv) improved watershed management in targeted areas.

13. The overall Program outcomes would be measured by:

Percentage of activities implemented according to the Sustainable Development Action Plan, Hydropower capacity (MW) rehabilitatedinstalled throughout the Niger Basin, Increased hectares ofirrigated surface, Percentage of watershed area within the Niger River Basin using agro-forestry, river bank stabilization, silt and sedimentation control.

14. The overall program is expected, after completion ofthe full implementation period, to have benefited 5 million people in the Basin and indirectly benefited approximately 10 million people.

7 15. The overall program cost is estimated at US$747.2 million, for which IDA contribution is US$500 million. The nine riparian countries agreed that the First Phase would focus on the five countries situated on the Niger River’s main stem. A total of US$186 million would hdthe first phase and comprise three credits, and two grants. The proposed three credits are US$9 million to Benin, US$18 million to Mali, and US$135 million to Nigeria. The two proposed grants are US$9 million to Guinea, and US$15 million to Niger. The second phase of the overall program would include the remaining four countries (Burkina Faso, Cameroon, Chad and CBte d’Ivoire) and would thus contribute to the implementation ofthe SDAP in all nine riparian countries.

16. The First Phase would include three main components. Component 1 focuses on the institutional strengthening and capacity building of the NBA and the national structures involved in the project’s implementation. Component 2 addresses the rehabilitation, optimization and development of regional infrastructure. Component 3 deals with the rehabilitation of small water infrastructure and the sustainable management of selected degraded ecosystems to manage “public goods” while providing incentives to communities through income generation activities. The multi-sector approach would broaden the range and scope of potential investments and generate and capture a wider range of direct and indirect benefits. It would also generate a spillover ofbenefits across countries due to more reliable energy supply deriving from the rehabilitated dams, the regeneration of ecosystems through better optimization of reservoirs and water resources across the basin and the management of “public goods” types of activities associated with afforestation, watershed management, erosion and sedimentation control activities. A carbon finance mechanism will be also considered to seek additional financing through the rehabilitation of the Kainji and Jebba hydropower plants.

17. Following consultations with the NBA’s COM, the riparian countries have agreed on clear triggers to move to the Second Phase of the APL. The selected triggers are limited in number, and will aim at measuring progress by countries in meeting some of the key achievements essential to the sustainable management of the water resources of the Niger River Basin.

18. The policy, legal and institutional triggers constitute the endorsement and subscription by the NBA’s member countries to the legal instruments and institutional mechanisms for the efficient water resources optimization and management at the regional level including: (i)a Niger Basin regional environmental code has been adopted by riparian countries; (ii)the legal instruments for the joint management and optimization of large infrastructure, dispute resolution and arbitrage enforcement have been developed and adopted by riparian countries; (iii)the finalization of the Niger Basin Water Charter; and (iv) the creation ofa Permanent Water Commission (PWC).

19. The technical trigger is that PHCN has met the expected output in terms of availability ofthe rehabilitated units 5, 6 and 12 ofKainji power plant.

8 20. The Second Phase would build on the completion of due diligence processes for planned water infrastructure and on the lessons learnt from the ecosystem management activities to scale up activities across the Basin including the four remaining riparian countries in the program. The activities already identified for the second phase include: (i) NBA institutional strengthening and capacity building; (ii)completion of the remaining activities on the rehabilitation of Kainji hydropower plant and eventually adoption of black Start facilities in Jebba hydropower plant; (iii)rehabilitation of Lagdo dam and Garoua River port on the Benue; (iv) master planning ofthe Benue sub-basin; (v) contribution to the financing of Fomi, Taoussa, Kandadji and Zungeru dams; and (vi) scaling up of income generation activities associated with ecosystem management and mitigation measures for the development of additional water resources infrastructure. The on-going studies on the feasibility ofdam sites would provide timely information for the selection ofsuitable sites to be supported in the Second Phase.

C. Proposed project development objective(s)

21. The project development objective (PDO) is the same as the program objective: to enhance regional coordination, development and sustainability of water resources management in the Niger River Basin. However, the project outcomes are targeted to the five Niger Basin countries participating in the First Phase. The key project outcome indicators, accordingly, will be:

e Percentage of activities implemented according to the Sustainable Development Action Plan (SDAP); 0 Hydropower capacity (MW) rehabilitated at Kainji and Jebba hydropower plants; 0 Increased hectares of irrigated surface in Mopti region (Mali), Tillabkri region (Niger), Karimama and Malanville districts (Benin); 0 Percentage ofwatershed area in Faranah region (Guinea), Mopti region (Mali), Dosso and TillabCri regions (Niger) and Alibori region (Benin) using agro-forestry, river bank stabilization, silt and sedimentation control.

22. Figure B.l summarizes the expected shared benefits across the five participating countries in the First Phase. The development of multipurpose activities will generate a range of benefits within and across the boundaries of the five participating countries. The proposed ecosystems management activities including watershed management, agroforestery, siltation and erosion control will provide locally and regionally ecological services, thus improving both the quality and quantity of the basin water resources. This, in turn, will enable the development of income generation activities, increased agricultural production and flows of goods across borders. Futhermore, increased water availability associated with the rehabilitation of Kainji and Jebba hydropower dams will augment the energy production with more reliable electricity supply to Nigeria in neighboring countries including Niger and Benin.

9 Figure B. 1: Schematic flow ofshared benefits in the First Phase Project

0 Damrandweirs

TLANTlt OtE

D. Project components

Component 1: NBA institutional strengthening and capacity building: (US$7.77 million equivalent)' 23. This component would enhance the capacity of the NBA and its National Focal Structures including other national institutions involved in implementing the First Phase Project ofthe Niger Basin Program. The key sub-components identified are:

a) Strengthening and capacity building of the NBA (US$3.77 million equivalent). Key activities include: (i)reinforcing the NBA's administrative and management skills to set up an Overall Performance Evaluation system; (ii) strengthening the NBA's communication and practices for sharing information, knowledge and experience, implementing its communication's strategy and reinforcing the NBA's Information Technology; (iii)updating and implementing, jointly with other partners, the NBA's capacity building program; and (iv) supporting the project's management and supervision.

b) Strengthening and capacity building of national water resources management institutions (US$l.16 million equivalent). This sub-component would strengthen the NBA's National Focal Structures including additional skills, resources and staff trainings for coordination with National Implementing Agencies (NIAs) and supervision ofthe Project's activities.

5 Total financing for Component 1 is expected to be approximately $14.76 million inclusive ofparallel donor financing from the European Union (EU), the French Development Agency (AFD) and the Canadian International Development Agency (CIDA).

10 Institutional support and strengthening of regional water resources management and planning (US$2.84 million equivalent). Activities under this sub-component would: (i) support the establishment of a Regional Consultative Group (RCG) to build a participatory consensus on water infrastructure development in the Niger Basin; (ii) prepare regional guidelines for the management ofwater infrastructure based on updated dams feasibility studies planned in component 2; (iii)provide an independent Panel of Experts (POE) to support the RCGwith the “infrastructure management and optimization options” and “recommendations for coordinated regional infrastructure management rules” (iv) support the creation of a Permanent Water Commission (PWC) as a regulatory water management mechanism in the Niger Basin; (v) establish sub-basin commissions to apply the required subsidiary principles to implement the SDAP; (vi) prepare a Niger Basin regional environmental code; (vii) prepare legal instruments for joint management of water infrastructure, dispute resolution and arbitrage enforcement; and (vii) support the implementation of the Niger Basin Water Charter. This sub- component also includes the Project Preparation Facility (PPF) studies that supported the preparation ofthe First Phase Project ofthe Niger Basin Program.

Component 2: Rehabilitation, optimization and development of regional infrastructure (US$138.45 million equivalenQ6 24. This component would focus on rehabilitating and upgrading the existing large’ water infrastructure of regional relevance, and supporting the regional planning framework. The rehabilitation of regional infrastructure and the development of additional ones are central to the Basin countries’ agenda. They would increase opportunities for improved multipurpose activities such as irrigation, fisheries and ecosystem regeneration with greater water storage capacity and adequate management. More critically these infrastructures would reduce the severe regional energy crisis with more reliable supply and increase power sharing between riparian countries. The Kainji and Jebba hydropower plants in Nigeria have the potential to increase the energy production at a low cost and to supply additional energy to Niger and Benin.

25. Several agreements are already in place to support the regional dimension and complement the benefits to be accrued from the dams and hydropower plants rehabilitation. These agreements include: (i)the 1972 bilateral agreement between Nigeria and Niger to provide 40 MW of firm power supply over a 20 year period from Kainji hydropower plants; (ii)the 1992 re-negotiated bilateral agreement to allow the export ofan additional 30 MW to Niger; and (iii)the extension ofthe existing bilateral agreements to 2007. Those agreements will be fbrther expanded and consolidated throughout the Basin in addition to the transmission lines to transport the generated electricity from these hydropower plants and

6 Total financing for Component 2 is expected to be approximately $144.66 million inclusive ofparallel donor financing from the European Union and the French Development Agency. ’ The adjectives ‘small and large’ are not necessarily related to the geometrical dimensions of the water infrastructure. In the context of this note, the adjective ‘small’ is intended to designate complexity of water infrastructure that local communities (beneficiaries) can reasonably handle, possibly with some limited technical assistance by public and/or private entities. ‘Large’ water infrastructure, on the other hand, are those that, in the local context, require the intervention of specialized, external resources (planners, designers, contractors, suppliers, etc.).

11 other facilities through activities financed under the Northern Corridor to be included in the third phase ofthe West African Power Pool (WAPP-APL 3, CR 4092 GH- Nov. 1,2005).

26. The subcomponents include:

Rehabilitation of Kainji dam and hydropower plant (US$l15.88 million equivalent). This subcomponent includes: (i) rehabilitation and harmonization of productive electromechanical equipments to restore the available capacity from the current 480 MW up to the total installed capacity of 760 MW; (ii)rehabilitation of auxiliary services; (iii) rehabilitation of the navigation lock; (iv) upgrading instrumentation and monitoring equipments; (v) improvement of the flood warning systems and development of a decision support and management system; (vi) implementation of the environmental action plan to mitigate potential impact of the rehabilitation of Kainji and Jebba sites; and (vii) operational support and reinforcement of PHCN and the National Focal Structure in Nigeria.

Rehabilitation of Jebba hydropower dam (US$l I.67 million equivalent). This subcomponent consists of: (i)selected rehabilitation of electro-mechanical equipments to ensure the availability of the entire installed capacity of 578 MW; (ii)rehabilitation of auxiliary services; (iii)civil works for stabilization of the tailrace channel and rehabilitation of upper navigation lock; (iv) upgrading ofinstrumentation and monitoring equipment; (v) prevention of tree invasion; and (vi) reinforcement of the maintenance workshops.

Assessing optimization and management options for the development of regional water infrastructure (US$lO.90 million equivalent). This sub-component will support the strategic planning and development of regional multipurpose water infrastructure in the Niger River Basin by bringing all major potential infrastructure at the same level of technical assessment (at a detailed engineering design level including the relevant environmental and social requirements). Key activities will include: (i)complementary studies for Fomi dam in Guinea; (ii)complementary studies for Taoussa dam in Mali; (iii)complementary studies for Kandadji dam Niger; and (iv) feasibility and detailed engineering studies for Zungeru dam in Nigeria.

Component 3: Sustainable management of selected degraded ecosystems and rehabilitation of small water infrastructure (US$39.78 million equivalent)* 27. This component would combine small water infrastructure rehabilitation and ecosystems management in order to support income-generating activities. The NBA and the riparian countries have agreed on the technical, social and political criteria to select areas where these activities would be implemented. The technical criteria are related to the severity of environmental degradation and locations’ suitability for restoration and for maximum project impact. The social criteria are related to the degree of poverty and integration of vulnerable groups, including women and youth throughout the Basin. The political criteria are linked to countries’ decision to re-balance development activities across

* Total financing for Component 3 is expected to reach approximately US$73.78 million inclusive ofparallel donor financing from the African Development Bank.

12 the Basin to focus on regional cooperation and integration. The areas and related activities were selected in a participatory process in order to engage the communities for the sustainable management of the water resources. Selected areas include: the upper Basin in Guinea (region of Faranah); the headwaters tributaries in Benin (upper Alibori, Goungoun, Sota and Goroubi - Karimama and Malanville Districts); the Inner Delta in Mali (Circles of Mopti, Douentza, Djenne and Tenenkou); and the Niger River middle section in Niger Republic (regions ofTillab6ri and Dosso). The selected activities are as follows:

Rehabilitation and diversijkation of small dams (US$2.40 million equivalent). Key activities include: (i)rehabilitation 12 small dams in Benin and diversification of agricultural activities; and (ii)rehabilitation of two small dams in Niger including the development ofhorticulture, irrigated vegetables, livestock and their marketing.

Rehabilitation and extension of small irrigation schemes (US$9.26 million equivalent). Key activities include: (i)rehabilitation of three irrigation schemes in Niger through drainage restoration and development of flood and silt protections; (ii)development of small irrigation schemes in Benin; and (iii)development of recessional agriculture in Mali and the marketing ofagricultural production.

Support to the development of traditional Jisheries (US$4.91 million equivalent). Key activities in Mali and Niger will: (i)promote sustainable fishing practices and fish production processing; (ii)upgrade technology to enhance the livelihoods of fishermen (training and equipment such as nets, boats, ovens, processing and storage facilities); (iii) support co-management of fishery activities in selected areas; (iv) support institutional strengthening and capacity building for sustainable development of fishery activities; and (v) support development of local fishery management plans and marketing of fishery production.

Watershed Restoration and agro-forestry (US$20.12 million equivalent). i. Integrated development of lowland areas (bas-fonds) -- Key activities in Guinea include: (i)development of a watershed management plan; (ii)afforestation of key vulnerable and degraded areas; (iii)identification of key areas suitable for local income generation activities based on land suitability and water conditions; and (iv) .. training in appropriate agricultural practices for watershed management. 11. River bank stabilization and erosion control - Key activities include: (i)river bank stabilization in Mali and sediment flow control in selected Koris in Niger; (ii)sand dunes stabilization in selected Dallos in Niger; (iii)restoration and afforestation of ... degraded slopes and plateaus in Niger; and (iv) training ofcommunities. 111. Restoration of pastureland ecosystems - Key activities in Mali will: (i)develop management plans for bourgou production and regeneration; and (ii) support community participation and management of bourgou including effective management ofproceeds and provision ofappropriate tools. iv. Forestry protection and development of aao-forestry - Key activities in Benin and Guinea include: (i)design of community plans for sustainable development and management of forest and forestation activities; (ii)afforestation of degraded hot

13 spots areas; (iii)introduction of seedling nurseries; and (iv) training of community organizations.

e) Operational Support to National Implementing Agencies (US$3.09 million equivalent). This sub-component will aim at reinforcing and supporting NIAs towards successhl implementation ofcomponents 2c. and 3 in Guinea, Mali, Niger and Benin.

28. The total project cost for the components, inclusive of donor parallel financing, is summarized in table 1 below:

Table 1: Project cost and components

(million US$) IDA Donor Components Project YO Parallel YO Total % costs financing Component 1. NBA institutional strengthening 7.77 53 6.99 47 14.76 6 & capacity building

Component 2. Rehabilitation, optimization & I38.45 96 6.21 4 144.66 62 development of regional infrastructure

Component 3. Sustainable management of selected degraded environments and 39.78 54 34.00 46 73.78 32 rehabilitation of small water infrastructure . Total Costs 186.00 80 47.20 20 233.20 100 Front-end Fee Total Financing Required 186.00 80 47.20 20 233.20 100

E. Lessons learned and reflected in project design

29. The proposed Niger Basin WRDSEM APL program was designed taking into account the lessons learnt from a decade ofBank engagement in river basins development in Africa and from regional projects such as the Niger Basin Reversing Land and Water Degradation project, the Niger Basin Institutional and Organizational Reform process, the Senegal River Basin Multipurpose Water Resources Development, hydropower rehabilitation projects in Zambia (IDA 30420 - March 2, 1999) and Ghana (Cr. 2109 GH - Sep. 11, 1999), and the Loess Plateau Watershed Rehabilitation in China (IBRD 4470- Dec- 16, 1999). The four most pertinent lessons applying to this project are:

Coherence of approach and sustainability. Aligning national and regional priorities is critical to ensure that ownership of regional operations is in place and that countries will avoid using unilateral approaches to achieve their development objectives. Regional operations require realistic implementation schedule and budget to take into account their complex nature and this requirement is even more important when dealing with power plant rehabilitation which requires extensive research and investigation followed by a proper design of the scope of work. The First Phase

14 Project of the Niger Basin Program has been designed whereby that regional and national activities are developed consistently and complement each other in terms of generated benefits. e Institutions strengthening and capacity building. Regional projects can only be effective and countries can only buy in regional operations when these are designed and managed by competent regional institutions with technical credibility and political back up. Consolidating the capacity of the Niger Basin Authority and enhancing the capacity of National Implementing Agencies are crucial to effectively achieve the stated results and ensure sustainability of the First Phase Project of the Niger Basin Program activities. The institutional reform of the NBA contributes to this objective by bringing together regional competence and promoting an environment ofconfidence in which riparian countries can engage simultaneously on national and regional development agendas. For this reason, the first component of the project focuses on institutional strengthening and capacity building at all levels. In addition, improving communication and information on the existing and planned infrastructure will enhance an environment of trust where the Regional Consultative Group and the Panel ofExperts will foster regional endeavors.

Infrastructure development and climate variability. Due to their dependence on the Niger Basin’s water resources, the development of water infrastructure is central to the economic agenda of many riparian countries. Over the last decades, the continuous climate variability has led to low economic performances with a magnitude of impacts going beyond national boundaries. This is particularly the case of the five countries located in the main stem of the Niger River where the extreme climatic events of droughts and floods have prompted the planning and development of water infrastructure. Ensuring sound operation and maintenance of existing infrastructure and maintaining a coherent vision for risks prevention is a pre-requisite to respond to climate variability and address the water storage gap. The creation of the Permanent Water Commission and Sub-Basin commissions will also contribute to regional water resources allocation and management.

Regional common goods and national constituencies. In the Niger Basin, national agendas have until recently dominated regional ones. Consequently, regional common goods have not been fully experienced to yield appreciable benefits for the NBA’s member countries, although Nigeria’s water infrastructure provides significant benefits to neighboring Niger and Benin. The Shared Vision process, supported by the SDAP, constitutes a robust framework for optimal cooperation and coordinated water resources management. While countries’ interests vary across the Basin, it is important to maintain a comprehensive approach of the development opportunities and achieve good compromises which result in fair benefits to all. In this process, local constituencies should be well rewarded as they are the primary caretakers ofthe Basin resources, but who, in most cases, are the last beneficiaries of regional common goods. The combination of ecosystems management and water infrastructure development provide leverage to consolidate national agendas and promote regional common goods approach. For example, afforestation of the upper

15 sources in Guinea will benefit infrastructure in Mali. Similarly, erosion control and silt reduction in Mali and Niger Republic will have a positive impact on existing water infrastructure in Nigeria. Conversely, the support of Nigeria in regional infrastructure development and planning, and sharing some benefits (such as electricity) of its water infrastructure with upstream countries encourages the overall regional solidarity and common goods development. Nigeria will, therefore, have a strategic role as energy producer in the Basin but also as an advocate for a mix between hydro, thermal and regional power pooling to ensure the security of the energy supplied.

30. The design ofthe operation also builds upon the lessons and experiences from other regional infrastructure APL programs, such as the WAPP and the Senegal River Basin Multipurpose Water Resources Development (MWRD) Program. The main lessons applied to this program are:

The design of APL programs which provides a regional umbrella for multi-faceted, multi-country infrastructure projects should focus on achieving regional program goals (and complement national activities) to ensure their effective implementation. Furthermore, regional project implementation should be as much as possible articulated with objectives assigned to regional institutions. Accordingly the WRDSEM 1 program is firmly grounded regionally within NBA's mandate to harmonize and coordinate across the Basin. In addition, subsidiary principles should be applied for activities ofnational interest by using the most effective institutions of each beneficiary member states covered by the program. Consequently, national activities would be handled by experienced agencies such as the Power Holding Company of Nigeria (PHCN), Centre Rkgional pour la Promotion Agricole (CeRPA/Borgou -Alibori) in Benin, Direction Nationale du Gknie Rural (DNGR) in Guinea, Direction des Amknagements et Equipements Ruraux Agricoles (DAERA) in Niger and Agence d 'Exe'cution des Travaux d 'Infrastructures et Equipements Ruraux (A GETIER) in Mali.

The generation oftangible benefits for the stakeholders is critical to maintain the full ownership and consensus-building among them during and beyond the First Phase Project implementation. Consistent with the Fada Ngourma Declaration, the First Phase Project takes into account the stakeholders expectations including those at local level, through a transfer ofknowledge. Best practices in community participation and involvement in the design of technical activities which generate income were drawn from the Loess Watershed Rehabilitation Project in China.

F. Alternatives considered and reasons for rejection

31. Two alternatives for lending and project design were considered and rejected as identified below:

0 APL vs. SIL. The rationale for using the APL instrument is to ensure long-term commitment and sustainability in water resources development and ecosystems

16 management in the Niger River Basin to address the huge financing needs required for rehabilitating existing large hydropower facilities but at the same time financing the development of water infrastructure to increase storage and address climate variability. The APL is considered as the most appropriate vehicle as it will help address the need for adequate instruments to deal with the joint management of large scale infrastructures. The APL facilitates the prioritization of investments aligned with appropriate funding. This is particularly relevant for the rehabilitation of the Kainji hydropower plant for which the present poor status justifies the mobilization of adequate finding to restore capacity and appropriate level of operation by ensuring harmonization of the electromechanical equipment. Furthermore, the APL instrument will also allow NBA and its member countries to consolidate their Shared Vision framework with a long term approach through coordinated actions with potential joint benefits on the ground.

Parallel Individual National Programs. Individual national programs could not address the transboundary issues or the need for systematic and coordinated decision- making for overall water resources development in an international river basin. Similarly, attempting to restore and protect environmental degradation cannot be sustainable if the proposed activities are not strategically targeted and coordinated across borders. Furthermore, individual national programs would likely be more costly and result in duplication and inconsistencies, thus potentially leading to tensions among countries especially in the case ofunilateral large infrastructure.

111. IMPLEMENTATION

A. Partnership arrangements

32. First and foremost, the NBA is a partnership between the riparian countries of the Niger River. The transformation of the Niger Basin Commission to a Niger Basin Authority further enhanced the ability ofthe institution to respond to the collective goal ofaddressing, regionally, the Basin’s development challenges. The nine riparian countries are all signatories of relevant acts and decisions that govern the NBA since 1980. Second, the NBA’s Donors Consultative Committee established in 2000 is the mechanism to coordinate donor support to the NBA and is led by the World Bank. The First Phase Project of the Niger Basin Program builds upon the principles of this framework to further engage other partners in the cooperative development of the Niger Basin. The project complements activities funded by other partners such as AFD, CIDA, AfDB and EU and which support the finalization of the SDAP and the related Investment program (see Annex 2). It is expected that the adoption ofthe SDAP, in line with the assistance strategy ofthese partners, will result in their participation in the second phase ofWRDSEM 2.

B. Institutional and implementation arrangements

33. The NBA would be responsible for the overall implementation and coordination of WRDSEM 1 on behalf ofthe five riparian countries participating in the First Phase Project, namely the Republic of Benin, the Republic of Guinea, the Republic of Mali, the Republic

17 of Nigerand the Federal Republic of Nigeria. The legal arrangements of the First Phase Project would be similar to those put in place for the Senegal River Basin Multipurpose Water Resources Development Program (IDA 41820, Ida 41830, IDA 41840 and IDA H 2310 - March 14, 2007). The World Bank would enter into financing agreements with each ofthe five participating countries and into a project agreement with the NBA. The proceeds of the IDA financing would be made available to the NBA under subsidiary agreements between each of the countries and the NBA. Annex 6 details the overall coordination and implementation arrangements. Component 1, related to institutions strengthening and capacity building, would be regionally implemented by the NBA as a transversal activity. Components 2 and 3 would be executed by the National Implementing Agencies (NIA) identified during project preparation under services agreements signed between them and NBA. A capacity assessment of the NBA’s human resources has been done and additional staff would be recruited and integrated into the NBA’s technical department to ensure efficient and effective implementation ofthe First Phase Project.

34. The institutional setting for implementation, monitoring and evaluation of the WRDSEM 1 project is as follows:

0 The NBA would anchor the First Phase Project at the regional level. Additional staff would be recruited and fully integrated to the existing organization in the NBA. These additional staff would complement staff (procurement, financial management and technical) previously working for ongoing projects like the Global Environment Facility’s (GEF) Reversing Land and Water Degradation project, and the Silting Control projects funded by the AfDB. The NBA would sign service agreements with relevant NIAs. These agencies would execute the national activities in their respective countries, under the coordination and supervision ofnational focal structures.

Regional Steering Committee (RSC): This Committee established in 2004 by the NBA’s Council of Ministers would maintain oversight of the WRDSEM APL program. The RSC would meet at least once a year to give overall guidance to the NBA and its National Focal Structures, formally review progress and approve annual project workplans.

0 NBA Observatory: The Observatory was established in 2005 within the NBA to ensure effective monitoring and evaluation of the NBA’s activities within the river basin. The observatory would handle data collection and all required tasks to track project indicators, in collaboration with national agencies.

West Africa Power Pool (WAPP): As the overall coordinating body for the power utilities in West Africa, the WAPP would liaise with the NBA to better coordinate the development of power-related infrastructure in the Niger Basin. The First Phase Project would promote a regional framework towards joint planning of hydropower production and electricity transmission. This approach would be specifically tested with the rehabilitation ofthe Kainji and Jebba hydropower plants to which the WAPP will participate to complement the NBA’s limited expertise and experience in the power sector. 0 The NBA National Focal Structures: The First Phase Project of the Niger Basin Program would build on national project teams created under the GEF’s Niger Basin Reversing Land and Water Degradation project (TF 53233 - April 12, 2005). They have been transformed to National Focal Structures (NFS) to respond to the need of the riparian countries to have a permanent technical arm of the NBA. They would coordinate and assess progress ofactivities carried out in each country. The NFS9 will handle the financial management of funds related to the coordination and supervision activities of the project in their national territory. This choice is the result of their positive handling of the financial management of the above mentioned GEF project. However, they would not be involved in the procurement of project activities. The national focal structures would be strengthened with additional staff when required.

0 National Implementing Agencies (NIAs): The National Implementing Agencies involved in the First Phase Project of the Niger Basin Program implementation are DNGR in Guinea, AGETIER in Mali, DAERA in Niger, CeRPA/Borgou-Alibori in Benin and PHCN in Nigeria. These agencies will directly execute activities in their area of expertise and they will recruit private sector operators and NGOs to carry out some of the activities. They will be responsible for procurement. A detailed description ofthese institutions is provided in Annex 6.

C. Monitoring and evaluation of outcomes/results

35. The Project Development Objective’s (PDO) performance indicators and the detailed list ofresult indicators for the components are provided in Annex 3. The scope and reach of this multi-sectoral regional project requires a Monitoring and Evaluation (M&E) system that is robust and decentralized to facilitate systematic data collection in each of the five participating countries. M&E capacity at the national level in the specific areas of intervention to track data to feed into the NBA’s observatory will be strengthened. Data will be collected for each of the indicators identified in the Results Framework by country through the National Focal Structures, aggregated at the national and then at the regional level by the Niger Basin Observatory. Surveys to collect socio-economic data were financed under the Project Preparation Facility (PPF). Monitoring progress associated with reaching the First Phase Project of the Niger Basin Program’s triggers will be carried out as part of the overall M&E arrangements. The NBA’s Observatory will have the overall responsibility for M&E and will report to RSC and to the NBA’s Council of Ministers. The institutional arrangements for data collection, analysis, and presentation are also detailed in Annex 6.

In the case ofNiger Republic, the NFS will have the overall financial management responsibilities because of the implementing agency weakness (DAERA) in this area.

19 D. Sustainability

36. The overall Niger Basin Program is designed to foster ownership, enhance coordination and ensure long-term sustainability for water resources development and ecosystems management in the Niger Basin.

37. The First Phase Project would support institutional sustainability through the preparation of legal instruments and institutional mechanisms that promote effective planning and development of water infrastructure. At the regional level, the project would promote the establishment ofthe regional consultative group (RCG) to foster dialogue on the development of new regional water infrastructure in line with the principles of the Shared Vision. This RCG will be guided as needed by a panel of experts (POE) in agreeing on the major infrastructure to be built in the Basin. The project would also support the creation ofa Permanent Water Commission (PWC), a consultative body to guide the NBA on the overall planning, management and optimization of the Basin’s water resources. At the national level, improved capacities of and coordination with National Implementing Agencies will facilitate more effective management of the water resources and protection of degraded ecosystems within the Basin. At the local level, a decentralized and participatory approach, empowering key stakeholders in the design and decision making, will foster ownership and promote local level constituency. The First Phase Project would build on all relevant experiences accumulated by the participating institutions acting under the subsidiarity principles. The reporting to the NIA and the NBA will foster accountability and transparency of involved institutions in the project’s implementation. Thematic exchanges are expected to drive Performance enhancement at the institutional and organizational level, as well as on some technical issues (identification and dissemination ofbest practices).

38. Technical and environmental sustainability will be supported through the planned restoration and management of degraded environments (component 3). The technical packaging of these activities to generate income for local communities contributes to the medium and long term environmental sustainability. The First Phase Project will also support tailored capacity building of all participating institutions and involved communities across the Basin specifically to better address environmental matters.

39. Financial and economic sustainability will be assured with the PHCN’s improved performance management. The First Phase Project would closely work with the on-going “Nigeria - Transmission Development Project” (Cr. 3559-UNI -May 3 1, 2002)) particularly on tariffs and cost recovery issues. Consequently, adequate resources will be mobilized to ensure effective operation and maintenance of the power plants and the two dams. Furthermore, the existing mechanism for the financial contributions ofcountries to the NBA has been improved together with the payment of arrears on past contributions based on the renewed willingness of riparian countries to transform the NBA into a financially viable institution. At the local level and under Component 3, the use of participatory approaches, contribution of beneficiaries to the subproject’s costs, and institutional and organizational strengthening oflocal stakeholders will support the sustainability ofdifferent sub-projects.

20 E. Critical risks and possible controversial aspects

40. The risks associated with implementing this project are high. Therefore, the current economic, political and social circumstances in the Basin combined with the governance dimension need to be carehlly considered and robust mitigation measures proposed as shown below:

Risk Mitigation Measures

General project complexity To ensure successful implementation, the following including the challenges of measures have been taken: (i)implementing NBA’s international waters and communication strategy to foster common competing national understanding, collaboration and coordination among agendas. riparian countries; (ii)developing mechanisms and legal instruments supported by a regional consultative group and a panel of experts to advise and guide riparian countries on large infrastructure development and regional optimization; (iii)identifying activities and beneficiaries at national and local levels to ensure that key stakeholders and vulnerable groups are positively impacted by the First Phase Project ofthe Niger Basin Program activities; and (iv) clarifying roles and responsibilities of each agency in terms of financial management and procurement to avoid delays and increase accountability. Furthermore, the NE3A’s and the National focal Structures staffing will be increased. Weak governance, which Procurement capacity assessments have been camed S may cause delays in project out for all institutions involved in the First Phase implementation due to lack Project of the Niger Basin Program implementation ofrobust procurement and activities. The following provisions have been made to financial management further mitigate poor governance issues: (i) arrangements. procurement and financial management for the rehabilitation of Kainji and Jebba electromechanical equipment, has been handed to the existing PHCN’s PMUwhich has the capacity and experience through similar energy projects; (ii)National project teams established by the GEF project were transformed to National Focal Structures to support when required the First Phase Project of the Niger Basin Program financial management; and (iii)intensive training for both the NBA and national institutions will be provided by the on-going IDF grant to enhance procurement and fiduciary capacity of the NBA and national institutions.

21 The NBA’s lack of The NBA’s involvement in national and local level S experience for within riparian countries is relatively recent with the implementing a regional implementation ofthe GEF and silting control projects. project ofthis magnitude The NBA’s recent institutional revamping and reform and to coordinate activities ofits National Focal Structures, provide more capacity at national and local levels. for adequate involvement ofcommunities in the Basin overall development and management ofactivities. In addition, the services agreements to be signed with experienced NIAs will also reduce the risk offailure of national and local activities to be developed within countries. Finally, the NBA’s capacity building include twining it with more experienced RBOs to fast track its learning oflessons and best practices to adequately deliver on riparian countries expectations. Additional costs during The scope ofwork for the rehabilitation and the overall rehabilitation ofthe 40 year bidding document package (single responsibility H old Kainji hydropower plant contract) have been carefully defined based on exceed contingencies extensive technical studies conducted by consulting firms. Partial rehabilitation ofthe A rehabilitation contract with performance based H Kainji hydropower plant elements will guide the rehabilitation ofthe will generate benefits not hydropower plant and incentives will be built in the proportionate with the contract so that the contractor will appropriately take financed amount. care ofthe works. Donors’ commitment and The First Phase Project of the Niger Basin Program N willingness to cooperate design and objectives derived from the principles ofthe with the Bank in support of Shared Vision Framework which all donor partners the NBA is less than have agreed on. Key activities are complementary to anticipated. the ones supported by other partners and will further facilitate the implementation ofthe SDAP for which all the NBA’s Dartners are involved in. Overall risk rating H

F. CreditdGrants conditions and covenants

41. The proposed conditions and legal covenants are as follows:

Effectiveness conditions:

a) The Subsidiary Agreements have been signed between the NBA and Benin, Guinea, Mali, Niger and Nigeria respectively;

b) NBA has established a computerized information system for the financial management and procurement ofthe Project (including software customization, adoption of the Project Manual of Financial, Accounting and Administrative Procedures in form and substance satisfactory to the Association, training in procurement and financial management and short term assistance), in a manner satisfactory to the Association;

22 c) NBA has recruited an external auditor for the Project with terms of reference, qualifications and experience satisfactory to the Association;

d) NBA has revised the attributions, composition and organization of the existing Regional Steering Committee in form and substance satisfactory to the Association, and has recruited a Regional Coordinator for the Project, with terms of reference, qualification and experience satisfactory to the Association;

e) NBA has entered into service agreements, in form and substance satisfactory to the Association, with each of the National Implementing Entities (and in the case of Niger, the Niger Focal Structure, which shall be a party to the service agreement, has been established), for the execution ofthe activities ofcomponents 2 and 3 ofthe Project.

Dated Covenants:

No later than four months after the Effectiveness Date, NBA shall enter into a Memorandum of Understanding with the West African Power Pool for the joint supervision ofcomponent 2 ofthe Nigeria Project Activities;

NBA shall fbrnish to the Association, as soon as available, but in any case no later than September 1'' of each year, an annual action plan and budget for the Project for the following year, in form and substance satisfactory to the Association, and of such scope and detail as the Association shall have reasonably requested, except for the annual action plan and budget for 2008, which shall be fbrnished no later than October 1,2007 or thirty (30) days after the Effective Date, whichever is latest;

No later than two months after the Effectiveness Date, NBA shall recruit an accountant and a procurement specialist, each with terms ofreference, qualifications and experience satisfactory to the Association;

No later than twelve months after the Effectiveness Date, each ofBenin, Guinea and Mali shall establish its respective National Focal Structure (NFS) with composition and attributions satisfactory to the IDA;

No later than two months after the Effectiveness Date, the National Implementing Agency of Benin and Niger shall recruit a procurement consultant with terms of reference, qualifications and experience satisfactory to the Association;

No later than one month after the Effectiveness Date, Mali's National Implementing Agency shall recruit an accountant with terms ofreference, qualifications and experience satisfactory to the Association;

No later than one month after the Effectiveness Date, the Nigeria's National Implementing Agency shall recruit a consultant to help prepare the bidding documents for the Kainji dam, with terms of reference, qualifications and experience satisfactory to the Association.

23 IV. APPRAISAL SUMMARY

A. Economic and Financial Analysis

42. The First Phase Project would ensure the realization of regional benefits through rehabilitation of hydropower plants in Nigeria, and would build the case for empowering local communities through the promotion of economic activities compatible with resource conservation and management - these are crucial from a sustainability perspective. Nearly five million people will either directly or indirectly benefit from the rehabilitation ofnational water infrastructure and the promotion ofeconomic activities along the watershed in the first phase. The rehabilitation of the Nigerian hydropower plants will benefit nearly 50 million electricity users across the Basin.

Economic Costs

43. The First Phase Project’s economic costs are composed of: (i)the full base costs of the public investment without taxes in infrastructure rehabilitation; (ii)the full base costs of investment in watershed conservation without taxes; (iii)the full base-costs of project management without taxes; and (iv) physical contingencies that represent real costs and, unlike price contingencies, are included in project economic costs, and incremental recurrent costs. The project is not likely to produce significant negative impacts on the environment and natural resources, since activities essentially entail rehabilitation work. Nevertheless, mitigation costs are included in the analysis. The costs offinancing the feasibility studies for regional water infrastructure (in Guinea, Mali, Niger and Nigeria) is kept separate from investment and capacity building costs, since their benefits will clearly accrue in the future. Incremental recurrent costs, which are generated by the project at completion and which are necessary to carry out proper maintenance of equipment and structures, will represent about 15 percent ofthe total project costs (see table below).

24 Project investments and recurrent costs (Present value, US$ 000s)

Type of investment Guinea Mali Niger Benin Nigeria Total Sustainable management of 3,571 7,860 5,689 2,232 19,352 degraded environments Rehabilitation of national water 2,457 3,596 3,200 9,253 infrastructure Rehabilitation of regional 101,224 101,224 water infrastructure Capacity building 237 684 616 360 13,459 15,357 Present value of investment 3,808 11,001 9,901 5,792 114,683 145,185 and capacity building Feasibility studiesfor regional 3,000 2,000 1,100 4,800 10,900 water infrastructure Present value of project costs 6,808 13,001 11,001 5,792 119,483 156,085 Recurrent costs flollowing 1,129 3,262 2,935 1,717 11,771 20,814 project completion)

Economic Benefits

44. The First Phase Project would generate a wide range ofbenefits:

Monetarv benefits. These will accrue through an increase in income generation activities such as fishing both in the river (Mali) and in small dams or lakes (Niger), agricultural production in irrigation schemes (Niger) and in non-irrigated land (Mali, Benin), enhanced livestock production (Mali, Niger, Benin) and hydropower (Nigeria).

Environmental benefits. Conservation in any area of the upper watershed is critical for sustainable economic performance in lower parts of the watershed. For example, conservation of Dallols and Koris in Niger will likely reduce sedimentation downstream allowing more water storing capacity. Environmental benefits are not quantified in the economic analysis as precise data on the flow of environmental services along the Niger River is not available.

0 Nutritional benefits. The support of traditional fisheries and the creation of fishery schemes in small dams and lakes will improve the nutritional intake of local communities who rely heavily on fish for auto-consumption. Intensive production of rice in the Inner Delta in Mali, and in the irrigation schemes in Niger will increase the availability of staple food for communities in the area. Promoting pasture land development and dam rehabilitation will provide a more reliable source of food for the communities who relies on livestock activities.

Results of the Costs-Benefits Analysis

45. Key assumptions used in the economic analysis are described in Annex 9 and include the following: (i)use of constant prices based on the import parity price plus the cost of

25 transport from the border to the market; (ii)real prices remain constant for the next 30 years (this is a conservative assumption since international forecasts predict an increase of crop prices such as rice over the next 10 years); (iii)the period for net benefit evaluation is 30 years; and (iv) opportunity cost ofcapital is 12 percent. The economic analysis shows a solid rate ofreturn. The overall Economic Internal Rate ofReturn (IRR) ofthe First Phase Project is 51 percent.

Economic Analysis - Summary ofresults Sustainable Rehabilitation of Rehabilitation of Total management of national water regional water degraded infrastructure infrastructure environments NPV(US$ IRR NPV(US$ IRR NPV(US$ IRR NPV(US$ IRR 000s) 000s) 000s) 000s) Guinea 4,267 33% 4,267 33% Mali 7,957 21% 2,046 35% 10,003 22% Niger 537 32% 1,838 24% 2,376 25% Benin 485 27% 3,693 22% 4,178 22% Nigeria 873,051 54% 873,051 54% Total 13,246 24% 7,577 25% 873,051 54% 893,874 51%

46. The results differ widely across countries and components. The high net benefits are mainly driven by the rehabilitation of regional water infrastructure in Nigeria (IRR: 54 percent). The rehabilitation of national water infrastructure also has a strong rate of return (IRR: 25 percent). The introduction of controlled flood infrastructure in Mali is characterized on the other hand by a rate ofreturn that is above 30 percent. The sustainable management of degraded ecosystem components, through the promotion of economic activities such as low-land agriculture, livestock production, fisheries and ago-forestry provide in aggregate a rate of return of 24 percent. Returns are driven up by agro-forestry activities in Guinea, Mali and Benin. The lowest rate ofreturn for this component is in Mali (IRR: 21 percent). This is the result of low returns for the fishery and bank-protection sub- components.

47. The variables influencing the flow ofproject benefits the most are likely to be: (i)the unit value ofelectricity in Nigeria; (ii)the evolution ofagricultural producer prices; and (iii) the efficiency of water users and local governments in maintaining the rehabilitated infrastructure. The sensitivity analysis shows that the economic Internal Rate of Return of the First Phase Project remains above the opportunity cost of capital even for considerable change in the parameters.

Financial Analysis and Sustainability

48. The main beneficiaries of the First Phase Project would be the local populations, including farmers, livestock herders, fishermen and communities engaging in ago-forestry activities. From the fiscal point of view, in each country, the national government would provide the bulk of the project’s investment costs and would receive a fiscal compensation that represents a fraction of project costs. Water user associations and local governments in

26 charge of maintaining rehabilitated infrastructure will bear the bulk of recurrent costs. In most cases, water user associations will coincide with producer associations. In those cases in which management of infrastructure is carried out by agents other than the users, the project will establish the necessary institutional framework to make resources available for necessary maintenance. As for the hydropower rehabilitation component, the project net benefits will accrue essentially to consumers and the Power Holding Company of Nigeria (PHCN). From the fiscal point of view, the Nigerian government will pay the bulk of investment costs but will benefit from taxes on electricity sold through PHCN. In the case of Nigeria, sustainability ofthe project requires that maintenance activities, whose costs will be covered by the incremental revenues produced, are performed effectively over time.

B. Technical

49. The appropriate technical design of the water infrastructure rehabilitation in the Kainji and Jebba hydropower plants will be critical to the First Phase Project meeting its objectives. The sound specification of electromechanical equipments and an adequate rehabilitation design process, to ensure the harmonization of equipments will be fully taken into consideration. These higher technical requirements will be handled by qualified consulting firms based on performance base arrangements. This, in turn, will progressively improve the Kainji dam’s economic performances with more reliable units. As for the small dams, the relevant technical issues and rehabilitation processes are fully mastered by local entities.

C. Fiduciary

50. The financial management and disbursement responsibility will be conducted by NBA. NBA will be responsible for the preparation of consolidated technical and financial reports to be submitted to the Bank, as well as the consolidated annual work program including the consolidated budget and financial statements for all project components and for all National Implementing Agencies (NIAs). NBA will also monitor the disbursements of the Project and ensure that they are in compliance with IDA requirements. NBA will coordinate financial management and disbursement of funds with the NBA’s National Focal Structures (responsible for supervision and coordination activities) and the NIAs for all other relevant works. The financial management capacity of NBA will be strengthened with the recruitment of an Accountant. In addition, an integrated financial management and procurement manual associated with an integrated computerized financial management system will be put in place in NBA and in Niger NFS, PHCN (Nigeria), CeRPABorgou- Alibori (Benin), AGETIER (Mali) and DNGR (Guinea). All NBA fiduciary and internal audit teams will also be trained in the integrated manual, accounting software and Bank FM and disbursement procedures for projects. NBA and the NIAs will manage their designated account opened in a commercial bank. The consolidated annual financial statements prepared by the NBA and those from the NIAs will be audited by an independent firm acceptable to the Bank. NBA will also produce consolidated Interim Un-Audited Financial Reports from Niger NFS (for the specific case ofNiger, the national focal structure will also manage the funds), PHCN, CeRPABorgou-Alibori, AGETIER and DNGR and safeguard the project assets and resources.

27 51. The overall Procurement activities coordination will be conducted by NBA. At the regional level, NBA will recruit a second Procurement Specialist with sufficient qualifications and experience in World Bank projects. The Procurement Specialist responsibility will be reinforced so that all procurement documents meet the quality and comply with the agreed guidelines. At the level of each participating country (including Niger where NBA is located), the NIAs will have a Procurement Officer to handle procurement activities. This Procurement Officer will work under the direction and responsibility of the regional Procurement Specialist who will clear and approve all documentation for International Competitive Bidding Contracts (ICB). Where a Procurement officer is not yet in place (Benin and Niger), a transparent recruitment process will be conducted with clear terms ofreference and evaluation criteria to recruit one, subject to the Bank’s no objection. A harmonized approach will be followed by all participants to avoid complexities arising out ofthe use ofindividual local procedures.

52. The overall project risk for procurement is HiPh.

D. Social

Key social issues relevant to the project objectives 53. Components 2 and 3 are expected to directly provide significant social benefits by improving the living and environmental conditions of low-income communities. The strong involvement and collaboration of riparian governments and key stakeholders in the Niger Basin will be central to the success ofthe First Phase Project.

Stakeholder Participation 54. The First Phase Project was designed using an intensive participatory process. Substantial effort was made to facilitate the engagement of stakeholders from each of the riparian countries through a series of workshops, meetings and consultations. The project aims to increase community social cohesion and local level ownership through the involvement of the communities in planning, design, and implementation of their own activities. Most of the activities at the local level will benefit vulnerable groups such as women and youth.

Project collaboration with NGOs and others 55. Consultation took place through local, national and regional meetings. The design involves partners and beneficiaries directly in decision making processes. During project preparation, NGOs and civil society were engaged both in the identification ofactivities and the preparation and validation of key studies. A socio-economic study was carried out to ensure that the project design is conform to how riparian communities are organized and how they collectively reach decisions.

56. The consultation process will continue during the First Phase Project implementation. It is also expected that a large range oflocal, national and international non- governmental organizations such as Wetlands International and IUCNcould be partners for specific activities in the course of project implementation. Workshops will include a wide

28 range ofinterested parties including NBA, riparian countries, NGOs, appropriate community representatives and line ministries.

57. The First Phase Project activities involve the participation of relevant stakeholders and primary beneficiaries affected by the project to: (i)promote greater participation and transparency in selection, planning and decision making at the grassroots level; and (ii) create a sense of community ownership and accountability by establishing a framework of dialogue and information exchange mechanism among the actors.

58. Although no significant social impacts are anticipated, a Resettlement Policy Framework (RPF) consistent with the Bank’s Safeguard Policy OPBP4.12 was prepared as due diligence to deal with any land acquisition, involuntary resettlement, loss of access, and other matters which may have a negative social impact in the implementation of local level activities. The RPF provides clear principles and detailed guidance on: (i)minimizing land acquisition and subsequent displacement; (ii)compensating project-affected persons; (iii) rehabilitating livelihoods; (iv) addressing grievances; and (v) implementing the RPF through the preparation ofResettlement Action Plans (RAP) if needed.

How will the project monitor performance in terms of social development outcomes? 59. The monitoring of social development outcomes especially benefits to stakeholders is a key part of the First Phase Project and will be reviewed during supervision missions against baseline information as indicated in the results framework.

60. The consultative and participatory process initiated during project preparation will continue in order to ensure that the benefits flowing from the activities reach the entire communities in the subprojects areas. Most ofthe First Phase Project performance indicators relates to better socioeconomic conditions through improved water resources management and income-generation activities. Baseline and performance indicators were finalized during project appraisal.

E. Environment

61. With respect to large water infrastructure, WRDSEM 1 does not include any new investments but rather, targets the rehabilitation of Kainji and Jebba Dams. With the possibility of large-scale water infrastructure investments in the second phase (WRDSEM 2), the overall program is classified as Environmental Assessment Category A. An Environmental and Social Management Framework (ESMF), an Environmental and Social Audit (ESA) for Kainji and Jebba Dams, a Resettlement Policy Framework (RPF) and a Social Assessment (SA) have been prepared and cover the entire Niger Basin and address potential environmental and social impacts of sub-projects in the five countries located on the River’s main stem. It is expected that sub-projects will individually have relatively low environmental and social impacts; however, accumulative impacts may be more severe. The individual and the cumulative impacts will, therefore, be assessed through application ofthe ESMF to the sub-projects. On this basis, Environmental Assessments (EAs) will be carried out for those sub-projects with potentially high impacts based on their evaluation using the ESMF. One potential impact of the small water infrastructure might be the upsetting of the

29 social balance in a community, which could be the source of social conflicts. These impacts will be carefully identified, monitored and addressed.

62. Since this is a transboundary project, the project team and the NBA will work with the nine riparian countries to improve the exchange of environmental assessments and other related information, for activities with transboundary impacts.

F. Safeguard Policies

63. The following table indicates the Safeguard Policies triggered by the First Phase Project ofthe Niger Basin Program:

Safeguard Policies Triggered by the Project Yes No EnvironmentalAssessment (OPBP 4.0 1) [XI [I Natural Habitats (OPBP 4.04) [XI [I Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OPiBP 4.1 1) [XI [I Involuntary Resettlement (OPiBP 4.12) [XI [I Indigenous Peoples (OPBP 4. IO) 11 1x1 Forests (OPBP 4.36) [XI [I Safety of Dams (OPBP 4.37) [XI [I Projects in Disputed Areas (OPBP 7.60) [I [XI Projects on International Waterways (OPiBP 7.50) [XI [I

64. For the first phase, it is anticipated that Component 2 (Rehabilitation of regional water infrastructure) and Component 3 (Rehabilitation of small infrastructure and sustainable management of degraded ecosystems) will trigger several safeguards policies as noted above, including Environmental Assessment (OPBP 4.01), Involuntary Resettlement (OPBP 4.12), Natural Habitats (OP/BP 4.04), Forests (OPBP 4.36), Physical Cultural Resources (OPBP 4.1 l),Safety of Dams (OPBP 4.37) and Projects on International Waterways (OPBP 7.50).

65. In the case ofthe latter (OP/BP 7.50), the nine riparian countries are all signatories of the 1980 Faranah Convention establishing the NBA. In September 2006, at the NBA Council of Ministers held in Niamey, NBA consulted and informed all the nine riparian countries on the preparation process of the WRDSEM program. The NBA Council of Ministers (COM) provided clearance to NBA to move the program forward.

66. The Borrowers have prepared an Environmental and Social Audit for the rehabilitation ofthe Kainji and Jebba Dams and an ESMF for activities which have not yet been precisely defined. For interventions that could result in involuntary resettlement and/or the loss ofland, an RPF has been prepared.

Environmental and Social Screening Procedure 67. At the regional level, the NBA environmental and social experts will be responsible for the environmental monitoring and supervision in collaboration with the national environmental agencies in the five countries. They will monitor implementation of the

30 Environmental and Social Management Framework, the Kainji and Jebba Dams’ Environmental and Social Audits, and implementation of the prepared Environmental Assessments and Environmental Management Plans and Resettlement Action Plans for the selected sub-projects. At national level, sub-projects selected will be screened (a screening form will be filled out) for environmental and social impacts and land acquisitiodresettlement by communities. The EAs will be approved according to the national EA procedures and relevant institutions. In each country, the existing national decentralized environmental units will determine the EA category and the need for a Resettlement Action Plan. They will also monitor the environmental and social screening process in coordination with the National Implementing Agencies. Most sub-projects will be Category Bywhile others will be Category C. It is not expected that one sub-project will be Category A. The EA process will follow the national EA regulation in each country, but it also will need to be in compliance with the World Bank’s Safeguard Policies. For Category B sub-projects the decentralized environmental units with the support of the NIAs will: (i) prepare the TOR for the EA study; (ii)recruit the consultant for the EA; and (iii)carry out the public consultations. The Environmental Management Plan (EMP) of Category B sub- projects will be approved by the decentralized environmental units. The EAs will include an Environmental and Social Management Plan, defined indicators and assigning of responsibilities for its execution and a budget. The screening procedure will identify if there are pesticide management issues and ensure that farmers are trained in safe use, storage and disposal ofpesticides. The NBA environmental experts will monitor the EA process and also identify if people will be affected (involuntary resettlement or land acquisition). In such case, a Resettlement Action Plan (RAP) will be prepared based on the approved RPF.

68. Anticipated afforestation activities will require the Borrower to prepare and implement appropriate forestry management plans as part of project implementation (OP 4.36 on Forests and OP 4.04 on Natural Habitats). The Physical Cultural Resources Safeguard Policy OP 4.11 will only be triggered for newly constructed small dams. A “Chance Find Procedure” will be applied during project implementation. The First Phase Project also complies with operational policies as they pertain to Safety of Dams (OP 4.37) and Projects on International Waterways (OP 7.50). The Borrower has prepared a Dam Safety Report for the Kainji and Jebba Dams.

Environmental actions during implementation 69. For Fomi, Taoussa and Kandadji Dams, Environmental Assessments (EAs) and Resettlement Action Plans (RAPS)will need to include an environmental, biodiversity and socio-economic baseline. Based on the finalized documentation (EAs, RAPS,detailed design studies etc.) an Energy Options Assessment will be undertaken in Component 2(c) to assess the most suitable options in comparison with other energy developments.

Safeguard Documents Disclosure 70. All of the Borrowers’ assessments (Environmental and Social Audit, ESMF, and RPF) have been completed and disclosed in the riparian countries involved, and in the Infoshop on February 26, 2007. During preparation, the NBA was engaged in a consultative process with national and local stakeholders. The concerns of stakeholders have been addressed in the ESMF.

31 G. Policy Exceptions and Readiness

71. The First Phase Project complies with all the World Bank policies and no specific policy exceptions are sought. A procurement plan for the first 18 months ofproject activities was prepared during appraisal and finalized at project negotiations. All institutional arrangements have been agreed upon prior to negotiations. The draft subsidiary agreements, services agreements, terms of reference for the project management team and other bidding document packages are in an advance stage of preparation and will be ready before the project becomes effective.

32 Annex 1: Country and Sector or Program Background AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

A. Niger River and its environment

Physical characteristics 1. The Niger River is 4,200 km long and the third longest river in Africa. Its basin covers 2.2 million km2, spread over nine countries: Benin, Burkina Faso, Cameroon, Chad, C8te d’Ivoire, Guinea, Mali, Niger, and Nigeria. The hydrologically active part ofthe Basin is approximately 1.5 million km’. The Niger River is formed by two branches, which constitute its hydrological system. The main branch rises in the Guinea Dorsale and is reinforced by abundant tributaries coming from the Fouta Djallon Highlands. The Niger River then flows north-east through Mali to the Inner Delta. The Benue, the main tributary ofthe Niger River, rises in Chad and Cameroon and drains the eastern part ofNigeria before joining the Niger River in Lokoja, Nigeria.

2. The Basin encompasses several climatic zones, and can be divided into four distinct hydrogeographic sub-systems: 0 The Upper Niger extends over approximately 140,000 km2 and contains three main tributaries-the Tinkisso, Milo and Nianadan Rivers. 0 The Inner Delta in Mali comprises a complex and geographically extensive system of lakes and floodplains. The Middle Niger covers 900,000 km2. Upstream of the Niger Republic, the River receives inflows from tributaries in Burkina Faso, which include the Garouol, Dargol, and Sirba Rivers; and 0 The Lower Niger has a catchment area of 450,000 km2 and receives several major tributaries including the Sokoto, Kaduna, and Benue Rivers.

The Basin water resources 3. Water resources are essential for achieving sustainable growth and welfare of the people living in the Niger Basin. A majority ofthe Basin’s population depends on the River for its livelihood, and the Basin economies use the water resources for irrigation, hydropower and navigation purposes. Tributaries in the headwaters contribute to the upper discharge of the Niger Basin. The Inner Delta receives 55 km3/year. Approximately 40 percent of this volume is dissipated through evaporation and infiltration. At Lokoja in Nigeria, the Benue River contributes 93 km3/year, thus complementing the 73 km3/year from the Niger River itself. In total 250 km3/year are discharged on average into the Gulf of Guinea, suggesting that the Niger Basin is endowed with abundant surface water resources. However, since 1970, the average annual discharge ofthe Niger River has dropped by more than 30 percent due to decreased rainfall and hydrological variability which are threatening the quantity and reliability of water resources. The River’s low flows have decreased by up to 70 percent, even drying up in some years (such as in Niamey in May 1985). Consequently, there is a strong need to strengthen land management practices and water

33 resources development and management including infrastructure in order to provide storage and regulate river flows.

Water infrastructure dimension 4. The total area ofirrigated agriculture in the Niger Basin is approximately 400,000 ha, most ofwhich is concentrated in Mali (250,000 ha) and Nigeria (113,000 ha). Infrastructure development in the Niger Basin dates back to the colonial era with the construction of the Markala weir for irrigation purposes in the Office du Niger (Mali). It was later complemented by the construction of additional multipurpose dams such as Sotuba HEP, S&lingu&(Mali), Kiri, Dadin Kowa, Shiroro Kainji and Jebba (Nigeria), Lagdo (Cameroon), and Dabola HEP (Guinea). The development ofwater infrastructure in the Niger Basin has never been tailored to the economic demand or to an overall regional planning. Consequently, as the Basin population has doubled, the increased demand for water has not been met qs significant infrastructure has not been commissioned since the late 1980s. The advanced development planning of long standing dam sites of Fomi (Guinea), Taoussa (Mali), Kandadji (Niger) and Zungeru (Nigeria) underscore the need for new infrastructure in the Niger Basin. Nevertheless, the promotion of new infrastructure should not overlook the importance ofappropriate operation and maintenance ofexisting ones notably Kainji and Jebba dams and hydropower plants. Commissioned in 1968, Kainji dam is the most important dam in the Niger Basin. Its total storage capacity is 15 km3while the hydropower plant has an installed capacity of 760 MW distributed between 8 units (units 5 to 12). Units were installed in different phases (units 7 to 10 under a WB project, Power II,Loan no. 383- UNI, 1964), resulting in non-harmonized installed technologies (units 5 and 6 are propeller while the other remaining 6 units are Kaplan) in addition to difficulties in operation and maintenance. According to the documentation available at the time of the site visit on January 30,2007 the status ofthe units was mixed (see Table A.1):

Table A. 1: Status ofthe Kainji Hydropower Units

Rated Unit Status at the time of the site visit Capacity 5 120 MW Decommissioned since November 2000 I 6 I 120 MW I In operation 7 80MW Forcedoutage 8 80MW Forced0utae;e In operation with a maximum available capacity of 50 MW Stator Coils in 9 80MW - 1 1 1 poor condition. I In operation with a maximum available capacity of 60 MW Stator Coils in 10 80MW - 1 1 1 poor condition. I 11 100 MW Forced Outage Forced Outage (when operating it has a maximum available capacity of 70 l2 looMW MW - Shaft vibrations and others).

5. Apart from the decommissioned unit 5, units 9, 10 and 12 are subject to a permanent de-rating while all units suffer from low availability and reliability. The power plant is stuck in the “poverty trap” moving from one emergency situation to another without being given

34 the possibilities and the resources to achieve sustainable results. The present level of reliability of the units is causing economic damage to the system in terms of: (i)lower energy produced by the Kainji and Jebba hydroelectric system; (ii)lower value ofthe energy produced; (iii)poor delivery of network services; and (iv) lower possibility to carry out planned outage for scheduled maintenance not only for the Kainji and Jebba Dams but also for the overall generating infrastructure of Nigeria. Lessons learnt from preparing similar hydropower projects are being applied in this new credit. The following preparatory work has been achieved toward the rehabilitation of the Kainji hydropower plant:

0 In 1991 the Project Utility Partnership Program (UPP) under the Power System Rehabilitation and Development Project (Power VII) prepared a least-cost expansion program for the period 1992-201 1. The plan included the rehabilitation of the Kainji hydropower plant as a key element ahead of any new plant acquisitions. Part of the financing of Power VI1 was redirected to emergency works of the Kainji dam. A follow-up project, the Power System Rehabilitation and Development Project (Power VIII) was prepared in 1992 but never finalized.

0 In the late 1990s, units 11, 7 and 8 were rehabilitated but only unit 11 was completely dismantled and re-commissioned. The rehabilitation activities were not completed until 2002.

0 Since the decommissioning of unit 5 (unit was subject to run away speed in November 2000) the hydroelectric power plant has seen several preparatory works to assess its rehabilitation needs and identify a rehabilitation strategy.

In September 2001 a Technical Assessment Report was prepared by the US Army Corps of Engineers, financed by USAid. Despite the fact that the Draft Ten year recommendation plan was not annexed in the Final Report, the report is quite detailed. It reflected the site inspection carried out during the period of July 10-15, 2001*

0 In April 2002, Coyne & Bellier prepared an Inception Report relevant to the Rehabilitation ofthe Kainji Power Station financed by the Nigerian National Electric Power Authority (NEPA). It reflected the site visit carried out from March 19-26, 2002.

In November 2003 Cope & Bellier prepared a Final Inspection Report relevant to the Rehabilitation of Kainji Power Station financed by NEPA. It reflected the site visits carried out during several months in ApriliMay, 2002, July 2002, September 2002 and July 2003. The study included a detailed rehabilitation strategy, cost estimation and rehabilitation schedule. Although the report is very detailed only unit 6 out of the three internal inspections foreseen (unit 6, 9 or 10, and 12) only unit 6 was inspected.

In June 2005 Colenco Power Engineering Ltd within the framework of the Piloting Performance Based Procurement of Energy Infrastructure Services - Functional

35 Specifications (Rehabilitate-Operate-Transfer of Hydropower Facilities) prepared a Kainji Hydroelectric Project - Case Study Material. The study included a rehabilitation strategy and cost estimation based on the Technical Assessment Report prepared by the US Army Corps ofEngineers.

0 In 2005 Bidding Documents for the Complete Rehabilitation ofUnit 1G12 (100MW) were issued by PHCNwith the assistance ofCoyne & Bellier.

In February 2006 Cope & Bellier issued the Tender Appraisal Report for the Complete Rehabilitation ofUnit 1G12 (lOOMW), but the contract was not awarded.

6. Considering the continuous attention dedicated over the last few years to examine the rehabilitation needs of the power plant and the poor condition of the dewatering system which jeopardizes the physical inspection of the units, it is assumed that the PHCN and Kainji business unit have sufficient information to identify the rehabilitation needs and the relevant cost estimation. Further preparatory work will not guarantee better information, and will encounter skeptical cooperation on site and will it respond to the urgent need for rehabilitation.

7. Located downstream ofthe Kainji dam, Jebba dam was commissioned later in 1983 with capacity storage of 3 km3 and a total installed capacity of 578.4 MW distributed among 6 units. All units are operational even though some of the equipment has reached its life expectancy. Selected interventions on electro-mechanical components and spare parts are required to maintain current satisfactory levels ofplant reliability and availability.

Socio-economics 8. Currently, approximately 110 million people live in the Basin, representing two- thirds of the West Africa’s population. The population is concentrated along the Niger River and its tributaries and use the River for fishing, domestic and municipal water supply, hydropower, navigation and irrigation. The population growth rate is estimated at 2.7 percent and the population is expected to double over the next 20 years. The Basin’s population is young: 44 percent of inhabitants are under 15 years of age. Low life expectancy (ranging from 43 to 49 years in the five main stem countries) means that the workforce continually loses members with a great deal of experience and productivity. Despite the Basin’s tremendous potential for development, it still remains underdeveloped thus limiting economic growth and ability to improve livelihoods of the Basin population. Overall, the gross domestic product ofthe Niger Basin is estimated at US$5,700 million and the gross national income is estimated at US$415 per capita. Agriculture plays a significant role in the economy ofriparian countries and provides for the livelihood ofabout 85 percent of the Basin population which is predominantly poor. Seven of the nine riparian countries rank among the twenty-five poorest in the world.

Environmental Considerations 9. The environment of the Niger Basin is under severe stress, threatening livelihoods and increasing the rural population’s social and economic vulnerability. Four principal environmental issues (land degradation, water resources scarcity and variability,

36 deforestation, and biodiversity loss) have a synergistic effect on water resources in the Basin. Land degradation, in the form of erosion, results from unsuitable agriculture practices, such as bush fires, clearance for rice paddies, extensive cultivation, overgrazing, and reduction of wetlands from drainage. Water variability and over the last three decades, water scarcity result in growing difficulties to meet environmental and economic water demands which tend to significantly increase in dry seasons. Lack ofadequate infrastructure for water storage and service provision further diminishes the ability ofthe riparian countries to manage the Basin’s water resources in a sustainable way. Deforestation is the result of increased needs for energy and limited access to electricity. Biodiversity loss is caused by habitat destruction and a subsequent increase of invasive species, which are in turn caused by inappropriate fishing practices, deforestation, and land conversion for agriculture.

Moving from national to regional development opportunities 10. The opportunities for development across the Basin are tremendous but only a fraction have been developed to date. First, the Basin hydropower potential is estimated at 30,000 gigawatt hours per year, of which only 6,000 gigawatt hours have been developed, despite the severe power outages and growing energy demand. Second, the irrigation potential is estimated at 2.5 million hectares, ofwhich only 0.5 million have been developed. Third, there is significant livestock and fisheries potential but not commercially developed to date due to high reliance on water variability and energy shortages. Fourth, the Niger River’s annual flood can reach 200 km3, yet there is no comprehensive enhanced flood management, early warning system and adequate storage options would help reduce the devastating impacts of floods and help further mitigate the impacts of droughts. Fifth, the productive ecosystems of the Basin such as the Fouta Djallon watershed, the Inland and Maritime Delta can yield significant benefits for the overall sustainability of the water resources and ecosystems ofthe Basin, but their management lacks a holistic and enhanced environmental management plan. Developing these opportunities will stir up riparian countries’ commitment to regional common good management associated with poverty reduction and provides a strong basis for continuous cooperation.

Regional Integration 11. In the Niger Basin where water scarcity and flow variability are always a source of concern, the only option for sustainability of the water resources, optimal utilization and good relationships is to pursue the path of coordinated and cooperative water resources development. The Niger Basin countries have committed to cooperation and moving from unilateral action toward enhanced coordination, collaboration and possibly joint action and integration. The outcomes of the NBA Summit of Heads of State in 2002, substantiated by the Paris Declaration of 2004 and the successful institutional audit of the NBA in 2006, stand as clear support ofthe riparian countries to the NBA. With an empowered and enabled NBA, attuned to its constituencies and respected as an institution that can broker major development investments, the nine countries have an opportunity to move a significant common development agenda forward to reduce poverty, promote regional integration, and enhance the lives of millions of people across the Niger Basin. The Shared Vision and the Sustainable Action Development Program (SDAP) will help achieve these goals and this program is a clear indicator ofcountries readiness to engage on that path.

37 12. The Niger Basin Authority is bound by a number of legal agreement and treaties including the following:

0 The Act of October 26, 1963 in Segou which established the principles regarding navigation and economic cooperation between the states ofthe Niger Basin.

0 The Agreement ofNovember 25, 1964 in Niamey, which proclaimed the international status ofthe Niger River and the freedom ofnavigation and transport, and established the Niger River Commission which was revised on February 2, 1968, on June 15 1973, and in Lagos on January 26,1979.

The Treaty of November 21, 1980 in Faranah transformed the Niger River Commission into the Niger Basin Authority, which inherited all the assets and assumed all the obligations ofthe defunct Niger River Commission.

0 The revised Treaty ofOctober 29, 1987 in Ndjamena empowered the NBA to further address coordination of activities across the member countries. In the meantime, this treaty revised the objectives set by the 1980 Faranah Treaty by tailoring the objectives of the NBA towards coordination and coherent development of the Basin resources.

13. The institutional arrangements ofthe NBA include the Summit ofthe Heads of State and Government (SHSG), the Council of Ministers (COM), the Technical Committee of Experts, the Executive Secretariat, and the National Focal Structures.

The Summit ofthe Heads State and Government (SHSG) is the supreme body ofthe NBA. It defines the general orientation of the development policy of the Authority and controls its executive hnctions to assure the realization of the objectives of the Authority. It meets every two years in an ordinary session hosted by the member state which assume chairmanship. The mandate ofthe chairman is two years.

The Council of Ministers (COM) is responsible for monitoring the activities of the Executive Secretariat and reports to the Summit. The COM meets once a year in an ordinary session. The mandate of the chairman of the Council of Minister is two years.

The Technical Committee ofExperts comprises representatives ofthe member states. Its mandate is to prepare the sessions of the COM. The Technical Committee of Experts meets upon invitation of the Executive Secretary according to a work schedule approved by the Council ofMinisters.

The Executive Secretariat is administrated by an Executive Secretary appointed upon the recommendations of the Council ofMinisters to the Summit ofthe Heads of State and Government for a period of four years and renewable once. Each member state can nominate a candidate for the position of Executive Secretary. The NBA’s institutional reform in 2005 introduced a new change by providing the Terms of

38 Reference and profile of the Executive Secretariat to firther guide the COM’s recommendations.

0 Each member state has a National Focal Structure (NFS), which is directly linked to the countries’ Committee of Experts which are established by the Council of Ministers as advisers. The role of the NFS is to coordinate and supervise activities in the Niger Basin in each state. A National Focal Point heads each NFS and is a member of the national Committee of Experts that advises the COM. The on-going reforms of the National Focal Structures will further enhance these bodies by consolidating ties with the NBA, and involving them in key institutions such as the Permanent Water Commission to be established in the First Phase Project of the Niger Basin Program.

14. Two salient human and financial resources features of the NBA are:

0 The operational budget of the NBA’s Executive Secretariat is estimated at US$1.6 million as of March 2007. This budget comes entirely from countries’ contributions;

0 The total personnel comprise 55 staff, exclusively recruited through a competitive process from within the member countries, as a result of the institutional reform.

Figure A. 1: Niger Basin Authority Institutional Chart

Heads of States Summit I NBA Council of Ministers Management I Technical Committee Auditor of Experts Executive Secretary ......

Financial Controller Legal Adviser

Niger Basin Internal Auditor Observatory 1

Technical Unit Administrative & Financial Unit

Department of Planning Human Resources Financial & Accountant

39 B. Lending instrument for Water Resources Development and Sustainable Ecosystems Management Project (WRDSEM) 15. The proposed Adaptable Program Lending (APL) Program will span 12 years and be implemented over two phases (WRDSEM 1 and 2) each lasting five and seven years respectively. The rationale for using the APL instrument is to ensure long-term commitment in phasing the different interventions in the Basin for scaling up water resources development and promoting sustainable ecosystems management in the Niger River Basin. The phased approach facilitates the prioritization of investments in alignment with appropriate funding. The APL instrument will allow the NBA and the riparian countries of the Niger River Basin to consolidate their cooperative framework with the implementation of the Sustainable Development Action Program (SDAP).

16. Satisfactory completion of the first phase will trigger implementation of WRDSEM 2. The scope, magnitude and timing of the second phase, WRDSEM 2, will depend on the completion of World Bank due diligence processes for financing planned water infrastructure and on the lessons learnt on scaling up ecosystem management activities across the Basin. In addition, this second phase will very likely incorporate priorities from the SDAP, and include the four remaining riparian countries in the program. The activities already identified for the second phase are: (i)NBA institutional strengthening and capacity building; (ii)completion of the remaining activities on the rehabilitation of Kainji hydropower plant and eventually adoption of black start facilities in Jebba hydropower plant; (iii)rehabilitation of Lagdo dam and Garoua River port on the Benue; (iv) master planning of the Benue sub-basin; (v) contribution to the financing of Fomi, Taoussa, Kandadji and Zungeru dams; and (vi) scaling up of income generation activities associated with ecosystem management and mitigation measures for the development of additional water resources infrastructure. The on-going dam sites feasibility studies will provide timely information on the suitable sites to be further supported by WRDSEM 2. The WRDSEM 1 and WRDSEM 2 phases and proposed financing are detailed in the table below.

40 Table B. 1: Niger Basin WRDSEM 1 & WRDSEM 2 APL Phases and Financing

Strengthening capacity ofNBA IDA 3.77 4.72 NBA CIDA Strengthening capacity of national water IDA 1.16 0.71 NBA CIDA I resources management institutions I I I I I

Civil works IDA 7.25 PHCN Upgrading of instrumentation and IDA 0.39 PHCN monitoring equipment Prevention of tree invasion IDA 0.2 PHCN Reinforcement of the maintenance IDA 1.19 PHCN workshops

IoIncludes IDA and donor parallel financing under phase 1 'I This component includes a parallel financing ofUS$6.99 million from EU, AFD and CIDA '' This component includes parallel financing ofUS$6.21 million from EU and AFD

41 ntary studies for Taoussa dam

Institutional consolidation and NBA & other TBD IDA 3 strengthening relevant agencies Implementation ofregional water NBA & other IDA ,3 TBD management rules relevant agencies Implementation ofremaining water NBA & other IDA 1 TBD charter elements relevant agencies ComDonent 2: Rehabilitation, oDtimization and del Harmonization of equipment for Kainji 50 30 PHCN/NBA TBD dam I IDA I I I Contribution to the financing of Zungeru 25 40 PHCN/NBA TBD dam I I I AfDB, Contribution to the development of NBNTaoussa 25 35 IDB, Taoussa dam or another option I IDA dam Authority KDF, EU

13 This component includes parallel financing ofUS$34 million from African Development Bank l4The US$200 million cofinancing for Phase I1will vary based on donors’ commitment with priorities agreed on the SDAP.

42 Contribution to the financing of Fomi NBA/Fomi dam AFD, EU IDA 25 35 Dam or another option Authority AfDB, Contribution to the financing of Kandadji NBAKandadji IDA 25 35 dam dam Authority KDFIDB, Benue sub-basin Master plan IDA 4 TBD NBNGaroua Port TBD Rehabilitation of the Garoua port IDA 30 Authority NBNLagdo dam TBD Rehabilitation of Lagdo dam IDA 30 Agency

Scaling up of income generation National activities in Guinea, Mali, Niger, and IDA 40 5 parastatal & other TBD Benin relevant agencies Development of income generation National activities at local level around Kainji and IDA 23 5 parastatal & other TBD Jebba reservoirs relevant agencies Development of income generation National activities in Burkina Faso, CBte d’Ivoire IDA 30 15 parastatal & other TBD and Chad relevant agencies

43 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

1. Several donors are involved in the Niger River Basin and their activities are coordinated through the Donors Advisory Committee (DAC) established in 2005. This Committee meets several times annually on the NBA’s invitation. Under the Shared Vision Process, the main functions of the Committee are to ensure harmonization of actions and agree on the agenda set by the NBA and its member countries for cooperative development ofthe Niger River Basin. The following is a selective list ofprojects and technical assistance activities which relate to the Niger Basin Water Resources Development & Sustainable Ecosystems Management Program (WRDSEM) and which are fimded by international financial institutions and bilateral donor agencies:

0 The World Bank has several on-going or planned projects in the region in water resources management, agriculture, environment and energy sectors, including: (i)the Global Environment Facility’s Project for Reversing Land and Water Degradation Trends in the Niger Basin (TF 53233 - April 12, 2005 ); (ii)the Guinea Community- Based Land Management Project ;( TF 53153 - April 12, 2004); (iii)the Mali Rural Community Development Project (Cr 4113 MLI - March 24, 2006) (iv) the Benin Forests and Adjacent Lands Management Project (TF 57165 - March 27, 2007); (v) the Niger Community-based Integrated Ecosystem Management Project (TF 52053 - Dec. 11, 2003); and (vi) the West Africa Power Pool APL1 (Cr. 4092 GH - Nov 1, 2005). Additionally, the Bank has funded some technical assistance to the NBA to support the Shared Vision Process. The current WRDSEM 1 will build on these activities and bring the necessary coordination for effectiveness and greater impact at the regional level.

0 The African Development Bank (AfDB) is supporting a silting control project in the three riparian countries of the Niger Basin. The overall objective of this US$34 million project is to contribute to the reduction of silt accumulation in the Niger River. It includes: (i)comprehensive diagnostic ofthe silting phenomena in the Niger Basin; and (ii)development of a regional master plan to prevent hydraulic erosion and silt accumulation. Finally, as NEPAD’s lead agency for infrastructure, the AfDB is supporting a number of studies related to regional infrastructure development and sound environmental management.

The European Union (EU) has recently approved, under its Water Facility window, a US$1.91 million grant to support the finalization ofthe Shared Vision Process. The European Initiative has also mobilized US$1.63 million to support the finalization of the SDAP.

The French Development Agency (AFD) is currently supporting scientific and technical activities in the Niger River Basin including the development of a hydraulic model and the implementation of the HYCOS program and the Niger Basin Observatory. The US$4.94 million commitment from AFD to support phase I1 of the

- 44 - Shared Vision Process also covers organizational and institutional activities such as: (i)preparation ofthe Sustainable Development Action Plan (SDAP); (ii)development of a NBA communication strategy; and (iii)mobilization of a funding pool for relevant studies.

The Canadian Cooperation (CIDA) has already mobilized US0.46 million to support the NBA's institutional development including the reform ofthe NFS. CIDA has also facilitated the elaboration of a NBA Capacity Building Plan and has committed to an approximate funding ofCA$5 million.

0 Other donors active in the Basin include the Islamic Development Bank (IDB), the Kuwait Development Fund (KDF) and the West African Development Bank (BOAD) and the People's Republic of China. These donors support or have committed finding for the development of large-scale water infrastructure in the Basin.

Table 2.1: Major Related Projects Financed by the Bank and other Agencies

I I Latest Supervision I (PSR) Ratings Summary of sector-related projects Sector Issue Project (Bank-financed 1 1 I projects only) Bank-financed IP DO Water Niger Basin - S S The objective ofthis GEF project is to support Resources Reversing Land & the nine riparian countries in defining a Management Water Degradation transboundary framework for sustainable Trends (TF 53233 - development ofthe Niger Basin, through April 12, 2005). strengthened capacity and better understanding of the Basin's land and water resources. Environment Guinea - S S The main objective ofthis Project is to reduce Community-Based land degradation through the integration of Land Management sustainable practices into the overall development Project (TF 53153 - planning process and in selected pilot sub- April 12, 2004). watersheds. Environment Benin- The main objective ofthis Project is to support integrated ecosystem management in selected forests and their adjacent lands and enhance trends to generate multiple global benefits. - March 27,2007) Environment Niger- The principal project objective is to promote integrated management of ecosystems and natural resources as a means ofreducing the region's vulnerability to desertification, while fostering multiple global environmental benefits.

Agriculture S S This Project aims at improving the living conditions ofrural communities in terms of(i)

- 45 - Development access to basic socio-economic services; and (ii) Project (Cr 4113 a sustainable increase in incomes, while MLI - March 24, promoting improved natural resource 2006) management practices. Energy Nigeria - S S Support the Federal program ofpower sector Tr&smission reform through: (i)facilitating aPA's Development unbundling; (ii)establishing a transparently- Project (Cr. 3559- regulated, financially-viable, commercially- UNI -May 31, operated TransysCo with private participation; 2002) (iii)removing transmission network and system operation constraints on provision ofreliable power supply; and (iv) facilitating development ofan efficient wholesale power market. Energy West Africa Power S The key objective ofthe WAPP is to establish a Pool Program APL well-functioning, cooperative, power pooling 1 (Cr. 4092 GH- mechanism among national power utilities of Nov. 1,2005) ECOWAS member states, based on a transparent and harmonized policy, legal, regulatory and

Agency Project Sector Description of activities AfDB Silting Control Environment / The Project includes a comprehensive diagnostic Program in the Water Resources ofthe silting phenomena in the Niger Basin and River Niger Basin Management the development ofa regional master plan for preventing hydraulic erosion and silt accumulation EU Water Resources Water Resources Support the second phase ofthe Shared Vision Planning Management Process including the formulation ofthe Niger Basin Investment Program. AFD Support to IWRM Water Resources Activities include support to the hydrological in the Niger Basin Management knowledge (HYCOS), development ofan hydraulic model on the whole Niger Basin and support to key studies for decision making. CIDA Capacity Building Institutional Activities include support to the establishment of Program for the Strengthening NBA's National Focal Structures as well as the NBA preparation and funding ofa capacity building program for the NBA.

IPDO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

- 46 - Annex 3: Results Framework and Monitoring AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Project Development Objective (s) (PDO): The PDO is to enhance regional coordination, development and sustainability o water resources management in t I Niger River Basin PDO Outcomes Outcome indicators Use of Indicator Information

Improved institutional Percentage ofactivities Reports from NBA's planning and coordination for regional implemented according to the operation units on the management and development of Niger Basin Sustainable implementation status of the water resources in the Niger Basin Development Action Plan. SDAP.

Improved performances of Hydropower capacity (MW). Progress reports to assess rehabilitated hydroelectric plants rehabilitated at Kainji and Jebba rehabilitated MW on the system. in targeted areas hydropower plants.

Improved irrigated agriculture in Hectares ofrehabilitated or Progress reports from NIAs to targeted areas. additional irrigated surface in assess the increase ofirrigated Mopti region (Mali), Tillabtri surface. region (Niger) and Karimama and Malanville districts (Benin).

Improved watershed management Percentage ofwatershed areas in Progress reports from NIAs to in targeted areas. Faranah region (Guinea), Mopti assess restored watersheds. region (Mali), Dosso and Tillabtri regions (Niger) and Alibori region (Benin) using agroforestry, river bank stabilization, silt and sedimentation control. Intermediate Outcome by Intermediate Outcome Use of Indicator Information Project Component Indicators

Component 1: NBA Institution4 Strengthening and Capacity Bu din P Specific Outcomes

Improved water resources C1.l Percentage of monthly Monthly hydrology bulletins and knowledge in place and/or annual water resources annual reports to inform on water information database publicly resources status in the Basin. available on the NBA's website.

Improved legal instruments for C1.2 Number oflegal Ratification agreements by riparian efficient water resources in~truments'~adopted by riparian countries to promote efficient management and optimization at countries for integrated water water resources management and the regional level resources management at regional optimization and the regional level. level.

IsThe list of legal instruments to be adopted is: (i)the Niger Basin Regional Environmental Code; (ii)the agreement on Common Guarantee 'of Infrastructure; (iii)the agreement on Joint Management of Infrastructure; and (iv) the agreement on Dispute Resolution and Arbitrage.

47 I I Improved consultative water C1.3 Number ofwater Minutes ofthe Permanent Water management in the Niger Basin management meetings held per Commission meeting to indicate year by the Permanent Water decision reached on water Commission. management in the Basin. Component 2: Rehabilitation, o, rimization and development of rt .iona1 infrastructure Specific Outcomes Rehabilitation ofdams and C2.1 Number of Kainji & Jebba Completion reports on the hydropower plants hydropower units rehabilitated. rehabilitated hydropower units at Kainji .

Completion reports on the rehabilitated units at Jebba.

C2.2 Kainji dam monitoring and Completion reports on the instrumentation equipment updated rehabilitation and installation of in Kainji & Jebba. monitoring equipments.

Regional water infrastructure C2.3 Number ofdam sites with Feasibility studies completion option developed completed feasibility studies. reports from dam authorities.

Specific Outcomes Enhanced ago-forestry practices C3. 1 Hectares afforested for Reports from NIAs to assess ecological or income generation progress on agroforestry activities purposes. Rehabilitated water and imgation C3.2 Hectares ofimgation Reports from NIAs to assess infrastructure schemes rehabilitated. progress on rehabilitation ofwater and irrigation infrastructure.

C3.3 Number ofsmall dams Reports from NIAs to assess rehabilitated in Niger and Benin. progress on small dams rehabilitation. Improved watershed protection C3.4 Hectares ofareas stabilized Progress reports from NIAs on against erosion. restoration ofwatershed.

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0 0 Annex 4: Detailed Project Description AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

1. The Niger Basin Water Resources Development and Sustainable Ecosystem Management APL Program (WRDSEM) is a phased program of twelve years. The first phase of the project is over a period five years has an estimated budget of US$186 million and includes three main components, as follows:

Component 1: NBA institutional strengthening and capacity building (US$7.77 million equivalent)16

2. This component would enhance the capacity of the NBA, its National Focal Structures, and other institutions involved in project implementation and supervision. Furthermore, this component would strengthen regional water resources management and planning. The key identified sub-components are detailed below:

Strengthening capacity of the NBA (US$3.77 million equivalent). Key activities include: (i)reinforcing the administrative and management skills of the NBA to set up an Overall Performance Evaluation (OPE) system; (ii)strengthening the NBA’s communication capabilities and practices inclusive of internal, corporate, grassroots and external communications and media relations and reinforcement of the NBA’s Information Technology; (iii)updating and implementing jointly, with other partners, the NBA’s existing capacity building program; and (iv) providing supportand supervision to the project’s management.

Strengthening capacity of national water resources management institutions (US$l. 16 million equivalent). Activities under this sub-component include support to the strengthening ofthe NBA’s national focal structures in Guinea, Mali and Benin; and will focus on staff recruitment, equipment and training for supervision ofthe Project.

Institutional strengthening of regional water resources management and planning (US$2.84 million equivalent). Activities under this sub-component will include: (i) providing support the creation of a Regional Consultative Group (RCG) to build a participatory consensus on water infrastructure development in the Niger Basin; (ii) preparing regional guidelines for the management of water infrastructure based on updated feasibility studies ofthe dams which is planned in Component 2; (iii)providing support the creation ofan Independent Panel ofExperts (POE) to assist the RCG with the “infrastructure and optimization options” and “recommendations for appropriate regional management rules”; (iv) providing support the creation of a Permanent Water Commission (PWC) as a regulatory water management mechanism in the Niger Basin; (v) establishing sub-basin commissions to implement required subsidiary principles; (vi) preparing a Niger Basin regional environmental code; (vi) preparing legal instruments for

16 Total financing for Component 1 is expected to be approximately US$14.76 million inclusive of parallel donor financing from the European Union (EU), the French Development Agency (AFD) and CIDA. Parallel financing from these donors is described in Annex 2.

53 common guarantee of infrastructure, joint management of infrastructure, dispute resolution and arbitrage enforcement; and (viii) supporting the implementation of the Niger Basin Water Charter. This sub-component would also includes the Project Preparation Facility (PPF) studies that supported the preparation of the First Phase Project ofthe Niger Basin Program (WRDSEM 1).

Component 2: Rehabilitation, optimization and development of regional infrastructure (US$138.45 million equivalent)"

3. The first two activities of this component would focus on the rehabilitation of the Kainji and Jebba dams and hydropower plants located in Nigeria. These hydropower plants which operate through the same hydrology system have the potential to increase the energy production with the rehabilitation of 320 MW capacity at a least cost and to supply additional energy to Nigeria and other Niger Basin countries, namely Niger and Benin. The third activity will support the strategic planning and development of multipurpose water infrastructure in the Niger Basin.

a) Rehabilitation of the Kainji dam and hydropower plant (US$I 15.88 million equivalent). This activity aims at a major rehabilitation ofthe Kainji dam in order to bring it back to normal operation and secure both power production (to a maximum capacity of760 MW) and the dam itself. The overall approach is to enhance harmonization of power production units, rehabilitate auxiliary services and priority units and upgrade dam safety equipment and practices as follows:

i. Rehabilitation and harmonization of productive electromechanical equipments JuS$106.91 million). Units 5, 6 and 12 will benefit from major rehabilitation and harmonization including: (i)supply and installation of new Kaplan turbines for units 5 and 6 (presently equipped with propeller turbines) and rehabilitation of stationary and rotating parts for units 12; (ii)installation of new generators (for all three units, and generator circuit breakers (for unit 12); (iii)overhaul of draft tube gates and intake gates for all units; and (iv) installation of the new governors and excitation system that had been purchased in the past for units 5, 6 and 12. Units 9 and 10 will also be rehabilitated provided that there are sufficient finds following the rehabilitation ofthe priority units 5, 6 and 12.

ii. Rehabilitation of auxiliary services (US$2.93 million). The activities include: (i) supply and installation ofnew unit control systems (for units 5, 6 and 12), new power plant control system for all units; (ii)supply and installation ofnew MV, LC and DC systems, a new diesel generator, new water supply and sewerage and new cooling, fire detection and compressed air systems; (iii)upgrading of the ventilation system; (iv) supply of dewatering and drainage pumps; and (v) overhaul of cranes, the fire fighting system, and the oil storage distribution and treatment systems.

" Total financing for Component 2 is expected to be approximately US144.66 million inclusive of parallel donors financing from the EU and AFD. Parallel financing from these donors are described in Annex 2.

54 iii. Rehabilitation of the navigation lock (US$0.34 million). The navigation lock of Kainji dam was designed as an auxiliary spillway with a discharge capacity of 1,300 m3/s. The upper door of the lock will be rehabilitated to comply with extreme flood cases safety measures. Since the electrical equipment has been damaged, and no navigation activities are foreseen in the near future, the rehabilitation would include an upgrade of the lock to manual operation. The wall pillar will also be rehabilitated and the water tightness ofthe gates restored.

iv. Upgrading instrumentation and monitoring eauipments (US$1.44 million). This activity will include: (i) repair or replacement of the faulty dam safety instrumentation such as the chainage markers, plumb lines equipment, the pressure logger to read piezometers, invar extensometers, dip meter probe, relief well boxes along the saddle dam; and (ii)update ofthe manuals and training on monitoring and dam safety procedures.

v. Improvement of the flood warning svstems and development of a decision support and manayement svstem KJS$1.91 million). This activity will be implemented jointly with Jebba dam to foster joint water resources management and optimal power production. It will include: (i)repair and upgrade of hydrological and flood warning equipment (including rainfall and hydrometric stations and communication tools); (ii) development of a Decision Support Tool including a simple hydrological forecasting model and a reservoir operation model; (iii)hydrological analysis and establishment of flood frequency patterns including the Probable Maximum Flood (PMF); (iv) Preparation of an Emergency Preparedness Plan (EPP) and a dam break analysis; and (v) revision of the operating rules and manual of Kainji and Jebba dams integrating outputs from previous activities.

vi. Environmental and social mitigation plan (US$l million). This sub-component will address environmental and social issues identified as a result ofthe Kainji and Jebba hydropower plants rehabilitation. This sub-component is further detailed in Annex 10

vii. Operational support and strengthening of PHCN and NFS KJS$1.35 million). This sub-component will aim at reinforcing and supporting the PHCN towards successful implementation of Component 2. This involves provision of additional human resources in the necessary areas, equipment and training to strengthen the existing capacity and enhance the coordination with other relevant national institutions. The National Focal Structures, which will also be reinforced, will ensure that such coordination is fully developed and will ensure the link with the regional level. b) Rehabilitation of Jebba hydropower dam (US$ll.67 million equivalent). This activity intends to secure the power production of Jebba hydropower plant at a maximum capacity of578 MW as follows:

i. Rehabilitation of electro-mechanical equipments KJS$1.48 million). The activities include: (i)the rehabilitation ofthe generators, transformers (supply ofbushing seals, oil & winding temperature meters, heat exchangers and oil tank), penstocks and scroll cases (sand blasting and coating); (ii)supply of major spare parts such as brake

55 pressure control valves, mechanical over-speed valves and guide vanes control valves; and (iii)upgrade of the control room for computer interfacing with the existing outputs ofthe Sequence-of-Event Panel. .. 11. Rehabilitation of auxiliarv services (US$1. 16 million). The activities include: (i) provision of governor air compressors, banks of batteries and flood evacuation equipments including submersible, sump and dewatering pumps; and (ii)overhaul of the draft tube crane bus bar feeding and the powerhouse cranes control systems. ... 111. Civil works (US$7.25 million). This activity will include: (i)rehabilitating the tailrace spillway channel through the backfill ofthe eroded areas and the construction ofprotection and drainage works; (ii)rehabilitating ofupper navigation lock; and (iii) grouting ofthe auxiliary dam number 3 to stop leakage from the drain hole AD 53.

iv. Upgrading of instrumentation and monitoring equipment WS$O.39 million). This activity will include: (i) repair or replacement of the faulty dam safety instrumentation including the replacement of the distribution panel for the hydraulic piezometers of the main dam, the reinstallation ofthe chainage markers and the repair and cleaning of defect standpipes and inclinometers; and (ii)update of the manuals and training on monitoring and dam safety procedures.

V. Prevention oftree invasion (US$0.20 million). This activity will include: (i)removal of submerged tree logs and debris around turbines and spillway intakes (200 m upstream from dam axis); and (ii)removal ofdead trees in the reservoir.

vi. Reinforcement of the maintenance workshops (US$l. 19 million). In order to support efficient operation and maintenance ofJebba dam, the First Phase Project ofthe Niger Basin Program will provide equipment and training for: (i)the mechanical workshop; (ii)the electrical workshop; and (iii)the protection control and metering workshop. c) Assessing optimization and management options for regional water infrastructure development (US$lO.90 million equivalent). This sub-component will support the strategic planning of regional water infrastructure in the Niger Basin by bringing all major potential infrastructure to the same level of technical knowledge (at a detailed design level including all necessary Environmental Assessment studies and Resettlement Action Plans). The key activities will include:

i. Complementary studies for Fomi dam site - Guinea (US$3 million). The planned activities include: (i)updating of the feasibility study to reconsider the optimum volume and size ofthe dam (the existing design proposes a reservoir of 6.2 km3for an installed capacity of 90 MW and the development of 15,000 ha for irrigation); (ii) updating of the Environmental Assessment and Resettlement Action Plan according to the World Bank standards; and (iii)preparation of the Detailed Engineering Design. .. 11. Comdementary studies for Taoussa dam site - Mali (US$2 million). This activity will support due diligence for this multipurpose dam with an estimated hydropower

56 capacity of 20 MW and the development of 74,800 ha for irrigation. Sub-activities will include updating each of (i)the topography and assessment of the irrigation feasibility (including a risk assessment of salinization); (ii)the Environmental Assessment according to World Bank standards, including a hydraulic impact study from Taoussa to Kainji dam; (iii)the RAP according to World Bank standards; and (iv) the Detail Engineering Design. ... 111. Complementarv studies for Kandadii dam site - Niger (US$1.10 million). This activity will support due diligence for this multipurpose dam with an estimated hydropower capacity of 100 to 125 MW and the development of31,000 to 140,000 ha for irrigation in Niger. Sub-activities will include: (i)updating the Environmental Assessment and RAP to World Bank standards and Hydraulic Impact Study down to Kainji dam; and (ii)updating ofthe Detail Engineering Design.

iv. Prepare feasibility & detailed studies for Zungeru dam site - Nigeria (US$4.80 million). The First Phase Project of the Niger Basin Program will support detailed analysis and design of Zungeru dam on Kaduna River for the installation of a hydropower capacity of 960 MW. Sub-activities include preparation of (i)feasibility study; (ii)Environmental Assessment according to World Bank standards; (iii)RAP according to World Bank standards; and (iv) the Detailed Engineering Design.

Component 3: Sustainable management of selected degraded areas and rehabilitation of small water infrastructure (US$39.78 million equivalent)"

4. This component aims at restoring selected degraded environments and rehabilitating associated small water infrastructure. This will be combined with income generation activities as an incentive for sustainable land and water resources management. While the preceding component adopts a regional approach, this component seeks a shift in focus for a bottom up approach engaging the local communities through participation in the planning and implementation of activities. The underlying principle of this component is that when income generation activities are synergized with environmental management and small water infrastructure interventions, they can provide incentives to actively engage communities in project planning and implementation. Involving local communities is critical to protect the common good and build robust local constituencies to manage the Basin resources and accrue collective regional benefits. The planned activities will be undertaken in selected areas suitable for concrete, immediate and tangible results that will provide anchorage for the local constituencies while paving the way for the protection of common resources and benefits sharing.

5. Sub-component (a) and (b) will rehabilitate and construct small water infrastructure and will be supported by environmental restoration activities in order to generate long term benefits from water and land resources management. The infrastructure will be multi- purposes in Mali, Benin and Niger and will include key activities such as husbandry, irrigated agriculture, fisheries and flood protection. The rehabilitation will be undertaken in

l8Total financing for Component 3 is expected to reach approximately US$73.78 million inclusive of parallel donor financing from the AFDB and is further described in Annex 2.

57 close cooperation with communities and include capacity building in order to achieve sustainable operation and maintenance. a) Rehabilitation and diverswcation of small dams (US$2.40 million equivalent). Key activities include: (i)rehabilitation and diversification of 12 small dams in Benin in the Borgou Department (Diadia, Gah Guessou & Kinkinnindarou villages) and the Alibori Department (Balata, Kakou Darou, Zougou Pantrossi, Potoko, Sombi KCrCkou, Batran, Liboussou, Warra and Toubou villages) including installation of scouring valves and construction of irrigation outlets and canals for new irrigated fields to be managed by local women; (ii)rehabilitation ofAboka dam in Niger to irrigate 150 ha for horticulture; and (iii)rehabilitation of Them dam in Niger including the reconstruction of the dyke, upgrading of the spillway and diversification of related income generation activities for women and youth. b) Rehabilitation and construction of small irrigation schemes (US$9.26 million equivalent). Key activities include: (i)rehabilitation ofthe Diamballa irrigation scheme in Niger (689 ha) through drainage restoration and development of flood and silt protections; (ii)rehabilitation of drainage system of the Kourani irrigation scheme in Niger (693 ha); (iii)rehabilitation ofthe Son-Lossa Kokomani irrigation scheme in Niger (406 ha) through diversification ofirrigated crops and silt protection; (iv) development of small irrigation schemes for horticulture (250 ha) in the districts of Karimama and Malanville in Benin; and (v) development of recessional agriculture (1,000 ha) in Djambacourou valley in the Region of Mopti (Mali) including promotion of the System for Rice Intensification (SRI). c) Support to the community-based development offisheries: (US$4.91 million equivalent). This component will contribute to the sustainable and efficient development of fisheries in Mali and Niger. Key activities will: (i)promote sustainable fishing practices and fish production processing in Mali and Niger; (ii)upgrade technology to enhance the livelihoods of fishermen (by providing training and provision of equipment such as nets, boats, processing and storage facilities); (iii)support institutional strengthening and capacity building for sustainable development of fisheries; and (iv) support the development oflocal fishery management plans in Mali and Niger. d) Watershed Restoration and Management, and Agro-forestry: (US$20.12 million equivalent).

i. Integrated development of lowland (Bas-fonds) areas (US$4.50 million). This activity will integrate lowland development and management by increasing soil fertility and agricultural production on 450 ha in the lowlands of Farannah region in Guinea. This in turn, will reduce the degradation of plateau and upper slopes due demographic pressure and extensive agriculture practices. Key activities include: (i)identification of priority micro-watersheds based on the severity of environmental degradation and erosion; (ii) development of a watershed management plan in the Guinean part of the Niger Basin; (iii)reforestation and planting ofvegetation cover on key vulnerable and degraded areas in Guinea (450 ha); (iv) identification of areas suitable for local income generation activities

58 based on land suitability and water conditions; and (v) communities' training in appropriate agricultural practices for watershed management.

ii. River banks stabilization and erosion control (US10.79 million). This activity aims at restoring severely eroded river banks caused by surface runoff and by controlling sediment runoff in selected Koris and Dallols in Niger and protecting degraded slopes in Benin and Guinea headwaters. This in turn will prevent sediment accumulation in the lowlands and infrastructure to be rehabilitated by the Project. The stabilization ofriver banks and erosion control activities include: (i)afforestation of 8 km stretch of river embankments in Mali (Sofara and Diondori); (ii)design and construction of appropriate weirs in selected sites in Mali and Niger (100 km in Dallol Foga and 100 km upstream of Kandadji dam site); (iii)stabilization of 3,000 ha of eroding slopes (700 ha in Dallol Foga, 1,800 ha in Dallol Maouri and 500 ha upstream of Kandadji dam site and Aboka dams); (iv) stabilization of 500 ha of sand dunes (300 ha in Dallols and 200 ha upstream of the proposed Kandadji dam site); and (v) communities training for monitoring and maintenance ofriver banks and erosion control facilities.

iii. Restoration ofpastureland ecosystems (US$1.36 million). This activity will focus on the development and management of floating meadows (bourgou or Echinochloa Stagnina) in the Inner Delta within the circles of Douentza, DjennC, Tenenkou, Youwarou and Mopti in Mali. Key activities include: (i)develop management plans for bourgou production and regeneration over time; and (ii) support community participation and management ofbourgou including effective management ofproceeds and provision ofappropriate tools.

iv. Agro-forestry development (US$3.47 million). This activity will build on lessons learnt from the on-going agro-forestry projects in Benin (PAMF19). The aim is to promote sustainable management of agro-forestry practices and allow flows of benefits to communities. Key activities include: (i)surveys to increase knowledge on forestry resources and status in the Niger Basin; (ii)participatory preparation of management plans for the forest conservation areas of the Upper Alibori (256,000 ha); (iii)design local forest management plans for six communities adjacent to the forest conservation areas; and (iv) community organization training.

e) Operational Support to National Implementing Agencies (US$3.09 million equivalent). This sub-component will aim at reinforcing and supporting NIAs towards successfbl implementation of Components 3 and 2c in Guinea, Mali, Niger and Benin. This support involves provision of additional specific human resources, equipment and training in order to strengthen the existing capacity and enhance the coordination with other relevant national institutions.

l9 Projet d 'Amenagement des Massiji Forestiers - Funded by the African Development Bank (AfDB) and the Arab Bank for Economic Development in Africa (BADEA)

59 Annex 5: Project Costs AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Total Parallel Grand Local Foreign IDA Financing Total US$ US$ Project Cost By Component and/or Activity us$ US$ US$ million million million million million Component 1. NBA institutional strengthening & capacity building a. Strengthening & capacity building of NBA: i) Reinforcement ofadkniskative and management skills of NBA through the development of a staff Overall 0.03 0.09 0.12 0.12 Performance Evaluation system ii) Strengthen the NBA institutions' communication capabilities 0.12 0.18 0.30 0.30 and practices iii) Participate to the update & implementation ofthe NBA 0.10 0.05 0.15 0.15 capacity building program iv) Support Project Management and Supervision: Preparation ofthe Project Implementation and - 0.01 0.18 0.19 0.19 Financial Manuals - Project Management Team costs 1.42 1.42 1.42 - Operating costs for NBA 0.66 0.66 0.66 - Regional project's monitoring & evaluation 0.49 0.49 0.49 - External Independent Financial Audits (once a year) 0.30 0.30 0.30 - Harmonization and capacity building on project's templates and procedures for effective Project 0.07 0.07 0.14 0.14 management between NFS, Implementing Agencies ani NBNSE b. Strengthening & capacity building of national water resources management institutions Operational support to NBA National Focal Structures (NFS) including supervision ofthe project (Guinea, Benin & 1.I2 0.04 1.16 1.16 Mali)

C. Institutional strengthening of regional water resources management and planning i) Establishment ofa Regional Consultative Group (RCG) for building a consensus on infrastructure development and 0.18 0.18 0.18 management in the Niger Basin ii) Strategic optimization ofmanagement rules for regional 0.12 0.38 0.50 0.50 infrastructures iii) Support an Independent Panel of Expert (POE) to implement integrated infrastructure assessment in the Niger Basin 0.13 0.25 0.38 0.38 (based on due diligence ofeach infrastructure) iv) Support the creation and activities ofthe Permanent Water 0.25 0.01 0.26 0.26 Commission (PWC) v) Establish permanent sub-basin commissions 0.1 1 0.01 0.12 0.12 vi) Establish a regional environmental code for the Niger Basin 0.05 0.07 0.12 0.12 vii) Developing legal instruments package to support the SDAP 0.06 0.09 0.15 0.15 implementation viii) Support to the development and application of a Water 0.09 0.09 0.18 0.18 Charter for the Niger Basin

60 Project Preparation Studies (PPF) 0.95 0.95 0.95

Parallel Financing from EU, AFD and ACDI 6.99 6.99

Total Component 1 Costs 5.34 2.43 7.77 6.99 14.76

Component 2. Rehabilitation, optimization & development of regional infrastructure

Nigeria a. Rehabilitation of Kainji Dam i) Rehabilitation and harmonization ofproductive electromechanical equipments ofunits 5, 6 and 12 (possible 21.38 85.53 106.91 106.91 9& 10) ii) Rehabilitation ofauxiliary services 0.59 2.34 2.93 2.93 iii) Rehabilitation of the navigation lock 0.10 0.24 0.34 0.34 iv) Upgrading instrumentation and monitoring equipments 0.29 1.15 1.44 1.44 v) Improvement ofthe flood warning systems and development ofa decision support & management system 0.38 1.53 1.91 1.91 for Kainji and Jebba dams vi) Environmental and social mitigation action plan 0.80 0.20 1.00 1.00 vii) Operational support and strengthening ofPHCN and the 1.18 0.17 1.35 1.35 National Focal Structure b. Rehabilitation of Jebba Dam i) Rehabilitation ofselected electro-mechanical equipments 0.30 1.18 1.48 1.48 ii) Rehabilitation ofauxiliary services 0.23 0.93 1.16 1.16 iii) Civil works on the tailrace spillway channel, grouting of 6.52 0.73 7.25 7.25 auxiliary Damno 3 and rehabilitation ofthe navigation lock iv) Upgrading ofinstrumentation and monitoring equipment 0.04 0.35 0.39 0.39 v) Prevention oftree invasion 0.20 0.20 0.20 vi) Reinforcement ofthe maintenance workshops 0.12 1.07 1.19 1.19

Supporting options assessment for regional water infrastructure development iv) Prepare feasibility & detailed studies for Zungeru dam site - Feasibility Study 0.25 0.75 1.00 1 .oo EIA according to International Standards inc. the - 0.25 0.75 1.00 1.oo hydraulic impact study Preparation ofResettlement Plan according - 0.25 0.75 1 .oo 1.00 International Standards - Detailed Engineering Design 0.45 1.35 1.80 1.so Sub-total Nigeria 33.33 99.02 132.35 132.35

Guinea i) Complementary studies for Fomi dam site : - Update ofthe Feasibility Study 0.15 0.45 0.60 0.60 Update ofthe Environmental Impact Assessment (EM) - 18 0.53 0.70 0.70 and Resettlement Action Plan (RAP) o. - Detailed Engineering Design 0.43 1.28 1.70 1.70 Sub-total Guinea 0.75 2.25 3.00 3.00

61 Mali ii) Complementary studies for Taoussa dam site : - Update of the topography and assessment of the irrigation feasibility (including a risk assessment of 0.12 0.38 0.50 0.50 vegetation) - Update of the EnvironmentalImpact Assessment according international standards including and estimate of 0.15 0.45 0.60 0.60 hydraulic impact down to Kainji dam - Update of the Resettlement Action Plan according 0.18 0.52 0.70 0.70 international standards - Update of the Detailed Engineering Design 0.05 0.15 0.20 0.20 Sub-total Mali 0.50 1.50 2.00 2.00

Niger iii) Complementary studies for Kandadji dam site: Update the Resettlement Action Plan to international - 0.08 0.22 0.30 0.30 standard - Update of the Environmental Impact Assessment according international standards including and estimate of 0.15 0.45 0.60 0.60 hydraulic impact down to Kainji dam - Update of the Detailed Engineering Design 0.05 0.15 0.20 0.20 Sub-total Niger 0.28 0.82 1.10 1.10

Parallel Financing from EU and AFD 6.21 6.21

Total Component 2 Costs 34.85 103.60 138.45 6.21 144.66

Component 3. Sustainable management of selected degraded ecosystems and rehabilitation of small water infrastructure

Guinea - Agroforestry Development and watershed protection (in selected degraded areas of Faranah Region) for erosion 1.60 0.40 2.00 2.00 control Low Land Agricultural Development (450 ha in Faranah - 2.00 0.50 Region) 2.50 2.50 - Operational Support to the NIA 0.42 0.10 0.52 0.52 Sub-total Guinea 4.02 1.00 5.02 5.02

Mali Recessional agriculture (1000 ha) in Djambacourou valley - 2.79 0.3 1 3.10 3.10 (Mopti Region) Fishery Resources Development & Sustainable - 3.38 0.84 4.22 4.22 Management in the Inner Delta - Pasture land restoration (500 ha) in DjennC, Tenenkou, 1.22 0.14 Youwarou, Mopti and Douentza Circles (Inner Delta) 1.36 1.36 - River Bank Restoration (6 km of dykes and 9 km ofvetiver revegetation) in Sofara (Fakala municipality in Djenne 3.89 0.43 4.32 4.32 Circle) and Diondori (Socoura municipality in Mopti Circle). - Operational Support to the NIA 1.03 0.10 1.13 1.13 Sub-total Mali 12.32 1.82 14.13 14.13

62 Niger Rehabilitation of small dams: - Rehabilitation and protection ofAboka dam (150 ha) 0.26 0.06 0.32 0.32 Rehabilitation of Theme dam (10,000 Tropical - 0.34 0.08 0.42 0.42 Livestock Units) Rehabilitation of irrigation schemes - Rehabilitation of the irrigation scheme of Diamballa 0.62 0.16 0.78 0.78 (689 ha) Rehabilitation of the irrigation scheme of Kourani (693 - 1.29 0.32 1.61 1.61 ha) - Rehabilitation of the irrigation scheme of Son-Lossa 1.12 0.28 1.40 1.40 Kokomani (406 ha) Integrated Watershed Protection & Restoration of selected areas in Tillaberi (upstream rehabilitated infrastructure and in Kandadji catchment areas) and Dosso (in the Maouri and Foga Dallols): - Inventory ofpriority degraded areas 0.02 0.05 0.07 0.07 Stabilization of 500 ha of dunes (300 ha in Dallols and - 0.23 0.03 0.26 0.26 200 ha upstream Kandadji) - Stabilization of eroded slopes (700 ha in Dallol Foga, 1800 ha in Dallol Maouri and 500 ha upstream Kandadji 1.23 0.14 1.37 1.37 and Aboka dam) - Stabilization of 200 km ofKoris’ embankments (100 km in Dallol Foga and 100 km upstream Kandadji and the 1.64 0.18 1.82 1.82 rehabilitated infrastructure) - Restoration and development of eroded plateaux (3000 1.01 0.11 1.13 1.13 ha in Dallols and 1000 ha in Kandadji watersheds) - Reforestation and revegetalization (6 million plants 1.64 0.18 1.82 produced and planted) 1.82 Traditional Fishery Development (2000 ha to produce 200 0.49 0.21 0.70 0.70 tons of fish I year) Operational Support to the NIA and the National Focal 0.82 0.10 0.92 0.92 Structure Sub-total Niger 10.71 1.91 12.62 12.62

Benin Rehabilitation and diversification of 12 small dams 1.16 0.50 1.66 1.66 Development of small irrigation in the municipalities of Karimama and Malanville and downstream rehabilitated 1.66 0.71 2.37 2.37 dams (250 ha) Participatory Agro-forestry development 2.53 0.28 2.81 2.81 Community capacity building and accompanying measures 0*46 0.20 0.66 0.66 Operational Support and reinforcement to the NIA 0.42 0.10 0.52 0.52 Sub-total Benin 6.23 1.79 8.02 8.02

Parallel Financing from the African Development Bank 34.00 34.00

Total Component 3 Costs 33.27 6.52 39.78 34.00 73.78

TOTAL BASELINE COSTS 73.46 112.54 186.00 47.20 233.20 ABOVE COSTS INCLUDE PHYSICAL AND PRICE CONTINGENCIES

63 Table 5.1: IDA allocation among the five riparian countries (US$’OOO)

64 Annex 6: Implementation Arrangements AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

1. The Niger Basin Authority (NBA) will be responsible for the overall implementation and coordination of the WRDSEM APL 1 Project on behalf of the five countries located on the main stem of the Niger River (Guinea, Mali, Niger, Benin and Nigeria). A capacity assessment of the existing institutions has been done and additional staff inclusive of technical, fiduciary expertise will be recruited to ensure efficient and smooth implementation of the First Phase Project of the Niger Basin Program (see project organizational chart). The institutional setting for implementation, monitoring and evaluation ofthe WRDSEM 1 Project is as follows:

The NBA will anchor the First Phase Project of the Niger Basin Program at the regional level within its Technical Unit. Additional staff will be recruited and fully integrated to the existing organization in the NBA. These additional staff will complement procurement, financial management and technical staff previously working for ongoing projects like the GEF funded Reversing Land and Water Degradation Project, and the AfDB funded Silting Control Projects. The NBA will sign services agreements with the relevant National Implementing Agencies (NIA). These agencies will execute the national activities in their respective countries, under the coordination and supervision ofthe National Focal Structures.

Regional Steering Committee (RSC): This Committee established in 2004 by the NBA’s Council ofMinisters, will maintain oversight ofthe WRDSEM program. The RSC is composed primarily of the NBA’s Technical Committee of Experts representing member countries. It meets at least once a year to give overall guidance to the NBA and its national structures. It will also formally review progress made by the WRDSEM program and approve the proposed activities to be implemented under the program.

NBA Observatory: The Observatory, established in 2005 during the NBA’s institutional reform, ensures effective monitoring and evaluation of environmental trends and activities within the Niger Basin. The Niger Basin Observatory will handle data collection and all required tasks for tracking indicators of the WRDSEM project in collaboration with national agencies.

West African Power Pool (WAPP): As the overall coordinating body for the power utilities in West Africa, the WAPP will liaise with the NBA to better coordinate the development ofpower-related infrastructure in the River Basin. The WRDSEM 1 will promote a regional framework towards joint planning of hydropower production and electricity transmission. This approach will be specifically tested with the rehabilitation of the Kainji and Jebba hydropower plants to which the WAPP will participate to complement the NBA’s limited expertise and experience in the power sector.

65 The NBA National Focal Structures: WRDSEM 1 will build on national project teams created under the GEF’s Niger Basin Reversing Land and Water Degradation project. They have been transformed into National Focal Structures (NFS) to respond to the need of riparian countries to have a permanent technical arm of the NBA coordinating and assessing progress of activities carried out in each of these countries. The NFS will handle the financial management of the First Phase particularly for activities related to coordination and supervision of national implementing agencies in their national territory. This choice is the result of their positive handling of the financial management of the above mentioned GEF project. However, they will not be involved in the procurement of the project. The National Focal Structures will be further strengthened with additional staff when required.

2. The National Implementing Agencies (NIAs) involved in implementing the WRDSEM 1 are:

Direction Nationale du Gknie Rural (DNGR) in Guinea, established under the Ministry of Agriculture, Livestock and Forestry will execute activities identified under Component 3 in Guinea (Faranah region). These activities are: (i)watershed management and development of lowlands (Bas-fonds); (ii)afforestation; and (iii) capacity building for rural populations.

Agence pour la Gestion et I’Exkcution des Travaux d’Infrastructures et d’Equipements Ruraux (AGETIER) in Mali, was established in 1999, as an association comprising the Head of the Chamber of Agriculture, a representative of the Office du Niger, the Chamber of Commerce and Industry, representatives of NGOs, CMDT (The Malian Company for Textile Development) and OHVN (The Upper Niger Valley Operation). AGETIER operations are carried out by an Executive Office staffed with a Director General, technical and financial Directors, recruited through open competition. AGETIER is now an experienced institution with a strong track record in executing World Bank projects in Mali. Such experience includes: (i) highly competent and experienced staff that possess management skills and the ability to work with NGOs, local communities as welle as national parastatals with a good understanding of rural issues in Mali; and (ii)competence in operating procurement and administrative guidelines and regulations of projects management. AGETIER will execute activities identified under Component 3 in Mali.

Direction des Ambnagements et Equipements Ruraux Agricoles (DAERA) in Niger, will handle all small dams and irrigation schemes rehabilitation activities in Tillabtri and Dosso Regions as well as rehabilitation of the Koris embankments. In line with the principles of Rural Development Strategy adopted by Niger Republic in 2006, DAERA will closely coordinate with other relevant national agencies such as the Environment Department in the execution of watershed protection, to be carried out by private operators.

Centre Rkgional pour la Promotion Agricole (CeRPA) du Borgou-Alibori: CeRPA in Benin, is the decentralized body of the Ministry of Agriculture, Livestock and Fishery. In Parakou, the CeRPA covers Borgou and Alibori, the two main

66 departments in the Beninese portion of the Niger Basin. CeRPA’s mission includes: (i)development and monitoring of rural infrastructure; (ii)support to the economic development ofrural areas; and (iii)promotion of sustainable management ofnatural resources. The NBA will sign a service contract with CeRPA to implement actions planned in Benin, namely small dams rehabilitation, diversification and development ofsmall irrigation schemes and agroforestry activities.

Power Holding Company of Nigeria PLC: In 2006, the unbundling of Nigeria’s NEPA resulted in the separation of PHCN business units (production and transmission) from PHCN headquarters. The NBA will sign a service contract with PHCN Headquarters to implement the rehabilitation of Kanji and Jebba dams. WRDSEM 1 will benefit from the existing PMU which has confirmed its efficiency and skills in managing contracts similar to those expected under this Project. The Kainji and Jebba business units will mobilize water resources management specialists and electro-mechanical engineers to support PHCN’s PMU in preparing all the procurement packages and specification for the rehabilitation of the two dams and hydropower plants. They will also provide competent and dedicated staff to ensure the overall supervision of the rehabilitation process. PHCN will be supported by an experienced Consulting Company. The contract for the rehabilitation of the Kainji hydropower plant will be a single responsibility supply and erection contract with pre-qualification and performance based elements (2/4 years O&M supervision; part of the payment of the FOB component will be linked to commissioning of the equipment, part of the overall payment will be linked to performance of the plant during the 2/4 years O&M supervision performance). Prequalification will be carried out in parallel to the approval process ofthe program without causing any delay in the overall schedule of the Project. The Pre-qualification process should clarify in advance the number of qualified companies participating to the bidding process encouraging them to “invest” in an effective site visit. An additional benefit of the prequalification process will be to send an early “mobilization” message to potential bidder. A mandatory site visit of five working days may be specified for all pre- qualified bidders simultaneously in the early days of the bidding preparation. At the end of this process, bidders would send a written technical paper with their remarks on the rehabilitation scope ofwork. Based on all technical papers PHCNwill issue an addendum to the bidding documents. Therefore, the Contractor selected for the rehabilitation ofthe Kainji and Jebba hydropower plants will thus be accountable for its medium-term efficiency and will be responsible for building the capacity ofPHCN front-line staff for long-term sustainability ofoperation and maintenance.

67 Figure 6.1: Implementation Arrangements for the WRDSEM Project

Consultation r > NBA Council of Ministers

Regional Steering Committee

I I

National NBA Implementing Focal Structures b) Agencies 5 I e) -

[ AGETIER 1

DAERA 1 ICoordination and Supervision r CeRPA 1 4 PHCN 1 IDNigeria

BENEFICIARIES e Guinea : Selected areas in Faranah Region 6) e)5 Mali : Selected areas in Mopti and Timbuktu regions

;a0 Niger : Selected watersheds in TillabCri and Dosso regions 3 Benin : Selected areas in Borgou and Alibori departments

68 3. The First Phase Project of the Niger Basin Program organizational chart of responsibilities located within NBA is described below:

69 Annex 7: Financial Management and Disbursement Arrangements AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Summary of the Financial Management Assessment

1. The objective ofthe Financial Management Assessments is to determine whether the entities that will be responsible for the implementation of the Niger Basin Water Resources Development and Sustainable Ecosystems Management Program (WRDSEM APL) have acceptable financial management arrangements as required by the Bank’s policies and procedures, including their system of accounting, reporting, auditing and internal controls. The Direction de l ’Administration et des Finances (DAF) ofthe NBA Executive Secretariat, the National Focal Structure of Niger (Niger NFS), CeRPABorgou-Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and the Power Holding Company of Nigeria (PHCN) will form the Budget Management and Accounting Center (BMAC) of the WRDSEM. The GEF project financial management unit now integrated into the NBA’s National Focal Structures will receive advance hnds to finance the supervision and coordination of activities within Mali, Guinea, Benin and Niger.

2. To carry out the financial management assessments of the NBA’s DAF and the National Implementing Agencies (NIAs) which are DAERA (Niger), CeRPN Borgou- Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and the Power Holding Company of Nigeria (PHCN), the World Bank’s financial management team visited the NIAs in February and April 2007. Video Conferences were also organized with the NBA and PHCN. The National Focal Structures in Niger, Benin, Mali and Guinea were also visited. The assessments were conducted based on the Financial Management Practices Manual issued by the Financial Management Board on November 3, 2005 (see the appendices to this Annex for the assessments).

3. The assessments concluded that the financial management arrangements in place for the NBA and the following implementing agencies of CeRPNBorgou-Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and Power Holding Company ofNigeria (PHCN) - meet the Bank’s minimum requirements under OPiBP10.02 and are adequate to provide, with reasonable assurance, accurate and timely information on the status of the Project as required by IDA. The DAERA of Niger however, does not meet these minimum requirements and therefore, the financial management responsibility will be assigned to the National Focal Structure ofNiger based on the experience of its financial management unit experience gained through the implementation of the GEF project. A key measure to be taken prior to the credit’s effectiveness is to install the integrated financial management system in the BMACs.

4. The overall residual control risk is considered substantial due to the Project’s complexity and the involvement ofvarious management units (the NBA, NIAs and NFSs) in the five participating countries. Nevertheless, the risk is mitigated by the fact that most of the financial management arrangements are in place and some ofthe implementing agencies

- 70 - have previous experience with the implementation of Bank financed projects, such as the Niger National Focal Structure, AGETIER (Mali), DNGR (Guinea) and PHCN (Nigeria).

5. The following integrated financial management arrangements are recommended to be put in place in the NIAs and in the NBA:

Financial management activities would be decentralized at the levels of NBA’s Executive Secretariat, Niger National Focal Structure, CeRPAIBorgou-Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and PHCN (Nigeria) with a designated account opened in a commercial bank and managed by each of these entitites. In addition to its overall financial management responsibility and coordination for the Project, the Administrative and Financial Unit of the NBA would be in charge ofthe consolidating annual budgets and annual financial statements and would manage a designated account opened in Niamey, Niger to fund the activities of Component 1. The Executive Secretary of the MA, as the main authorizer (“ordonnateur’y of capital expenditures in the organization, will approve related commitments documents and authorize cash transactions in the NBA’s designated account in Niamey and on the Credits and Grants accounts in Washington. Each National Focal Structure in Mali, Benin and Guinea will manage a 30 day advance account to finance the supervision and coordination ofactivities to be carried out in each country.

WRDSEM APL flow of hnds and information through the NIAs, NFS and NBA would need accountants well trained in the Bank’s disbursement and reporting procedures.

The subsequent annual activity plans with related budgets will be developed by the NBA and National Implementing Agencies, in collaboration with the respective National Focal Structures and then submitted to the NBA for consolidation, and to the World Bank for approval.

Financial Management and Procurement procedures will be developed and integrated in the NBA’s unique manual in conformity with an appropriate customization of harmonized integrated accounting software shared with each NIA. Accountants in the NIAs and NBA will be trained accordingly and short-term technical assistance (TA) will be provided.

The un-audited Interim Financial Reports (IFR) will be produced quarterly by each NIA and the NBA, as well as the annual financial statements requested. The integrated accounting software will facilitate provision ofthese financial management outputs.

The NBA will be strengthened by the appointment of an accountant located in the Administrative and Financial Unit and an internal auditor in charge of auditing accuracy and timely information on the status of the Project and internal controls. These individuals should be trained in World Bank’s principles, rules and procedures

- 71 - on financial management and audits. The internal auditor will use the manuals and the quarterly IFR as tools in their daily work.

0 Staff of the National Implementing Agencies (NIAs) should be trained in classification and quality ofexpenditure supporting documentation.

0 The NBA financial controller, already in place, will intervene to ensure the ex-ante control ofWRDSEM at the central level.

0 An external audit will be carried out at the end of each fiscal year to certify the WRDSEM annual consolidated financial statements produced by the NBA and each NIA.

Risk Assessment and Mitigation

Risk Risk Risk Risk Mitigating Conditions Remarks Residual rating Rating Measures Incorporated Y/N Risk at PCN into Project Design Stage Inherent risk (arising H NIA H from the environment in which the Project is located) Country level (Guinea, H NIA Commitments were mad6 N Except Mali, Mali, Niger, Benin, by the respective corruption and Nigeria) Governments to fight governance remain (risks determined at a corruption and promote major issues in Guinea, portfolio level for each good governance. Niger, Benin and fiscal year taking into Procurement and Nigeria and continue to account, inter alia, Financial Management hamper the programs quality ofPFM, Action Plans are developed in line with standard offinancial implemented. the PRSP and related accounting, reporting CAS. However, the and auditing; and Governments quality ofFM recognize the existence profession). ofproblems in PFM The risk is related to arrangements. weak political leadership Entity level S N/A NBA should accelerate N NBA performance is (risks determined the recruitment of a weak on core aspects based on information Project accountant, and such as (i)public contained inter alia in an internal auditor. It accounting, (ii)chart of [CR and CPPR where will also be provided accounts for NBA and entity has been with a common chart of its projects, and (iii) involved in accounts and a common internal auditing. Legal implementation of budget /costing and institutional Bank-finance classification to be framework is in place. >peration in the past shared with its projects.

- 72 - taking into account, NBA will use an inter alia, integrated accounting independence of software to consolidate entity’s management its projects’ financial and appropriateness outputs. oforganizational structure Project level N/A To continue to N Complex project with M (risks assessed on a strengthening the FM different spending units project specific basis capacity ofNBA and like NBA and National taking into account national focal structures Focal Structures. relative size ofthe and provide them with However, the national Bank loan, type of appropriate FM focal structure FM lending instrument and procedures, accounting units use Bank’s FM complexity ofproject) software and related procedures and training, particularly in practices through the Bank disbursement and NBNGEF project and reporting procedures. no major FM issues were identified at their level. Control Risk NIA S (risk that the project’s financial management system is inadequate to ensure funds used economically and efficiently for intended purpose) Budgeting NIA The NBA will be N At the level ofthe M provided with integrated NIAs, budgeting budgeting procedures preparation process is and related software well defined. In the module to consolidate absence of appropriate [he projects’ annual FM software, NBA has budgets. difficulties to consolidate the various projects’ annual budgets. Accounting NIA Relevant common chart Y The NBA’s M ifaccounts and Administrative and iudgetlcosting Financial unit is not :lassification for NBA fully staffed with ind its projects as well experienced and is adequate accounting qualified staff for Bank irocedures are being financed projects. ieveloped as parts of the No projects common -A FM and chart of accounts and ’rocurement manual. budgethosting The accounting software classification are yet in ’or NBA is being place. :ustomized on the basis However, the NIA

- 73 - of the common Charts of accounting staff are Accounts. A project capable and familiar accountant will be with overall Bank FM recruited and trained. procedures. Internal Controls NBA FM and Y The NBA FM and Procurement manual Procurement manual is will be developed to being strengthened take into account, with an IDF grant to harmonization of include the following donors’ procedures and aspects (i) updated procurement harmonization of procedures. The Donors’ procedures accounting software will through their projects be customized based on and (ii)procurement. these aspects. An No internal audit internal auditor is being function exists, but the appointed. Staff ofthe financial controller is National Implementing effective and performs Agencies (NIAs) should regular ex-ante control. be trained in No major internal classification and quality control issues were of expenditure identified at the NIA supporting level. documentation. Funds Flow NJ3A will manage a N Proper decisions have designated account to be been made by the opened in Niamey for NBA’s Council of Component 1 using Ministers to addressed transactions- based Member States’ disbursement method. contributions, although Each NIA will manage a some delays still noted designated account. in the payment of some Disbursement countries. However, procedures will be the arrears issues are described in the NBA being satisfactorily integrated FM and resolved by concerned Procurement manual and countries. will be used to train the No major flows of xcountants involved. funds issues were Each NFS ofGuinea, identified at the NIA Mali and Benin will level, but accounting nanage a 30 day staff ofCeWA in 4dvance Account Benin would need more training in FM Bank disbursement. Financial Reporting The appropriate format Y Except DNGR in :or Interim Un-Audited Guinea, and PHCN in ?inancia1 Reports (IFR) Nigeria, NIAs and Nil1 be designed and NBA have no previous ncluded in the NBA experience in preparing ntegrated FM IFR, but are

- 74 - Procurement Manual. It experienced in annual will be also customized financial statements in the integrated which are audited software All the yearly. accountants will be NBA Management trained in preparing IFR does not yet review nor use the financial statements in a meaningful manner. The audit TORSfor Y Audits of NBA and M external auditor will be NIA are conducted developed to taking into according to acceptable account the features of auditing standards as WRDSEM. An external per acceptable TORS, auditor will be appointed but the remedial for NBA and each NIA. actions are not taken An internal auditor is promptly. also being appointed.

Strengths

6. The legal and institutional framework of the NBA and the performance of the National Focal Structures vis-a-vis financial management are globally satisfactory, but both will be strengthened for the WRDSEM progam’s fiduciary needs.

Weaknesses and Action Plan

Significant Weaknesses Action Responsible Completion body NIAs and NBA have no previous Training ofall the fiduciary and NBA BY experience in preparing IFR and in internal audit teams in disbursement Bank disbursement procedures. presentating and preparing IFR and in Bank disbursement procedures. Expenditure supporting Staff ofthe National NBA BY documentation received by Implementing Agencies (NIAs) disbursement National Focal Structure from should be trained in national technical agencies is classification and quality of inadequate. expenditure supporting documentation. Overall NBA Member States Decisions should be made by NBA BY contributions are not received on a the upcoming Councils of disbursement timely basis. The on-going process Ministers. for concerned countries payment ofarrears should be speed up to maintain the necessary balance budget for the institution.

- 75 - Financial Management Actions plan

1. Agreement on IFR format and on Audit TORS By Appraisal NBA- Done 2. Appointment ofthe WRDSEM Accountant at Two months after NBA NBA level effectiveness 3. Preparation and adoption ofthe NBA integrated Before NBA effectiveness

Before NBA effectiveness

5. Appointment ofExternal Auditor (effectiveness Before NBA condition) effectiveness

NBA and NIAs: Budget Management and Accounting Center (BMAC)

7. The financial management ofthe First Phase Project will be assigned to the NBA and NIAs which will carry out the FM duties ofthe WRDSEM project.. The Administrative and Financial Unit of the NBA will be responsible for the project procurement and financial management and for consolidating all the FM outputs of WRDSEM. The NBA and each NU will also monitor the disbursement of funds as well as the withdrawals and direct payments applications, collect and control invoices, manage the Project’s designated accounts, keep the books of accounts; prepare and produce quarterly un-audited Interim Financial Reports (IFR) and make the necessary arrangements for the annual audit of all accounts. The WRDSEM accountant will be recruited by the NBA prior to the project’s effectiveness. The NBA and each NIA will be required to make the integrated financial management and accounting system operational, using the appropriate software as well as the detailed FM and Procurement manual and charts of accounts including the format, content and periodicity ofthe various financial statements to be produced.

Staffing and Training

8. Upon completion of the on-going recruitment process, the Administrative and Financial Unit of the NBA will comprise an Administrative and Financial Director, a Chief Accountant, the WRDSEM Accountant, two additional Accountants whose recruitment process is being cleared, a Procurement Specialist and the support staff. At the NIA level, the FM key staff are in place. These teams will work under the supervision ofthe Executive Secretary (ES) of the NBA regarding the WRDSEM financial management. The Financial Controller and the Internal Auditor will be assigned to ensure respectively ex-ante control and ex-post review ofthe WRDSEM program.

- 76 - 9. A training program will be prepared every year. Training will mainly be conducted through the World Bank’s local or sub-regional training institutions (CESAG and ISADE in Dakar). The NBA and each NIA will also require that the consultant appointed, sets up the NBA integrated FM and Procurement manual and accounting software, assists and trains all fiduciary and internal audit staff in the integrated computerized FM system.

Budgeting

10. Budget preparation process and its monitoring will be clearly defined in the NBA integrated FM and Procurement Manual. The NBA and each NIA should apply the annual budget time frame to avoid delay in budget readiness.

Accounting Policies and Procedures

11, The accounting standards to be applied by the NBA and each NIA are very similar to the International Public Sector Accounting Standards (IPSAS) issued by the Public Sector Committee of the International Federation of Accountants (IFAC-PSC). Any significant difference will be adequately disclosed and explained in the notes of the financial statements. The NBA will prepare the program’s consolidated financial statements for auditing. Project accounting policies and procedures as required by WRDSEM will be documented through the FM and Procurement Manual.

Accounting Software

12. A computerized financial management system will be developed and put in place at the NBA and the NIAs. These structures will use satisfactory and sound accounting packages capable of producing all the accounting and financial data required, including financial statements, Bank reconciliation statements, and all financial reports, such as the un- audited Interim Financial Reports (LFR). The accounting software should integrate activities components and categories ofexpenditures ofWRDSEM. The IFR format will be developed and agreed upon with the NBA. The accounting software should be multi-currency, multi- projects and multi-site, and should include the following integrated modules budgeting, general accounting, cost accounting, monitoring and evaluation, fixed assets management, preparation of withdrawal applications and tracking of disbursements by donors. The books ofaccounts will also be maintained electronically in this software.

13. The consultant appointed will develop the integrated chart of account, as part of the Manual of Procedures and customize the software. They will also provide the related training and short-term assistance to the entire fiduciary and internal audit staff.

Internal auditing

14. An internal auditor is being appointed by the NBA. Their duties and accountabilities will be documented in the implementation Manual.

- 77 - Funds Flow and Disbursement Arrangements

Disbursement Arrangements 15. Disbursements will be managed by the NBA’s Executive Secretary in Niamey on behalf ofthe five recipient countries. Separate Financing Agreements will be signed between IDA and the respective countries, namely Guinea, Mali, Niger, Nigeria and Benin. Through subsidiary agreements countries will retrocede the resources allocated to NBA’s Executive Secretary in Niamey, which is responsible for overall program financial management.

16. The NBA’s Executive Secretary will be responsible for executing the retroceded Financing Agreement of each country. The NBA and each NIA will claim disbursements by sending the withdrawal and direct payment applications to the Bank through the payment authorization ofthe NBA. A designated account B will be opened in a commercial bank and will be managed by the NBA to finance only Component 1 activities. The National Implementing Agencies - DNGR (Guinea), AGETIER (Mali), CeRPNBorgou-Alibori (Benin), PHCN (Nigeria) - and the National Focal Structure of Niger will manage a designated account A which is linked to its corresponding Credit or Grant account located in Washington. Funds from these accounts will be used to finance eligible expenditures. Detailed procedures will be documented in the Manual.

Disbursement Methods 17. The proceeds of the Financing Agreements would be disbursed in accordance with IDA standard Disbursement procedures and will be used to finance project activities through the disbursement procedures currently in use: i.e.Withdrawa1 Applications (WAS) for direct payment, for Special Commitments andor reimbursement accompanied by appropriate supporting documentation or use of Statements of Expenditures (SOEs) in accordance with the procedures described in the Disbursement Letter. The NBA will be responsible for submitting appropriate supporting documentation for activities implemented so that payments can be made from the six designated accounts opened for that purpose, or to submit WAS for direct payment to the Bank accompanied by necessary supporting documentation. National Implementing Agencies involved and the National Focal Structure of Niger will manage a designated account A. Funds from these accounts will be used to finance eligible expenditures. National Focal Structures of Guinea, Mali and Benin will manage a 30 day advance account. It is expected to shift to quarterly IFR-based disbursement as soon as the Bank is satisfied with the accounting and reporting capacity of the NBA, DNGR (Guinea), AGETIER (Mali), CeRPA du Borgou-Alibori (Benin), and the National Focal Structure ofNiger.

Minimum Value of Applications 18. The minimum value of WAS submitted under the IDA Credit or Grant for Direct Payments and Special Commitments for each country will be documented in the Disbursement Letter.

Reporting on Use of Loan Proceeds 19. Use of Statement of Expenditures (SOEs): All applications to withdraw proceeds from the CreditdGrants will be fully documented. However, according to the Procurement

- 78 - Plan Prior Review, SOE thresholds would be documented in the Disbursement Letter Documentation supporting expenditures claimed against SOEs will be retained by the Borrower and will be available for review when requested by Bank supervision missions and Project Auditors. All disbursements will be subject to the conditions of the CreditdGrant Agreements and the procedures defined in the Disbursement Letter and the NBA integrated manual.

Designated Accounts and 30 days advance accounts 20. Thresholds for the Authorized Allocations into the six designated accounts and for the different Borrower/Recipients and the NBA have been established with the World Bank's Finance Officer and reflected in the draft Disbursement Letter. The NBA and each NIA will manage a designated account. The National Focal Structures in Guinea, Mali and Benin will manage each a 30 day advance account. Exceptions were made for the NFS of Nigeria and Niger with regard to managing a 30 day advance account. In the case ofNigeria NFS this is due to staff instability and in the Niger's case, because it will manage the Niger designated account. These arrangements, however, are transitional. All the accounts will be located in commercial banks. The initial deposits will flow from the Bank directly to the designated account held by each NIA and the NBA. Subsequent replenishments will flow from the Bank to the six designated accounts managed by the NBA and the NIAs. For Benin, funds will transit through the Caisse Autonome d 'Amortissement (CAA) before flowing into the designated account of CeRPA/Borgou-Alibori. Such arrangements will be clearly documented in the NBA's Integrated Manual. The advances should give the Project sufficient liquidity for an average of four months ofexpenditures.

Counterpart Funding 21. No counterpart funds will be required for the Project and the Project is exempted from all taxes.

Retroactive Financing 22. The NBA will retroactively claim the reimbursement of expenditures generated by the recruitment of the Project support team, the preparation of the integrated FM and the Procurement Manual, and the integrated computerized system. Reimbursement will be approved based on conditions set up by IDA and will be charged to the three Credits and the two Grants.

- 79 - Table 7.1: Allocation of IDA Credit Proceeds

Components (million US$) IDA - Donor Project YO Parallel YO Total % costs financing Component 1. NBA institutional strengthening 7,77 53 6.99 47 14.76 6 & capacity building

Component 2. Rehabilitation, optimization & 138.45 96 6.21 4 144.66 62 development of regional infrastructure

Component 3. Sustainable management of selected degraded environments and 39.78 54 34.00 46 73.78 32 rehabilitation of small water infrastructure Total Costs 186.00 80 47.20 20 233.20 100 Front-end Fees Total Financing Required 186.00 80 47.20 20 233.20 100

Figure7.1: Flow of funds

Credits / Grants ___------I I I I Benin, Guinea, Mali, Niger, Nigeria I I I

I I NBA/ES CeWA DNGR AGETIER NFS/Niger PHCN I I I I B A A A A A I I

NFS

Lepend :

Transfers of funds on transactions-based disbursement to NBA and NIAS Designated - Accounts as well as to NFS 30 days advance accounts - - + Direct Payments

- 80 - A description ofthe flow offhnds will be detailed in the NBA’s Integrated Financial Manual and Procurement Manual.

Financial Reporting and Monitoring

23. The NBA and each NIA will be responsible for reporting their fiduciary responsibilities. The NBA will ensure that, on a quarterly basis, the consolidated IFR and the NIAs’ are prepared and transmitted to IDA no later than 45 days after the end ofthe quarter. The first IFR shall be fhrnished to the World Bank no later than 45 days after the end ofthe first six calendar months following the Effectiveness Date and shall cover the period from the incurrence of the first expenditure under the project through the end of such first six calendar months.

24. The reporting format and procedures will be documented in the FM and Procurement Manual. IFR will be composed of: 0 Financial reports: (i)sources and uses of funds by funding source; and (ii)uses of hds by activities. 0 Physical progress (output monitoring) report. 0 Procurement monitoring report.

25. Quarterly IFR and annual financial statements will cover all activities financed through WRDSEM. The annual financial statements will be subject to external audit as described below. The NBA and NIAs will also be required to produce the audited annual financial statements, no later than June 30 ofthe following fiscal year.

External audit

26. External auditors in accordance with international auditing standards acceptable to IDA will conduct an audit of the consolidated annual financial statements and the annual financial statements of each NIA.

Audit Report Due Date

External auditor’s opinion on consolidated annual Seven (7) reports to be submitted within six financial statements prepared by the NBA and on months after the end ofeach financial year. annual financial statements ofthe NBNSE and each NIA such as Niger’s NFS, CeRPA du Borgou-Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and PHCN (Nigeria).

Letter to Management prepared by the external Six (6) to be submitted within six months after auditors on NBNSE and each NIA such as Niger’s the end ofeach financial year. NFS, CeRPA du Borgou-Alibori (Benin), AGETIER (Mali), DNGR (Guinea) and PHCN (Nigeria).

- 81 - CredWGrant Conditions and Legal Covenants (see PAD main text page 22)

Supervision Plan

27. Given the substantial level of the overall control residual risk, the WRDSEM will require two financial management supervision missions per year, which should be included in the budget. However, the intensity of supervision could be reassessed based on the evolution ofthe rating for the overall control risk.

28. Financial management supervision will be carried out by the World Bank’s Financial Management Specialist (FMS) who will perform the following tasks: Conduct financial management supervision mission before effectiveness/disbursement. Review the financial management aspects ofthe IFR. Review the Audit Reports and Management Letters from the external auditor and the internal auditor’s reports as well as follow-up on material accountability issues by engaging with the Task Team Leader, Client, and/or Auditors; closely monitor the quality of the internal and external audit to ensure that it covers all relevant aspects and provides enough confidence on the appropriate use offunds by recipients. Provide physical supervision on the ground that will be supported by reviews of the quarterly interim financial reports and the annual audit reports, including the management letters describing the status ofinternal controls. Provide assistance to build or maintain appropriate financial management capacity. APPENDICES to ANNEX 7

Appendix 1: Financial Management Assessment of the Direction Nationale de Genie Rural (Guinea)

29. The DNGR as the NIA of Guinea will carry out the financial management duties and activities regarding resources allocated to Guinea under the WRDSEM’s Components 2 and 3

Implementing Agency Existing arrangements Recommendations Accounting and Financial Staff 1 Chief Financial Officer Noadditional staffing required 1 Chief Accountant 11 Accountants (3 at central level and 8 in regional units) 3 logistic Assistants 1 Human Resource Management Assistant An average often year experience in accounting ~~~~ Internal control system including Two Manuals ofprocedures for Similar to the one for OMVS, an accounting and financial World Bank projects such as NBA Integrated Manual will be procedures OMVS and PACV. developed Internal audit arrangements Two or three post review In addition to that, the NBA interventions a year by the internal auditor will intervene Financial Control Office ofthe Ministry ofAgriculture and by [GF (Inspection Gbnbral des Finances) Reporting and information Software: last version of The NBA integrated software system TOMPRO and SUCCESS with will be customized and provided :haracteristics ofmulti-sites, Use modules ofreporting and multi-projects, production of withdrawal applications; mnual statements, FMR and Streamline the statement format withdrawal applications etc. for sources and use offunds and FMR are already produced. that ofphysical progress. External audit arrangements KPMG for PACV An auditor will be appointed by FAFSIR for PNIR 2 NBA for the WRDSEM APL Ernst&Young for OMVS Banking arrangements and cash 4lready familiarized with the Open a designated account A for nanagement 3ank disbursement procedures. the WRDSEM’s transactions in Managed two accounts opened in Euro and another account in :ommercial banks for receiving Guinean Francs. 5eparately funds in Guinean 7rancs and US Dollars. Vo liquidity shortage

- 83 - Appendix 2: Financial Management Assessment of AGETIER (Mali)

30. The AGETIER as the NIA of Mali will carry out the financial management duties and activities regarding resources allocated to Mali under the WRDSEM’s Components 2 and 3

ImplementingAgency Existing arrangements Recommendations Accounting and Financial Staff 1 Chief Financial Officer One more accountant is required 1 Chief Accountant and will be recruited by 3 Accountants AGETIER to be charged to its 1 Asset management Assistant own budget. Need to establish a link between training plan and performance evaluation results: Internal control system including Manual ofprocedures revised in The NBA integrated manual will accounting and financial 2002 and 2004. be developed and provided procedures Technical Committee for implementation ofauditor’s recommendations Internal audit arrangements Periodic post reviews carried out In addition, the NBA internal by the Financial controller. auditor will intervene Post review interventions ofthe ContrGle des Services Publics de I’Etat. Reporting and information Software: last version ofHIBTP, The NBA integrated software system but no costing accounting will be customized and provided module. Staff to be trained in reporting by Not familiarized with reporting FMR by FMR External audit arrangements The Auditor is YZAS BACKER An auditor will be appointed by Semester audits NBA for the WRDSEM APL - Banking arrangements and cash Already familiarized with Bank Open a designated account A in management disbursement procedures. XOF for the-WRDSEM’s Managed at least 160 accounts transactions. opened in commercial banks for receiving funds in XOF. No liauiditv shortage

- 84 - Appendix 3: Financial Management Assessment of CeRPA du Borgou-Alibori (Benin)

31. The CeRPA as the NIA of Benin will carry out the financial management duties and activities regarding resources allocated to Benin under the WRDSEM’s Component 3

Implementing Agency Existing arranpements Recommendations Accounting and Financial Staff 1 Chief Financial Officer No additional staffing required 1 Chief Accountant 9 Accountants (4 at the central level and 5 in municipalities) 3 Asset management Assistants 1 Human resource management Assistant Internal control system including Manual ofProcedures developed The NBA integrated manual will accounting and financial by the Ministry ofEconomy and be developed and provided procedures Finances.

Internal audit arrangements Periodic post reviews carried out In addition, the NBA internal by the internal auditor ofthe auditor will intervene Ministry ofAgriculture. Reporting and information Software: last version of The NBA integrated software system Perfecto, but limited will be customized and provided performance. Staff to be trained in reporting by Not familiarized with reporting FMR by FMR External audit arrangements The Audit for FY05 is not yet An auditor will be appointed by done NBA for the WRDSEM APL Banking arrangements and cash Not familiar with the Bank Open a designated account A in management disbursement procedures. XOF for the WRDSEM APL ’s Managed an account opened in a transactions. Flow of funds will :ommercial bank for receiving transit through the CAA (Caisse funds in XOF. Autonome d’ Amortissement) of Vo liquidity shortage Benin to CeRPA’s designated account A.

- 85 - Appendix 4: Financial Management Assessment DAER4 (Niger)

32. The DAERA as the NIA of Niger will not carry out the financial management duties and activities regarding resources allocated to Niger under the WRDSEM’s Components 2 and 3 because ofits very weak financial management capacity as indicated below. The related responsibility will be assigned to the National Focal Structure of Niger (Niger NBA/NFS) which currently includes now the on-going financial management unit ofthe NBNGEF Project

Implementing Agency Existing arrangements Recommendations Accounting and Financial Staff 1 Chief Financial Officer The accountant ofNiger national 1 Human resource management focal structure will be the key Officer. accounting and financial staff. No financial management background Internal control system including No Manual of Procedures The NBA integrated manual will accounting and financial developed. be developed and provided to Drocedures Niger national focal structure Internal audit arrangements Financial Controller for prior In addition to that, the NJ3A reviews and Inspecteur Gknnkral internal auditor will intervene at des Services for post reviews of the level ofNiger national focal projects under the Ministry of structure. Agriculture’s oversight Competencies ofthe Financial Controller and the IGS will be used. Reporting and information No Software The NBA integrated software system Not familiarized with reporting will be customized and provided by FMR to the Niger national focal structure. The NBA/NFS Staff to be trained in reporting by FMR External audit arrangements NIA An auditor will be appointed by NBA for the WRDSEM APL Banking arrangements and cash Not familiar with the Bank Niger national focal structure management disbursement procedures. will open a designated account A Never managed an account in XOF for the WRDSEM APL’s opened in a commercial bank for transactions. receiving funds in XOF.

- 86 - Appendix 5: Financial Management Assessment of PHCNPMU (Nigeria)

33. The Finance Section (FS) of the PMU (FSPMU) will carry out the financial management duties and activities for resources allocated to Nigeria under the WRDSEM APL’s Component 2

ImplementingAgency Existing arrangements Recommendations Accounting and Financial Staff 1 Project AccountantISenior Need one additional Accountant Manager Accounts who will be deployed to the FS 4 Assistant Managers (Accounts) and trained. 1 Officer National for Disbursements 1 Assistant Manager Accounting and internal audit staff sufficiently trained in Bank procedures, including disbursements, financial management and procurement Internal control system including Manuals offinancial procedures The NBA integrated manual will accounting and financial for World Bank projects and are be developed and provided procedures regularly updated by the FS. Internal audit arrangements 1 Internal auditor and In addition, the NBA internal 1 Assistant Internal Auditor auditor will intervene. Reporting and information Computerized accounting The NBA integrated software system systems in place for three will be customized and provided projects. Not familiarized with reporting- by FMR ~ External audit arrangements IDA-financed projects - TDP An auditor will be appointed by and NEDP accounts are annually NBA for the WRDSEM APL audited Banking arrangements and cash Already familiar with the Bank Open a designated account A for management jisbursement procedures. the WRDSEM’s transactions in Managed two accounts opened in USD and another account in ;ommercial banks for receiving Nairas. separately funds in Nairas and US Dollars. Yo liquidity shortage

- 87 - Appendix 6: Financial Management Assessment of the NBA’s Executive Secretary at the Regional Level

34. The DAF (Direction de 1 ’Administration et des Finances) of NBA’s Executive Secretariat will carry out the financial management duties and activities for resources allocated under the WRDSEM APL’s Component 1

Implementing Agency Existing arrangements Recommendations Accounting and Financial Staff 1 Chief Financial Officer One additional accountant is 1 Chief Accountant required and will be recruited. 3 Accountants Need to establish a link between 1 Asset management Assistant training plan and performance 1 Procurement Specialist evaluation results. 1 Human Resources Officer Internal control system including Separate Manuals offinancial NBA’s Integrated Manual will be accounting and financial procedures of SE and NBA developed and will also be used procedures projects for financial statements consolidation Internal audit arrangements 1 Financial Controller for prior The NBA internal auditor will reviews and intervene. 1 Internal Auditor position to be Competency ofthe Financial filled Controller will be used at the level ofthe NBNSE. Reporting and information Computerized accounting The NBA integrated software system systems in place, but separate will be customized and provided; software ofSE and NBA will also be used for financial projects. statements consolidation Staff to be trained in reporting by FMR. External audit arrangements GEF-financed project - and An auditor will be appointed by NBNES accounts are annually NBA for the WRDSEM APL audited Banking arrangements and cash Already familiar with the Bank Open a designated account B for management disbursement procedures. the WRDSEM APL’s Managed accounts opened in transactions in Euro and from commercial banks for receiving which transfer of funds will be funds in XOF. done to the three 30 day advance Liquidity shortage related to cash accounts ofthe NFS ofGuinea, contributions of Member-States. Benin and Mali.

- 88 - Appendix 7: Financial Management Assessment of the financial management units of national focal structures (former GEF national project teams)

35. The Financial management units of the NFSs of Mali, Benin, Niger and Guinea will carry out the financial management duties and activities regarding resources allocated under the WRDSEM APL for supervision and coordination

Implementing Agency Existing arrangements Recommendations Accounting and Financial Staff 1 Accountant No additional staffing is required

Internal control system including Regional Manual of financial The NBA integrated manual will accounting and financial procedures ofNBNGEF project be developed and provided; Drocedures Internal audit arrangements 1 Financial Controller for prior The NBA internal auditor will reviews and intervene. 1 Internal Auditor position to be fulfilled Reporting and information Simplified computerized Same system to be used; system accounting system in place,

External audit arrangements GEF-financed project - accounts An auditor will be appointed by are annually audited NBA for the WRDSEM APL Banking arrangements and cash Already familiarized with the Open an 30 days advance management Bank disbursement procedures. account for the WRDSEM APL’s Managed an account opened in transactions and will receive commercial banks for receiving funds from the designated funds in XOF. account ofNBNSE. No liquidity shortage

- 89 - Annex 8: Procurement Arrangements AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

A. General

1. The First Phase APL Project of the Niger Basin Program includes the following member countries: Benin, Guinea, Mali, Niger, and Nigeria. As a result of the Country Procurement Assessment Report (CPAR), all five countries have made substantial progress with Procurement Reform. No special exceptions, permits, or licenses need to be specified in the Financing Agreement for International Competitive Bidding (ICB), since all Niger River Basin countries’ Public Procurement procedures allow IDA procedures to take precedence over any contrary provisions in local regulations.

Use of Bank Guidelines 2. Procurement for the proposed Project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits ” dated May 2004, revised October lst,2006; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004, revised October lsi,2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame have been agreed upon between the Borrower and the Bank in the Procurement Plan which was prepared and agreed upon during Project Negotiations. The Procurement Plan will be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity.

Advertising 3. A General Procurement Notice (GPN) will be prepared and published in United Nations Development Business (UNDB), in Development Gateway (dgMarket), and in at least one national newspaper of each country, pending First Phase Project approval of the Niger Basin Program by the Bank Board, andor before effectiveness. The GPN would show all International Competitive Bidding (ICB) for works and goods contracts and all consulting services involving international firms. Specific Procurement Notices (SPN) for all goods and works to be procured under ICB and Expressions of Interest (EOI) for all consulting services costing the equivalent ofUS$200,000 and above will be published in the UNDB, dgMarket and in the national press.

Procurement Methods 4. Procurement of Civil Works: Major civil works procurement will take place in each country by identified National Implementing Agencies (NIA). The works to be procured in the First Phase Project of the Niger Basin Program will include: rehabilitation of hydroelectric plants (Kainji and Jebba dams), restoration of river banks, expansion and rehabilitation of small-scale irrigation and drainage systems, restoration and management of selected degraded watersheds in the Basin, rehabilitation and construction ofsmall dams etc.

- 90 - 0 International Competitive Bidding (ICB): Each civil works contract package estimated to cost US$l,OOO,OOO and more for Nigeria would be procured through International Competitive Bidding (ICB). Each civil works contract package estimated to cost US$500,000 and more for Benin, Guinea, Mali and Niger would be procured through International Competitive Bidding (ICB).

0 National Competitive Bidding (NCB): Advertised locally in the five participating riparian countries, would be carried out in accordance with procedures acceptable to IDA. Each civil works contract package estimated to cost less than US$l,OOO,OOO for Nigeria may be procured using NCB procedures. Each civil works contract package estimated to cost less than US$500,000 for Benin, Guinea, Mali and Niger may be procured using NCB procedures.

0 Small works estimated to cost less than US$50,000 equivalent per contract, which are labor intensive, spread over time, and do not lend themselves to grouping, and therefore, are unlikely to attract foreign bidders. Such works may be procured under shopping procedures as detailed in paragraph 3.5 of the “Guidelines: Procurement under IBRD Loans and IDA Credits” May, 2004, revised October 1, 2006 and the June 9,2000 Memorandum “Guidance on shopping” issued by the Bank.

5. Procurement of Goods: Goods procured under this Project would include: dam electromechanical equipment, dam safety equipment and auxiliary services, traditional fisheries equipment, vehicles, computers and accessories, software, communication and office equipment etc. Goods procurement will be done using the Bank’s Standard Bidding Document (SBD) for all ICB and national SBD agreed with the Bank for National Competitive Bidding (NCB).

0 International Competitive Bidding (ICB): Each goods contract package estimated to cost US$250,000 and more per bid package would be procured through International Competitive Bidding (ICB).

0 National Competitive Bidding (NCB): Contract estimated to cost less than US$250,000 and locally available at commercial price would be procured through National Competitive Bidding (NCB) procedures acceptable to IDA.

0 Shopping: Procurement for readily available off-the-shelf goods that cannot be grouped, or standard specification commodities for individual contracts of less than US$50,000 equivalent, may be procured under shopping procedures as detailed in paragraph 3.5 of the “Guidelines: Procurement under IBRD Loans and IDA Credits” May, 2004, revised October 1, 2006 and the “Guidance on Shopping Memorandum” issued by IDA on June 9,2000.

6. Selection of Consultants: Consultancy services which include engineering studies, specialized studies, Technical Assistance (TA), control and supervision of works, financial management and procurement, external audits etc, will be selected using Request for

- 91 - Expressions of Interest, short-lists and the Bank’s Standard Requests for Proposal (RFP), where required by the Bank’s Guidelines. The selection method would include Quality and Cost Based selection (QCBS); all consultancy services contacts estimated to cost less than US$lOO,OOO equivalent for firms could be awarded through Fixed Budget (FBS), Consultant Qualification (CQ), Least Cost Selection (LCS), and Single Source (SS) as appropriate. Specialized advisory services would be provided by individual consultants selected by comparison ofqualifications of three candidates and hired in accordance with the provisions ofSection V ofthe Consultant Guidelines

0 Short-lists of consultants for services estimated to cost less than US$200,000 equivalent per contract for Benin, Guinea, Mali, Niger and Nigeria, may be composed entirely ofthe national consultants from the five riparian countries in accordance with the provisions ofparagraphs 2.7 through 2.8 ofthe Consultant Guidelines.

0 Single Source Selection (SSS): In exceptional cases, this method would be used in accordance with the provisions of paragraphs 3.9 to 3.13 of the Guidelines, with IDA’Sprior no-objection.

Training, Workshops, Seminars and Conference 7. Training activities will comprise workshops and training in the region and abroad, based on individual needs as well as group requirements, on-the-job training, and hiring consultants for developing training materials and conducting training. All training and workshop activities will be carried out on the basis of approved annual programs that will identify the general framework of training activities for the year including: (i)the type of training or workshop; (ii)the personnel to be trained; (iii)the institutions which will conduct the training; and (iv) the duration ofthe proposed training as well as the outcome and impact ofthe training.

Operating costs 8. The operating costs shall include staff, travel expenditures and other abroad travel- related allowances with prior clearance from IDA; equipment rental and maintenance, vehicle maintenance and repair; utilities and communication expenses. Operating costs financed by the First Phase Project of the Niger Basin Program will be procured using the implementing agency’s administrative procedures described in the Project Operations Manual reviewed and found acceptable to IDA.

B. Procurement Implementation Arranpements

9. The Niger Basin Authority (NBA) will coordinate all Project-financed procurement and will ensure that all works, goods and services financed by the IDA Credit are procured in full compliance with World Bank Procurement and Consultants Guidelines. In each country, a separate National Implementing Agency (NIA) has been identified for each distinct component (or sub-component) in the relevant agency to ensure smooth implementation. Each NIA will be responsible for the coordination of the First Phase Project ofthe Niger Basin Program implementation ofits respective componentshbcomponents on a day-to-day basis, in line with the Project Implementation Manual and Bank guidelines. A Procurement Management contract will be signed between Niger Basin Authority and

- 92 - AGETIER Mali. All the remaining National Implementing Agencies (NIAs) will not receive any payment for their services. These entities will receive a budget for their operating costs. The table below shows the NIA responsible for procurement implementation in each country.

Type of activities Executing entity Items to be Entity in charge of procured procurement 1. National coordination NBA Niger GoodsIWorks Procurement Unit of activities, Monitoring and Services NBA. Evaluation, Project Management.

2. Rehabilitation ofsmall DAERA Niger Goodslsmall DAERA in dams, Aboka & Them; rehab. works collaboration with of small-scale irrigation; the respective NBA restoration of river banks; national focal support to community structure and line initiatives. ministries. 3. Kainji and Jebba dams PHCNNigeria GoodsIWorksl PHCNProject rehabilitation works and (Project Management Services Management related supervision services Unit) Unit in collaboration and feasibility study of with Kainji & Jebba Zungeru hydroelectric plant. Dams technical staff.

4. Rehabilitation of 12 small CERPA Benin GoodsISmall CeRPA Benin and dams; rehab. ofsmall-scale works1Services line ministries for irrigation. TA. 5, Civil works, development DNGR Guinea GoodsIWorksl DNGR in oflow land; Feasibility studies Services collaboration with ofFomi Dam. line ministries and NBA Focal Point. 6. Feasibility studies of AGETIER Mali GoodsIServices AGETIER in Taoussa dam; development of relative to collaboration of traditional fisheries; enhance grants Respective NBA community: (i)development of national focal recessional agriculture; (ii) structure & line River bank restoration and (iii) ministries. due diligence ofTaoussa.

NBA Niger Basin Authority DAEM Direction des Amdnagements et Equipements Ruraux Agricoles PHCN Power Holding Company of Nigeria PLC CERPA Centre Rdgional pour la Promotion Agricole DNGR Direction Nationale du Gdnie Rural AGETIER Agence d’Ex6cution des Travaux d’hfrastructures et d ’Equipements Ruraux

- 93 - C. Assessment of the agency’s capacity to implement procurement

Procurement risk at Country level

a) Federal Government ofNineria (FGN)

10. The Country Procurement Assessment Report (CPAR) of 2000 has been a positive catalyst, supporting the current Government’s agenda of financial sanitation. The FGN took several key actions to advance the procurement reform. In general, projects in Nigeria face the following procurement issues and risks during implementation: (i)lack of appropriate regulation (bidding documents, standard evaluation formats etc.); (ii)lack of a national procurement manual; (iii)lack of adequate record keeping; and (iv) inadequate contract management systems. Substantial progress in procurement reform was made at the federal government level, but the contract administration in the public sector still suffers from inefficiency and delays vis-a-vis payments. Delays in the Nigerian Customs further exacerbate the issue. Other improvements include: efforts in obtaining value for money in public sector expenditures, increased level oftransparency into the procurement process, and substantial steps taken by the government to reform its procurement policy and practices to make them more efficient, effective and transparent, However, until the Procurement Bill is passed into law and the current procurement reform program and implementation institutionalized, the procurement risk in the country will be high.

b) Benin

11. In April 1999, a Country Procurement Assessment Report (CPAR) for Benin was carried out. In November 2002, an action plan for a procurement system reform was developed during a national workshop integrating the CPAR’s recommendations. This action plan supports the modernization ofthe regulatory and institutional framework and has the following objectives: (i)to improve the management of public contracts; (ii)to modernize public procurement procedures; (iii)to strengthen capacities; (iv) to establish an independent control system; and (v) to adopt anti-corruption measures. In addition, the plan provides for the gradual empowerment of the decentralized procurement entities; the definition ofa strategic framework for capacity building in procurement; and the updating of tools such as standard bidding documents and manual for procurement procedures to ensure effective use of the procurement code. The implementation of this new institutional framework translated into the creation of (i)a National Commission of Public Procurement Regulation (CNRMP); (ii)the National Directorate for Public Procurement (DNMP); and (iii)Public Procurement Units (CPMP) at the ministry level. The government has agreed to carry out a new CPAR in FY07 and to harmonize the Procurement Code with the WAEMU Procurement Directives.

c) Guinea

12. The Country Procurement Assessment Report (CPAR) is based on an analytical review of current procurement practices in Guinea, intended to measure the impact of the 1997 reforms. Such reforms enabled the adoption of a revised Public Procurement Code (PPC), and the relevant documents that define the applicability of its rules and procedures,

- 94 - bidding documents, and information systems on bid evaluation. Procurement practices include: the regulatory and institutional framework, the competitiveness aspects of the national industrial private sector, and the adequacy of commercial practices regarding procurement. Nevertheless, after the initial stages of reform, institutional capacity, as required by the Code, stayed weak. In addition, deliberate yet negligible practices conducive to corrupt practices persisted in the absence of an independent and effective control system, and sanctions.

13. The CPAR identifies several adverse issues: small and medium scale enterprises lack adequate funds to develop, creating de facto monopolies, noticeably in basic products (sugar, cement etc.); the informal sector is in control of a large share of the county’s economy; leading the formal sector to adopt informal-type procedures to survive; and fiscal evasion is persistent, particularly, in customs practices where fraud is rampant. All these issues contribute to a fragile private sector that is heavily dependent on the public authorities. A plan of action is suggested to fight corruption, reinforce transparency and competitiveness, and achieve efficient practices and quality of service. The recommendations include: certification ofbudgetary expenditures; enforcement ofprocurement practices as defined by the Public Procurement Code and controlled internally; training and technical assistance in the development and dissemination of procurement documents (pre-qualification, bidding, and evaluation documents); and promotion of independent auditing to conduct a posteriori assessments and apply adequate sanctions.

14. The Malian Procurement Code is regulated by Decree no.95-401P-RM ofNovember 10, 1995. This code was reviewed in 1999 with IDA assistance, and amended under Decree no. 99-292P-RM of September 2 1, 1999. In general, the country’s procurement procedures do not conflict with Bank guidelines. No special permits or licenses need to be specified in the credit documents, since Mali procurement practices allow IDA procedures to take precedence over any contrary local regulation or practice. In December 1998, a CPAR flagged these main issues: lack ofcapacity among the Borrower’s staff, absence of standard bidding document at the national level, insufficient capacity of local contractors to handle contract subject to international competitive bidding, and corruption practices. In addition, an IDF Grant was provided to strengthen the Borrower’s capacity in procurement, modernize the procurement process and improve regulation. In 2004, a CPAR update was carried out and the final report delivered to the government of Mali in January 2006. The recommendations and action plan will be considered during Project implementation.

e) Niger

18. Following the CPAR prepared in 1998, the government, in collaboration with the Bank and supported by an IDF Grant in 2002, adopted a more transparent Procurement Code (2002) and created the Public Procurement Regulation Agency (ARMP), responsible for the formulation of policy, the national strategy for development of capacity, the handling of complaints and non jurisdictional procurement audits. The latest Country Procurement Assessment Report in 2004 identified several remaining deficiencies, including: (i)lack of measures taken by the government, ranging from elaborating implementing regulations,

- 95 - standard documents, set up ofthe ARMP, to dissemination ofthe Code; (ii)weak capacity of the public and private sectors; and (iii)inadequate control mechanisms and transparent and efficient complaint mechanisms. The action plan addressing these issues has been adopted by the government. As of today the government has: (i)set up the ARMP; and (ii)delivered training programs for trainers in procurement mechanisms. Niger was also involved in the Regional Reform Program of Public Procurement (PRMP) in the eight Member-States ofthe WAEMU. The Bank’s 2003 IDF Grant that supported the PRMP led to the adoption, in December 2005, by the Union’s Council of Ministers, of two directives on public procurement and concessions of public service. In conformity with these directives, the government has elaborated the legal texts for the creation of the public procurement control function, through the creation of the General Directorate for Controlling of Public Procurement (DCGMP) within the Ministry of Finance and Public Procurement Divisions (DPM) within the Contracting Agencies (CA).

19. An assessment of the capacity of the Implementing Agencies to implement procurement actions for the First Phase Project ofthe Niger Basin Program was conducted by the Bank’s Procurement Analyst during IDA’S pre-appraisal mission (January - February 2007) mission for the NBA, PHCN, CeRPA, DAERA and during the appraisal mission in April 2007 for DNGR and AGETIER in accordance with Procurement Services Policy Group (OPCPR) guidelines dated August 11, 1998. The assessment reviewed the organizational structure for implementing the First Phase and the interaction between the Project’s staff responsible for procurement and the line ministrys’ relevant procurement unit. The assessment revealed that the NBA, PHCN-Nigeria, AGETIER-Mali and DNGR-Guinea have the required experience to implement the World Bank financed project. However, the assessment is recommending a procurement capacity enhancement plan that includes, among other things, a comprehensive and intensive procurement-training program for all staff involve in the procurement process of the First Phase for CeRPA-Benin and DAERA- Niger. Procurement capacity assessment reports supporting evidence is kept in the project files.

- 96 - 1. SU MARY ASSESSMENT OF THE AGENCIES’ PROCUREMENT CAPACITY Benin 0 The CERPA will implement procurement activities ofthe First Phase Project of the Niger Basin Program.

Identifzed risks include thefollowing:

Lack of appropriate structure (staffing) in place to manage the procurement function for implementation 0 Lack ofprocurement planning; Lack of appropriate procurement filing system

Correctives measures include: (i)recruitment of a procurement consultant for the two first years of the Project; (ii)The assessment is recommending a procurement capacity enhancement plan that includes, among other things, a comprehensive and intensive procurement-training program for all staff involve in the procurement process of the project; (iii)establishment of electronic filling system for project records; (iv) re- assessment of procurement capacity of various executing agencies-one year following project effectiveness to ensure that appropriate capacity has been built.

0 The overall risk assessment is high. Guinea The DNGR is the NIA for the First Phase Project ofthe Niger Basin Program has DNGR procurement capacity and is knowledgeable ofBank procurement guidelines and procedures.

Strengths of DNGR are thefollowing: 0 Existence ofprocurement unit within the entity (four staff); 0 A proper filing system is being developed, but still need improvement; The DNGR is the implementing agency for three Bank projects, AfDB, European Union and Islamic Development Bank projects.

Weakness: The DNGR main weakness relates to the improvement of the existing filling system

Corrective measures are: (i)reinforcement of the entity with appropriate tools; (ii) training of relevant project staff particularly Procurement officers on Bank procurement procedure to update their knowledge three months following the project effectiveness and on a continuous basis during the project implementation; (iii)establishment of electronic filling system for project records

0 The overall risk assessment is considered high due to the country context, although the structure has required procurement capacity and experience.

Mali AGETIER (Mali) has relevant procurement experience in Bank operations and has been AGETIER identified to handle overall procurement ofthis project.

The strengths of AGETIER include: The procurement staffs knowledge ofBank procurement processing is good; 0 Internal controls seem adequate. There is proper separation ofduties; 0 Authorization and approval processes are adequately followed; The procurement officer and several other staff have attended Bank

- 97 - 1. SUMMARY ASSESSMENT OF THE AGENCIES’ PROCUREMENT CAPACITY procurement training and they are familiar with Bank procurement guidelines and procedures and have experience ofprocurement planning.

The keyprocurement issue and risk identified in implementing the project relates mainly to the lack of adequate records keeping;

In addition to the preparation and finalization of procurement plan, the corrective measures agreed upon during appraisal include the following: (i)the adoption of the Generic AFRICATIP Procedures Manual; (ii)the training of relevant project staff particularly the Procurement Officer / Project Director to update their knowledge; (iii)the establishment of electronic filing system for project records; conducting contract management training for relevant project staffs.

0 Provided the above-mentioned action plan is implemented, the procurement risk is considered Moderate. Nigeria The PMU ofPHCN will be the agency responsible for the overall procurement activities PHCN- for Nigeria’s component. PMU The Strengths of the PHCNPMU:

0 The procurement staffs knowledge ofBank procurement processing is good; 0 Internal control is adequate. There is proper separation ofduties; Authorization and approval process are properly followed; 0 Procurement Data Management: procurement documents are adequately filed; The procurement officer and several other staff have attended Bank procurement training and they are familiar with Bank procurement guidelines and procedures and are knowledgeable in procurement planning; 0 The Bank financed National Electricity Development and National Transmission Projects are being implemented in a satisfactory manner by the PHCN-PMU according to the conclusion ofthe PPR.

Thefollowing measures are recommended : (i)the hiring ofan experienced procurement consultant for preparation ofbidding documents, bid evaluation and contract award ofthe supply and installation of Kainji and Jebba Power Station; (ii)the training of relevant project staff particularly the Procurement Officer to update their knowledge in complex procurement involving supply and installation; (iii)conduct of contract management training for relevant project staffs; and (iv) adoption of Bank’s Standard bidding documents for NCB in lieu ofNational Standard document.

The procurement risk at project level is Moderate.

The Niger Basin Authority (NBA) will be responsible for the overall implementation and coordination of the procurement activities of WRDSEM-1 on behalf of the five riparian countries, participating to the first phase.

The strength and weaknesses of NBA are as follows: (i)existence of a procurement specialist recruited during the implementation of the GEF project; (ii)most of the existing staff do not have experience in Bank procurement procedures; and (iii)lack ofadequate record keeping ;

- 98 - 1. SUI MARY ASSESSMENT OF THE AGENCIES’ PROCUREMENT CAPACITY Corrective measures: (i)recruitment of additional relevant and experienced procurement officer within the Project Management Team; reinforcement of the entity with appropriate tools; (ii)training of relevant project staff particularly Procurement officers on Bank procurement procedure to update their knowledge three months following project effectiveness and on a continuous basis during the project implementation; (iii) establishment of electronic filling system for project records; (iv) a procurement officer will be responsible for supporting the project including updating the procurement plan, keeping the procurement records and managing the procurement process and monitoring of performance to contracts requirements; (v) re-assessment of procurement capacity of various executing agencies-ne year after project effectiveness to ensure that appropriate capacity has been built. The risk is considered high.

@) The DAERA is National Implementing Agency ofprocurement activities for Niger Republic. DAERA has limited procurement capacity and it will require time to enhance its procurement capacity. Risk include the following:

0 Lack ofappropriate structure (staffing) in place to manage the procurement function for implementation; Lack ofprocurement planning; 0 Lack ofappropriate procurement filing system.

Correctives measures include the following: (i)recruitment of a procurement consultant for the first year of the Project; (ii)a procurement capacity enhancement plan that includes, among other things, a comprehensive and intensive procurement-training program for all staff involved in the Project’s procurement process and on a continuous basis during project implementation; (iii) reinforcement of the entity with appropriate tools; and (iv) re-assessment of procurement capacity of various executing agencies-one year following project effectiveness to ensure that appropriate capacity has been built.

The risk is considered high

The overall project risk for procurement is High

- 99 - 15. The key procurement issues and risks for implementation of the Project have been identified. The corrective measures that will be put in place to address the issues and risks are reflected in the table below. This plan has been agreed upon with the Borrower during appraisal and it includes the following:

Schedule of actions to be carried out

Action Responsibility Due Date Remarks Procurement Plan for the first NBAIPHCN By Appraisal Done. 18 months prepared and agreed with the Bank Recruitment ofa second NBA September 2007 Competitive process Procurement Specialist Recruitment ofa procurement PHCNICeRPAI September 2007 Competitive process Consultant DAERA

Adoption ofBank Standard NBMIAS By Negotiations Done Bidding Documents for use under NCB in lieu of lack of National Standard Bidding Document

Adoption ofexisting NCB AGETIER By Negotiations Done standard bidding documents prepared by AFRICATIP Network Set up adequate electronic NBA/NIAS Not later than 3 To ensure easy retrieval filling system for project months into ofinformatioddata records. Designate a staff for projec t data management implementation Preparation ofa draft Project NBA June 20,2007 Done Implementation Manual PIM Participation in procurement NBA/NIAS Not later than 3 To improve project training workshop at months within staff slulls in Bank’s specialized institutions for project procurement. project staff implementation. Inclusion of the procurement NBAIPHCNI By September, To monitor system (planning, monitoring AGETIEW 2007 effectiveness and and contract management) with DNGR efficiency of the computerized project procurement financial management system by effectiveness.

D. Procurement plan

16. The Borrowers/Recipients, at appraisal, prepared a draft procurement plan for the first 18 months ofthe First Phase’s implementation on the basis of the procurement methods for each participating countries. The procurement plan was reviewed by the Bank and the

- 100- Project Team at appraisal and finalized during negotiations. Immediately upon approval of the AF’L Program, with the Borrower’s agreement, the plan will be published on the Bank’s public website and the Borrower’s intranet website. Once approved, the procurement plan shall be updated in agreement with the Project Team on an annual basis or as required, to reflect the actual project implementation needs and improvements in institutional capacity.

Publication of Results and Debriefing 17. Online (DG Market, UN Development Business, and/or Client Connection) publication of contract awards would be required for all ICB, LIB, Direct Contracting, and the Selection of Consultants for contracts exceeding a value of US$200,000. Aditionally, where prequalification has taken place, the list of prequalified bidders will be published. With regard to ICB and large-value consulting contracts, the Borrower would be required to assure publication of contract awards as soon as IDA has issued its “no objection” notice to the recommended award in UN Development Business (UNDB) online and dgMarket. With regard to Direct Contracting and NCB, publication of contract awards could be in aggregate form on a quarterly basis and in local newspapers. All consultants competing for an assignment involving the submission of separate technical and financial proposals, irrespective of its estimated contract value, should be informed of the result of the technical evaluation (number of points that each firm received) before the opening of the financial proposals. The Project Coordination Unit would be required to provide debriefings to unsuccessfitl bidders and consultants should the individual firms request such a debriefing.

Fraud, Coercion and Corruption 18. All procuring entities, as well as bidders, suppliers, and contractors shall observe the highest standard of ethics during the procurement and execution ofcontracts financed under the First Phase Project of the Niger Basin Program in accordance with paragraphs 1.15 & 1.16 of the Procurement Guidelines and paragraphs 1.25 & 1.26 of the Consultants Guidelines.

E. Frequency of procurement supervision

19. In addition to prior review supervision to be carried out by Bank offices, the capacity assessment ofthe Implementing Agencies has recommended two supervision missions to the field and a yearly post procurement review. An Independent Procurement Audit will be conducted to contribute to the mid-term review (MTR) exercise.

Procurement audit 20. A technical audit will be carried out twice a year during the First Phase’s implementation, to report on the procurement process, contract management, fiduciary compliance, etc.

- 101 - F. Details of the Procurement Arranvements Involving International Competition

21. A detailed procurement plan for the 18 months of implementation prepared at appraisal, discussed in detail and finalized during negotiations. Thresholds for procurement methods and Bank prior review are as follows

Thresholdsfor Procurement Methods and Prior Review

Expenditure Contract Value Contract Subject to Prior Category (Threshold) Procurement Method Review US$ US$

1. Works - Nigeria: L 1,000,000 ICB All - Other countries: 2 500.000

QCBS; LCS; CQ; <100,000 Other First 2 contracts per country Individuals Nothreshold IC All contract of 50,000 and more Nothreshold Single Source All contracts (Selection Firms & Individuals) 4. Training I Annual Plan 1 All Training

Overall Procurement Risk Assessment:

High Average Low

- 102- Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review) reviewing a sample of 1 in 5 contracts signed.

- 103 - Annex 9: Economic and Financial Analysis AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Project and Scope

1. The objective of the Niger River Basin Water Resources Development and Sustainable Ecosystem Management Project is threefold: (1) enhance regional integration among riparian countries; (2) exploit economic opportunities arising from a cooperative approach to water resource development; and (3) improve management and sustainable use of natural resources. Project components include the institutional development of the Niger Basin Authority (NBA), the rehabilitation and upgrading of existing infrastructure and the restoration and preservation of selected degraded environments. Activities will take place in Guinea, Mali, Niger, Benin and Nigeria. Table 9.1 shows the nature of activities for which benefits and costs can be estimated.

Table 9.1 : Activities by country

Guinea Mali Niger Benin Nigeria Upper and Ago- River bank Conservation Ago-forestry lower forestry stabilization along river banks, watershed slopes and management plateaux

Fishery

Agriculture Low Development of Horticulture development land systembf rice rehabilitation (non- develop intensification irrigated) ment and controlled flood agriculture in the Inner Delta

Bourgou field rehabilitation in the Inner Delta

- 104- ~ Guinea Mali Niger Benin Nigeria Rehabilitation Rehabilitation of Rehabilitatio of national irrigation n and water infrastructure extension of infrastructure horticulture for irrigated Rehabilitation of scheme agriculture, 2 small dams in livestock and association with Rehabilitatio fishery irrigation n of 12 small schemes, dam for livestock, and livestock and fishery aquaculture

Rehabilitation of regional ofKainji water hydropower infrastructure plant and dam; b Rehabilitation ofJebba hydropower plant Assessment of Fomi Taoussa dam Kandadji dam Zungeru dam planned dam regional water infrastructure Regional Niger lasin Authority strengthening institutional strengthening and capacity building

2. Enhancing cooperation between riparian countries will probably be the most important contribution of this project. As the program evolves through successive phases and follow up activities, the participative design and implementation of water resources infrastructure and conservation programs would provide very large cross-country benefits. In this First Phase, the activities selected would provide regional benefits through a first wave of large infrastructure rehabilitation. The First Phase Project of the Niger Basin Program (WRDSEM 1) would nurture institutions to enhance cooperation among riparian countries and the value added of such institutions will be capitalized during the Second Phase of the Niger Basin Program (WRDSEM 2), when a scaling up of water resource development through large infrastructure is expected. The First Phase will also ensure the realization of local benefits, which are crucial from a sustainability point ofview.

- 105 - Economic Costs

3. The First Phase’s economic costs are composed of: (i)the full base costs of the public investment without taxes2’ in infrastructure rehabilitation; (ii)the full base costs of investment in the watershed conservation without taxes; (iii)the full base costs of project management without taxes; and (iv) physical contingencies that represent real costs and, unlike price contingencies, are included in project economic costs, and incremental recurrent costs. To the extent that the economic costs include policy and capacity building expenditures which will benefit also future phases of the program but which have not been accounted for, this will result in underestimation of the net economic benefits from the project.

4. The First Phase is not likely to produce significant negative impacts on the environment and natural resources. No changes in water flows along the Niger River are expected. In addition, negative externalities associated with irrigation infrastructure investments are believed to be limited because they consist of rehabilitation of civil works. However, the success of the Project in the areas that are covered by the Project might present an environmental risk due to migration of people into Project success areas and the corresponding increasing pressure on the environment. These damages are, however, hypothetical and cannot be measured ex ante. For this reason, mitigation costs are not estimated.

5. A detailed description of the First Phase’s costs is presented in Annex 5. Table 9.2 below provides a summary view. Investment in the rehabilitation of regional infrastructure, in Nigeria, accounts for more than US$lOO million (70 percent of the total investment and capacity building costs). National infrastructure accounts for nearly US$lO million (6 percent) and local level sustainable management ofnatural resources represents 20 millions (13 percent). Capacity building across the region and strengthening of the Niger Basin Authority (NBA) represents 11 percent of the total investment plus capacity building component.

6. The First Phase will also finance the completion of feasibility studies and/or due diligence processes for regional water infrastructure including Fomi dam (Guinea), Taoussa dam (Mali), Kandadji dam (Niger) and Zungeru dam (Nigeria). The cost of financing such studies are kept separate from investment and capacity building costs, since their benefits will clearly accrue in the future.

7. Incremental recurrent costs are specifically generated by the First Phase at completion and will be necessary to carry out proper maintenance of equipment and structures financed by the Project. In this Project, incremental recurrent costs are: (i) additional maintenance costs associated with investment in regional and national dam rehabilitation; (ii)additional maintenance costs associated with irrigation infrastructure rehabilitation; and (iii)additional maintenance costs associated with investments in fishing gear, agricultural tools and agoforestry investments. In Nigeria, incremental recurrent costs

2o Taxes as well as subsidies are transfer payments, not economic costs. When looking at the project from a society’s viewpoint, a tax for the project entity is an income for the government.

- 106- are estimated as a hnction of the turbines residual life. In all other situations, the incremental recurrent costs have been estimated, by hypothesis, at 5 percent ofthe total cost of investment for four years without taxes. As shown in Table 9.2, recurrent costs represent 14 percent of the total investment and capacity building costs of the project. . An examination of will finance the recurrent costs and their importance will take place in the financial analysis section ofthis annex.

Table 9.2: Project investments and recurrent costs (Present value, US$ 000s)

Type of investment Guinea Mali Niger Benin Nigeria Total Sustainable management of 3,571 7,860 5,689 2,232 19,352 degraded environments Rehabilitation of national water 2,457 3,596 3,200 9,253 infrastructure Rehabilitation of regional 101,224 101,224 water infrastructure Capacity building 237 684 616 3 60 13,459 15,357 Present value of investment 3,808 11,001 9,901 5,792 114,683 145,185 and capacity building Feasibility studiesfor regional 3,000 2,000 1,100 4,800 10,900 water infrastructure Present value of project costs 6,808 13,001 11,001 5,792 119,483 156,085 Recurrent costs following 1,129 3,262 2,935 1,717 11,771 20,814 vroiect comvletion)

Economic Benefits and key assumptions

8. The First Phase will generate a wide range of incremental benefits along the following categories:

0 Monetary benefits: Incremental benefits measured in this analysis will accrue from: (i)incremental production ofnon-irrigated crops, livestock, fish and agroforestry; (ii) incremental production in irrigated areas; and (iii)increased hydropower. These benefits, summarized in Table 9.3 are described in detail below.

0 Environmental benefits: These are at the basis of the First Phase’s conception. Conservation in any part of the watershed is critical for sustainable economic performance in lower parts of the watershed. For example, conservation of Dallols and Koris in Niger will likely reduce sedimentation downstream allowing more sustained water storing capacity. Environmental benefits are not quantified in the economic analysis as precise data on the flow of environmental services along the river is not available.

0 Nutritional benefits: The support of traditional fisheries and the creation of fishery schemes in small dams and lakes will improve the nutritional intake of local communities which rely heavily on fish for consumption. Production of rice in the Inner Delta of Mali and in irrigated plains in Niger will increase the availability of

- 107- staple foods for communities in the area. Promoting pasture land development and dam rehabilitation will provide a more reliable source of food for the communities living oflivestock activities.

Table 9.3: Composition ofgross benefits (Present value, US$OOOs)

Type of benefit / I Guinea Mali Niger Benin Nigeria Total country of origin

Non-irrigated 9,204 18,824 1,575 I 10,034 39,636 production Irrigated production 3,077 3,649 1,654 8,380 Hydropower 1,031,604 1,031,604 Total 9,204 21,901 5,224 11,687 1,031,604 1,079,620

Project benefits in the regional context

9. Being regional in nature, the First Phase sets the stage for a shared vision vis-a-vis water resources development and ecosystem sustainable use. Project benefits will flow both downstream and upstream along the Basin. Traditionally, economic benefits and costs belong to the same entity (e.g. a particular country); in this case however, benefits can be generated in one country through an investment effort, and spread to other riparian countries in the watershed. Table 9.4 schematically represents this fact.

10. The national benefits of the First Phase Project of the Niger Basin Program are presented in the diagonal matrix. In the cells below the diagonal, are the benefits that flow downstream. For example, Mali’s fishery component will allow an increase in the fish catch ofNigerian fishermen (downstream) by an estimated US$0.6 million. On the cells above the diagonal, are the benefits that will flow upstream. For example, hydropower rehabilitation in Nigeria will allow an increase in the electricity supply in Niger (through an existing 70 MW bilateral agreement) and eventually Benin (through the development of the West African Power Pool, which will eventually also extend availability to other riparian countries).

- 108 - Table 9.4: Flow ofbenefits in the Niger Basin (Present value, US$ 000s)

Source of Total benefits benefits received

Recipient of benefits

Guinea 9.2 9.2

Hydro- Mali ecological 21.3 21.3 services 0.6 (fish catch); 51.6 hydro- 5.2 5.2 Niger (electricity) ecological services 1 Hydro- 103.2 Benin ecological 'a7 11.7 ' (electricity) services Hydro- Hydro- Nigeria ecological ecological 876.9 876.9 services services ~~ I Total benefits 9.2 21.9 5.2 11.7 103 1.6 924.3 produced

11. As previously mentioned, some categories ofbenefits such as those linked to changes in hydrology and ecological services, are not monetized. However, the category presented above presents a framework of Niger Basin activities from a standpoint that transcends national boundaries. For descriptive purposes, the rest of the analysis presents the benefits by examining the countries they originate from.

Incremental production of non-irrigated crops, livestock, fish and agroforestry

12. Component 3 ofthe Project focuses on four types of activities. First, management of critical watershed areas through the plantation of trees and the protection ofriver banks will take place in Guinea, Mali, Benin and Niger. These interventions will be accompanied by financially lucrative activities such as agro-forestry. Second, the project will improve fishery management in the lower Niger River in Mali. It will also support fishing activities in lakes and small dams in Niger. Fisheries are a crucial source of food and income for communities in the Basin but have been suffering from lower rain levels, degradation of ecosystem and

- 109 - increasing population pressure. Support to fisheries in Mali will likely benefit neighboring countries, due to the large number of migrant fishermen who use Malian fisheries on a yearly basis. Third, this component of the Project includes activities to boost flood agriculture in the low-lands of Guinea and the Inner Delta ofMali. Finally, the components include small water infrastructure rehabilitation which will be dealt with in the next section. a) Non-irrigated agriculture and livestock production

13. In Guinea, the First Phase will finance low land rehabilitation for agricultural production. This will allow farmers who currently cultivate along mountain slopes to count on a more reliable and lasting resource. Slopes are suitable for agriculture for a very short period of time; as nutrients are quickly depleted by rainfall and the land use changes. The project will allow an increase of low-land production ofhorticulture and the introduction of low-land rice cultivation during the dry season. This is expected to lower the pressure on the slopes as more labor will be needed in the low-lands. Key assumptions include an increase in rice yield from 1 to 3 tons per hectare. These parameters are based on earlier projects in the region and take a conservative stance. The other cultivations in the targeted areas include onions, sweet potatoes, manioc, gombo and pepper.

14. The Inner Delta is the main centre for livestock in Mali. Pastoralists obtain most of their sustenance from cattle as meat, milk and other animal products. The high concentration of livestock around the Inner Delta confirms the importance of this region’s productivity. The major part of the floodplain is covered with floating rice and bourgou. During inundation, the floodplain is inaccessible to cattle, due to the high water levels. Cattle can utilize the pastures just outside the delta that have been receiving rains. When water recedes, and after rice has been harvested, 1.2 million cows, 400,000 sheep and goats enter the floodplain abundant in bourgou pastures. In years with lower and shorter flooding, a serious scarcity problem occurs, owing to a shorter bourgou growing period and the lack of enough water depth for bourgou to grow optimally. Scarcity ofpastures leads to overgrazing which in turns diminishes the productivity potential of bourgou in coming years. Hence, the need for restoration ofbourgoutieres. The Project will promote bourgou plantation in a controlled flood environment. The objective is to restore pastures while at the same time reducing vulnerability to changing flood levels. It is assumed that in the targeted areas, half of the bourgoutieres will be used as pasture land while the other half will be used for harvest and subsequent sale in the market. By rehabilitating land areas and controlling water level, bourgou production will increase by 50 percent under the project. It is also assumed that without the Project, overgrazing in dry years will lead to an average 5 percent annual reduction in productivity. b) Fishery development

15. More than 300,000 people in the Malian portion ofthe Niger depend on fisheries for their living. Yet, fish is not a secure food source, since catches vary widely from year to year, due to high variability in rain and flood levels. Catch levels per fisherman have been decreasing in the past 25 years and are expected to fbrther decrease in the future if proper management of the resource is not introduced. Fishermen operate under extreme poverty

- 110- conditions which further exacerbate the overexploitation of the resource. The First Phase will provide fishing equipment with the objective of reducing the high dependence of fishermen on middle-man financing (which forces fishermen to sell the catch at a low controlled price in order to pay off their debts). The project will also introduce community management practices aiming at sustainable resource use. In addition, the Project will rehabilitate natural ponds with the aim of increasing fish stocks and will provide commercialization infrastructure such as ice factories and trucks. Most of the Project’s benefits originate from this increase in stocks and for the increase in value added made possible by better storing facilities. It is assumed that currently fishermen lose up to 33 percent of the fish catch value due to improper conservation. Financially, fishermen’s income will increase substantially by breaking the vicious cycle ofindebtedness and poverty in which fishermen operate and by favoring the access to markets. Capital costs for fishermen will be reduced by eliminating the chain of expensive financing created by middlemen, but this essentially represents essentially a transfer of resources from traders to fishermen. The financial analysis will touch upon this issue. Fish catch is expected to maintain itself overtime, vis-a-vis a declining baseline caused by overfishing.

16. Fishery development will also take place in Niger. The Project will specifically contribute to the development of hatcheries in combination with the rehabilitation of small dams. Larger water storage in the targeted areas will allow production of fish to increase from the baseline level of50,000 kg per year to 200,000 kg per year.

c) Agroforestry

17. Agroforestry activities will take place in Guinea, Mali and Benin. Given the level of degradation in targeted areas, the baseline production is assumed to be zero. In Guinea, nursery rentals, based on information from earlier projects, is US$1,200 per hectare. In Benin, average rentals are nearly US$700 per hectare, and in Mali they are estimated at US$1,500 per hectare.

Incremental production in irrigated areas

18. Rice is an important input in Mali’s agriculture and, except in the irrigation project of Office du Niger, production heavily depends on fluctuating rainfall. Most of the Inner Delta’s rice production takes place under uncontrolled flooding, as shown in Table 9.5; notice the very high variability of rice production. Controlled flooding, while still not comparable to irrigated agriculture, allows a more homogeneous production along time.

Region Segou Mopti Tombouctou Irrigated 6-16 36-45 Controlled flooding 23-37 1-24 Free flooding 19-116 5-10 Depressions (bas-fonds) 1-2 Immersed areas (lakes) 8-13

- 111 - 19. The First Phase Project of the Niger Basin Program aims at reducing the vulnerability to natural changes by increasing controlled flooding infrastructure. In subsequent stages, the introduction of a water efficient technique through the use of the System of Rice Intensification (SRI) is envisaged. Operations will take place in 1,000 ha in the circles of Djenne and Tenencou. Zwarts et a1 (2005) show that average productivity in free flooding agriculture is 458 kg/ha. It is expected that under controlled agriculture production will go up to 1,500 koa, a 200 percent increase2’.

20. T The economies of Niger and Benin rely heavily on a shrinking natural resource base. For this reason, the First Phase Project of the Niger Basin Program aims to upgrade and rehabilitate existing man-made infrastructure with the ultimate objective of obtaining a more rational use of available resources. Reversing this tendency is possible through the protection of land with high agricultural potential and through a more rational use of water storage capacity..

21. In Niger, several of the irrigation networks created during the fifties and sixties are heavily degraded due to sedimentation on main drainage channels. Low agricultural productivity is at the basis of poor nutritional intakes of communities and increasing degradation of forested areas. The Project targets an area of nearly 1,800 ha in the region of Tillabery. Rice is the main cultivation. Data fiom the Niger Irrigation Agency (ONAHA) shows that for similar schemes, rehabilitation work has achieved a 34 percent increase in production. The economic analysis uses this data and also exploits available time series by using an annual decrease in production of approximately 2.5 percent, due to the fact that sand accumulation cannot be completely stopped.

22. Small dams along the Niger River Basin are crucial to sustain local income by favoring small agriculture schemes, livestock activities and fisheries. The First Phase will rehabilitate dams in Niger and Benin. Rehabilitation entails the refurbishing of existing dams with the objective of extending their life period, and the protection of upstream catchments areas to reduce the rate of sedimentation. Rehabilitation will also decrease leakages over time thus allowing a longer duration of the storing capacity of the reservoirs. It is assumed that the rate of siltation will be progressively reduced as an impact ofthe project. Currently small dams are primarily used for livestock. The Project will also promote the establishment of fishing activities.

23. In the “without-project” scenario, the reservoir has an expected residual life period of 4 years. After rehabilitation, the reservoir’s life increases, the annual carrying capacity of livestock is reduced and fishing is introduced.

’’ As a mean of comparison, productivity under irrigated agriculture can reach 4 to 6 tons per hectare. Based on evidence fiom countries in which SRI has been introduced, rice productivity in the targeted regions could increase by 50 percent as a consequence of SRI introduction. The System ofRice Intensification (SRI) has been extensively studied and researched in Madagascar, after its introduction by Fr. Henri de Laulanie in the 1980s. Barrett et a1 (2004) show that, after controlling farmer’s behavior and land characteristics, the introduction of SRI allows an increase of 84.2 percent over mean yields using traditional methods. Here, a conservative improvement of 50 percent is used, in order to allow for lower water control possibility ofMalian farmers.

- 112- Increased hydropower (in Nigeria)

24. The First Phase Project ofthe Niger Basin Program will rehabilitate the hydropower plants of Kainji and Jebba in Nigeria. While Kainji’s installed capacity is 760 MW, it currently has a maximum available capacity of 560 MW, owing to the decommissioning in 2000 of Unit 5 and the poor status of Units 6, 9, 10 and 12. Jebba, located 100 km downstream of Kainji, has an installed capacity of 578.4 MW. The turbines at Jebba are in good working conditions. The rehabilitation work will concentrate on Kainji, where the needs are higher, and will aim at improving homogeneity of installed units, rehabilitating turbines 5, 6 and 12, and improving plant services. The rehabilitation package would be based on a “water to wire” approach Le. will include everything impacting with the unit (in the limit such fact is possible in the same power plant). The Kainji power plant is stuck in the “poverty trap” moving from one emergency situation to another without having the possibility and resources to achieve sustainable results.

25. Benefits from the rehabilitation include: 0 increase in energy produced 0 increase in the unit value of the energy produced by augmenting the share of production during peak hours 0 increase the delivery of network services (spinning reserve/load follow-up, fast non- spinning reserve; black-start capability; and frequency and voltage control) 0 increase the possibility to carry out planned outage for scheduled maintenance not only in Kainji and Jebba but, in the overall generating park ofNigeria

26. Table 9.6 provides estimate of the gross benefits arising from the increased energy production (76 percent of the estimated benefits) and increased unit value of energy (22 percent). The energy market operator in Nigeria does not currently reward network services. There is however a fixed fee of 105 Naira per Megawatt available. This has been indicated in Table 9.6 as a lower bound for reserve benefits. Other network services are not valued.

27. In calculating the benefits of energy production, a unit value of base energy of 7.8 US cents has been used. The price is assumed to be inversely related to the plant factor, a lower plant factor corresponds to a relative increased use of energy during peak hours22.This assumption is used to calculate the increased unit value of energy with rehabilitation.

22 Following World Bank (2005) the average unit value of energy is linked to plant factor by the following relationship: AV = BV x (VPF)”~;where AV is average value, BV is base value, and PF is plant factor.

- 113 - Table 9.6: Increase in the value ofenergy and energy services after rehabilitation in Kainji and Jebba

US$ I Increased Increased unit value Reserve (lower Total million I production of energy bound) Kainji I 680 150 16 846 Jebba 104 79 2 185 Total 784 229 18 1,032

Percent Increased Increased unit value Reserve (lower Total production of energy bound) Kainji 80% 18% 2 % 100%

28. The analysis assumes that rehabilitated units will have 15 days of scheduled outage per year for the first 10 years. Starting from Year 11, the number of (unscheduled) outage days increase progressively as the unit approaches the end of its lifetime. Operation and maintenance (O&M) costs have been assumed and vary proportionally to the nominal capacity of each unity and in inverse proportion to the availability of the unit (i.e. the more the unit is affected by unscheduled outages the higher the O&M cost).

Results of the Benefit Cost Analysis and Sensitivity

29. The benefit cost estimates presented below are inevitably imprecise and should be considered only in terms of order of magnitude, especially for recurrent costs (which have been assumed in most cases to be 5 percent of the investment cost) and for the benefits of fishery development (where biological data has not been used to estimate the actual carrying capacity ofthe existing fisheries). In all cases, benefits estimation has been carried out using conservative assumptions as described above.

30. Unit incremental values for tradable goods, such as the price ofrice and other crops, are expressed in constant terms and are based on the import parity price plus the cost of transport from the border to the market (estimated at 50 percent of the import price). In the analysis, real prices are assumed to remain constant for the next 30 years. This is a conservative assumption since international forecasts predict an increase of crop prices such as the one for rice over the next 10 years. The period for net benefit evaluation is 30 years and an opportunity cost ofcapital of 12 percent is used.

31. The economic analysis shows a solid rate of return. The overall Economic Internal Rate ofReturn ofthe First Phase is 5 1 percent.

- 114- Table 9.7: Economic Analysis - Summary ofresults

Sustainable Rehabilitation of Rehabilitation of Total management of national water regional water degraded infrastructure infrastructure environments NPV (US$ IRR NPV (US$ IRR NPV (US$ IRR NPV (US$ IRR 000s) 000s) 000s) 000s) Guinea 4,267 33% 4,267 33% Mali 7,957 21% 2,046 35% 10,003 22% Niger 537 32% 1,838 24% 2,376 25% Benin 485 27% 3,693 22% 4,178 22% Nigeria 873,051 54% 873,051 54% Total 13,246 24% 7,577 25% 873,051 54% 893,874 51%

32. The results differ widely across country and components. The high net benefits are mainly driven by the rehabilitation of regional water infrastructure in Nigeria (IRR: 54 percent). The unit value of energy clearly plays an important role in determining the net present value ofthe project’s benefit. The sensitivity analysis below looks into this issue.

33. The rehabilitation of national water infrastructure also has a strong rate of return (IRR: 25 percent). The lower bound is Benin (IRR: 22 percent). The introduction of controlled flood infrastructure in Mali is on the other hand, characterized by a rate ofreturn which is above 30 percent.

34. The sustainable management of degraded ecosystem components, through the promotion of economic activities such as low-land agriculture, livestock production, fisheries and agro-forestry provide in aggregate a rate of return of 24 percent. Returns are driven up by agro-forestry activities in Guinea, Mali and Benin. The lowest rate ofreturn for this component is in Mali (IRR: 21 percent). This is the result of low returns for the fishery and bank-protection sub-components. Fishery development will most likely entail a transfer of resources from traders to fishermen without an immediate impact on catch levels. River bank protection in Sofara, while expensive, will protect households from the ongoing degradation and will prevent the resettlements that would have to take place if the situation is not controlled. It is important to note that this low economic return activity will be balanced by the other high return activities lined to pasture land and agricultural land rehabilitation.

35. The variables that influence the flow ofproject benefits the most are likely to be: (i) unit value of electricity in Nigeria; (ii)the evolution ofagricultural producer prices; and (iii) the efficiency of water user authorities and local governments in maintaining the rehabilitated infrastructure.

36. The unit value of electricity used for Nigeria is likely to be on the lower bound of a range ofpossible estimates. In the current situation, hydropower in Nigeria is unable to meet peak energy demand and the system is characterized by daily black-outs. The population commonly resorts to private diesel generators implying a very high willingness to pay for

- 115 - reliable electricity. Using a lower electricity price in the analysis would have a considerable impact on the net present value but would still make the Project economically viable. For example, assuming a flat unit value of electricity of 4.7 US cents (the tariff level in 2006) would reduce the net present value of the Project by more than half while reducing the rate ofreturn to 3 1 percent.

37. The price of agricultural and livestock products are assumed to stay constant in the base case scenario. However, in the past years producer prices for rice for example have increased substantially. While a small risk exists that the prices will decrease once more, it is unclear whether the upward trend will continue. Assuming an annual increase in product prices of 5 percent across the board, would increase the rate of return of the sustainable management ofdegraded ecosystem components by 4 percentage points (to 28 percent) and would increase the rate of return of the national water infrastructure rehabilitation component by 7 percentage points (to 32 percent).

38. Efficient management ofrehabilitated infrastructure is crucial to ensure that benefits are sustained over time. Assuming that a time horizon of 10 years, that is, infrastructure is non-functional ten years from the start of the Project, the rate ofreturn would be marginally above the opportunity cost ofcapital of 12 percent.

Financial Analysis and Fiscal Impact

39. The main beneficiaries in the First Phase Project of the Niger Basin Program will be the local populations. The Project will directly or indirectly benefit nearly 5 million people through the rehabilitation of national water infrastructure and the promotion of economic activities along the watershed. The rehabilitation of the Nigerian hydropower plants will benefit nearly 50 million electricity users. From a fiscal point of view, the national government in each country will invest the bulk of the Project’s investment costs and will receive a fiscal compensation that represents a fraction ofproject costs. It is assumed that the only fiscal revenues come from the Project investments (using a tax rate of 18 percent). Fiscal revenues will also arise from taxation to the value chain of agricultural, livestock and agro-forestry products, but since a large part of the production will be aimed at auto consumption, this element is not likely to qualitatively change the results.

40. Water user associations, taken as entities separate from the producers, and local governments in charge of maintaining rehabilitated infrastructure will bear the bulk of the recurrent costs. In most cases, water user associations will coincide with producer associations. In those cases in which management of infrastructure is done by agents other than the users, the project will establish the required institutional framework to make resources available for the necessary maintenance.

41. In Nigeria, project net benefits will accrue essentially to consumers and the Power Holding Company of Nigeria (PHCN). From the fiscal point of view, the government will pay the bulk of investment costs but will benefit from taxes on electricity sold through PHCN. Consumers will benefit from incremental electricity production valued as the difference between willingness to pay and tariffs. PHCN will benefit from sales of

- 116- electricity, valued at the average tariff, and from maintenance cost saving allowed by the rehabilitation. Such benefits will be higher than the recurrent maintenance costs generated by the Project.

Table 9.8 Financial Analysis: winners and losers from the Project (NFV, US$ 000s)

Total

42. The fishery sector in Mali represents a special case since the First Phase will essentially transfer resources from traders to fishermen by providing the latter with the essential hardware. After project completion, fishermen will bear annual recurrent costs of nearly US$250,000, that is, an annual cost per fisherman of US$200. This cost will ensure proper maintenance of fishing boats and other equipments. Expected benefits and savings generated from breaking the indebtedness-poverty trap of fishermen will amply cover these costs. In order for the Project to be sustainable, however, fish catch needs to be maintained over time. The institutional and capacity building in fisheries management is thus an essential element ofthe Project.

- 117- Annex 10: Safeguard Policy Issues AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

A. Overview

1. General: With respect to large water infrastructure the First Phase (WRDSEM APL 1) does not include any new investments but rather targets the rehabilitation of the Kainji and Jebba Dams. With the possibility of large-scale water infrastructure investments in WRDSEM 2, WRDSEM is classified as category Environmental Assessment category. An Environmental and Social Management Framework (ESMF), an Environmental and Social Audit (ESA) for the Kainji and Jebba Dams, a Resettlement Policy Framework (RPF) and a Social Assessment have been prepared by the Borrower and cover the entire Niger River Basin and address potential environmental and social impacts of sub-projects in the five countries located on the main stem of the river. It is expected that sub-projects will individually have relatively low environmental and social impacts. However, cumulative impacts may be more severe. The individual and the cumulative impacts will, therefore, be assessed through application of the ESMF to the sub- projects. On this basis, Environmental Assessments (EAs) will be carried out for those sub- projects with potentially high impacts based on their evaluation using the ESMF. One potential impact of the small water infrastructure might be the upsetting of the social balance in a community, which could be the source of social conflicts. These impacts will be carefully identified, monitored, and addressed.

2. Since this is a transboundary project, the NBA will work with all nine riparian governments to improve the exchange of environmental assessments and other related information on activities with transboundary impacts.

3. Nigeria: The construction ofKainji and Jebba Dams created significant positive as well as negative environmental and social impacts. In the 1960s when the Kainji Dam was constructed, no Environmental Assessment was prepared. It is clear that a large reservoir such as the Kainji Reservoir will have caused changes in downstream hydrology and reduced floodplain economic activities, at least up to the confluence with the Benue River. The construction of the downstream Jebba Dam only increased these impacts.

4. The environmental and social audit for Kainji and Jebba Dams and field visits by World Bank safeguard staff revealed that people who were resettled as a consequence ofthe Kainji and Jebba Reservoirs have been compensated for their losses. However, the livelihood of these people has not improved over the last 40 years, even though expectations were raised for improved livelihoods after resettlement. These expectations still exist, especially for the younger generation. The populations around the two reservoirs have no access to electricity, safe drinking water and other social services and live in the same conditions as before resettlement. The Nigerian authorities have assured the Bank that a new policy has become effective to supply electricity to communities in a radius of 10 km around the reservoirs and the dams through a rural electrification scheme. The resettled communities suffer from serious waterborne diseases, such as a high prevalence ofmalaria, and a moderate prevalence ofurinary bilharzia, typhus and regular cholera epidemics. The black fly Simulium damnosum is increasing, but no cases of

- 118 - onchocerciasis (riverblindness) have been observed. There is no Tse-Tse fly causing sleeping sickness in the area. Some of the communities visited by the Bank team refused to use safe treated drinking water, because its taste of treated drinking water. Communities near the dam sites have access to the project hospitals for their health care, but need to pay for their medications. Other communities after resettlement in a safe place reinstalled themselves downstream of Kainji and Jebba Dams for economic reasons and request compensation when their houses and other property are flooded. This poses a safety issue and will be improved under the Project. The First Phase will finance an Emergency Preparedness Plan, including a Dam Emergency Action Plan and a Flood Warning System to improve the safety of communities downstream.

5. The Project Preparation Facility (PPF) financed a dam safety report and a sedimentation report for both dams. The safety of the two dams is presently not problematic at present and sedimentation in the reservoir is at the same level as was predicted at the feasibility stage. Dam safety equipment is not functioning. The First Phase will finance the replacement of the dam safety equipments and a monitoring process for their effective use whenever appropriate. The Jebba Dam faces problems with tree trunks invasion upstream of the generator and spillway intakes, because the reservoir was not adequately cleared before impoundment. The Project will finance the removal of these tree trunks, since they threaten the safe operation of the turbines. Water hyacinth infestation has been a problem, but is currently being adequately managed through monitoring and early community involvement for their removal. There is serious erosion and fracture in the tailrace channel ofthe spillway ofthe Jebba Dam. The Project will contribute to the solution of this problem. Water quality is good and no corrosion problems have been reported with the turbines.

6. In both powerhouses, the fire safety is insufficient. The First Phase APL will finance improvements in fire safety. Occupational health safety is insufficient. Although staff have free personal protection equipment, they opt not to wear it. The Project will insist that safety at the work place is improved. An Environmental, Health and Safety Unit will need to be established to improve environmental management, health and safety in the two dams. HIV/Aids awareness and prevention will need to be improved by the two dam management units in collaboration with the HIV/Aids program in Nigeria

7. Benin, Guinea, Mali and Niger: The First Phase will only finance small-scale activities in Benin, Guinea, Mali and Niger. It is expected that the environmental and social impacts of these sub-projects are manageable. These activities include the following activities for the different countries.

8. Benin: Rehabilitation of small dams (4 meter high) and reservoirs for income generating activities, such as cattle herding, aquaculture and small-scale irrigated horticulture. If pesticides will be used, farmers will be trained in safe pesticide use, storage and disposal. Small dams and small spillways can be economically protected through the use of the Vetiver System (Vetiver zizanoides), used worldwide for erosion control activities, including in small spillways. For these activities a small Environmental Assessment and an Abbreviate Resettlement Plan (ARP) will be prepared.

- 119- 0 Co-management ofprotected forest areas through an enforceable management plan to better protect the forest areas and to improve communities’ livelihoods. Communities get 50 percent of the revenue from the forests, but are obliged to replant the trees. Private tree nurseries and bush fire prevention will be strengthened under the project. For these activities an Environmental Assessment and Resettlement Actions Plan (RAP) will be prepared. 0 Small-scale irrigation for horticulture development. This activity will be monitored if pesticides are used. In this case, the farmers will be trained in safe pesticide use, storage and disposal.

9. Guinea: Agro-forestry development and income generating activities, to protect priority watersheds in the upper Niger River Basin through co-management. This activity will require an EA and a RAP;

Development of lowlands agriculture, including small reservoirs. This activity will require an Environmental Assessment. Pesticide use will be monitored, and farmers will subsequently be trained in safe pesticide use, storage and disposal;

0 Preparatory studies for Fomi Dam will be finalized, including an EA and RAP

10. Mali: Inland Fisheries Development and Management in the Niger Inner Delta. This activity requires an EA;

0 Flood recession agriculture and pasture restoration. This activity requires a small EA;

Protection of the river banks in order to manage siltation of the river bed. This activity will require a simple Environmental Management Plan and a RAP;

0 Preparatory studies for Taoussa Dam will be finalized, including an EA and RAP.

11. Niger: 0 Rehabilitation of small dams for small-scale irrigation of horticulture. Pesticide use will be monitored in this activity and farmers will subsequently be trained in safe pesticide use, storage and disposal. A small EA and ARP will be required;

Rehabilitation of three rice irrigation schemes totalling 1,700 ha. These areas are using almost no pesticides at present. Pesticide use will be monitored, and farmers will subsequently be trained in safe pesticide use, storage and disposal. A small EA will be needed for this activity;

Restoration of degraded lands, sand dune fixation and restoration of watersheds. A small EA and ARP will be required for this activity;

- 120- 0 Restoration of Koris and Dallols. Koris can be economically protected through the use of the Vetiver System (Vetiver zizanoides) used world wide for erosion control activities. The Vetiver System is not yet used in Niger, but will need to be introduced on a pilot basis. This activity will require a small EA and RAP;

Development and management of inland fisheries. This activity will require a small EA;

0 Preparatory studies for Kandadji Dam will be finalized, including an EA and RAP.

12. Safeguard Policies. The following table indicates the Safeguard Policies triggered by the First Phase Project ofthe Niger Basin Program:

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [XI [I Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OP/BP 4.1 1) [XI [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OP 4.10) [I [XI Forests (OP/BP 4.36) [XI [I Safety ofDams (OP/BP 4.37) [XI [I Projects in Disputed Areas (OP/BP 7.60)* [I [XI Projects on International Waterways (OP/BP 7.50) [XI [I

13. For WRDSEM APL 1, it is anticipated that under Component 2 (rehabilitation of regional water infrastructure) and Component 3 (rehabilitation of small infrastructure and sustainable management of degraded ecosystems) the First Phase will trigger several safeguards policies as noted above, including Environmental Assessment (OP/BP 4.0 l),Involuntary Resettlement (OP/BP 4.12), Natural Habitats (OPBP 4.04), Forests OP (4.36), Physical Cultural Resources (OP/BP 4.1 l),Safety of Dams (OP/BP 4.37) and Projects on International Waterways (OP/BP 7.50). In the case of the latter (OP/BP 7.50), the nine riparian countries are all signatories ofthe 1980 Faranah Convention establishing the Niger Basin Authority, and empowering it to ensure the overall coordination of activities within the Basin. Under this agreement the member states are obliged to inform the Executive Secretariat of the NBA of all projects and works they might intend to carry out in the Basin. The program is a regional activity carried out by the NBA based on the request made by the Chairman of the Heads of State Summit on behalf of the member countries. As the regional executing agency, the NBA has consulted the riparian countries and received their approval during the Council of Ministers in September 2006. The Niger Basin Authority has been informing, through official correspondence, all member countries since the inception of the First Phase Project and the requisite “non objections” were received prior to project negotiations. The NBA has prepared an Environmental and Social Audit for the rehabilitation of the Kainji and Jebba Dams and an ESMF for activities which have not yet been

* By supporting the proposed project, the Bank does not intend to prejudice thejnal determination of the parties’ claims on the disputed areas

- 121 - precisely defined. For interventions that could result in involuntary resettlement and/or the loss ofland, a RPF has been prepared.

14. Environmental and Social Screening Procedure: At the regional level, the NBA environmental and social experts will be responsible for the environmental and social monitoring and supervision in collaboration with the national environmental agencies in the five countries. They will monitor implementation of the Environmental and Social Management Framework, the Kainji and Jebba Dams’ Environmental and Social Audits, and implementation of the prepared Environmental Assessments and Environmental Management Plans and Resettlement Action Plans for the selected sub-projects. At the national level, sub-projects selected will be screened (a screening form will be filled out) for environmental and social impacts and land acquisitiodresettlement by communities. The EAs will be approved according to the national EA procedure, which is in most cases by the Ministry of Environment. In each country, the existing national decentralized environmental and social units will determine the EA category and the need for a Resettlement Action Plan. They will also monitor the environmental and social screening process in coordination with the National Implementing Agencies. Most sub-projects will be Category Bywhile others will be Category C. It is not expected that one sub-project will be Category A. The EA process will follow the national EA regulation in each country, but it also will need to be in compliance with the World Bank’s Safeguard Policies. For Category B projects the decentralized environmental units with the support of the NIAs will: (i)prepare the TORS for the EA study; (ii)recruit the consultant for the EA; and (iii)carry out the public consultations. The Environmental Management Plan (EMP) of Category B sub-projects and RAP or ARP will be approved by the decentralized environmental and social units. The EAs will include an Environmental and Social Management Plan, defined indicators and assign responsibilities for its execution and a budget. The screening procedure will identify if there are pesticide management issues and ensure that farmers are trained in safe use, storage and disposal of pesticides. The NBA environmental and social experts will monitor the EA process and also identify if people will be affected (involuntary resettlement or land acquisition). In this case, a RAP will be prepared based on the approved RPF.

15. Anticipated afforestation activities will require the Borrower to prepare and implement appropriate forestry management plans as part ofproject implementation (OPBP 4.36 on Forests and OPBP 4.04 on Natural Habitats). The Physical Cultural Resources Safeguard Policy OPBP 4.1 1 will only be triggered for newly constructed small dams. A “Chance Find Procedure” will be applied during project implementation. The First Phase APL Project of the Niger Basin Program also complies with operational policies as they pertain to Safety of Dams (OP/BP 4.37) and Projects on International Waterways (OPBP 7.50). The Borrower has prepared a Dam Safety Report for the Kainji and Jebba Dams. All nine Niger Basin governments were notified of the Project through the NBA.

16. Environmental Actions during implementation: A Strategic Regional Environmental Assessment (SREA) and preliminary RAPS will be prepared as part of the Energy Options Assessment to be undertaken under Component 2 during project implementation.

17. Safeguard Documents Disclosure: All the NBA’s assessments (Environmental and Social Audit, ESMF, and RPF) have been completed and disclosed in the riparian countries

- 122 - involved and in the Infoshop prior to appraisal in mid-April 2007, and 120 days before the Board presentation. During preparation, the NBA and riparian countries engaged in a consultative process with national and local stakeholders. The concerns of stakeholders have been addressed in the ESMF and RPF. The First Phase complies with all the relevant World Bank safeguard and national policies, and has met the requirements ofthe World Bank’s Disclosure Policy.

B. Environment

Baseline environmental and social conditions

18. Baseline environmental and social conditions were established as part of the ESMF, Environmental and Social Audit for the Kainji and Jebba Dams and Social Assessment. The exact locations of project activities are not yet known. The First Phase areas have however, been identified during pre-appraisal and confirmed during appraisal. The project will focus on the following main areas ofthe basin: 0 Nigeria: Kainji and Jebba Dams

0 Benin: departments of Alibori and Borgou within the upper sources of the Sota, Alibori and Mekrou

0 Guinea: The Region ofFaranah in the upper Niger Basin

0 Mali: primarily he regions of Mopti essentially and the regions ofTimbuktu and Gao for traditional fishery development

0 Niger: along the main Niger River, in the Tillaberi and Dosso regions and on the watersheds ofDallols Maouri and Foga.

Analysis of Alternatives

19. The “no project” scenario will leave the communities in a poverty trap. The “with project” alternative will have a positive impact on poverty reduction, economic development and national and regional natural resource management in the Niger River Basin.

Environmental and Social Impacts and Mitigation Measures

20. The NBA prepared an Environmental and Social Audit for Kainji and Jebba Dams. This document covers the two dams and the areas within the dams and reservoirs influence. In addition, an ESMF, RPF and a Social Assessment have been also prepared. These three documents cover the entire Niger River Basin and address environmental and social screening and management of sub-proj ect level activities in the five countries participating in the program (Guinea, Mali, Benin, Niger and Nigeria). It is expected that the local level activities will individually have relatively low environmental and social impacts, however, cumulative impacts may be more severe. These individual and cumulative impacts will be assessed, mitigated and managed. For sub-projects selected, which will be relatively large sub-projects, the NBA will prepare an EA, including an Environmental and Social Management Plan (ASMP), identify indicators and assign responsibilities as well as a budget for its execution.

- 123 - 21. One potential impact of the small water infrastructure might be the disturbance of the social balance in a community leading to increased social conflicts. These impacts will be carefully identified, addressed and monitored. In the First Phase rehabilitated water infrastructure and irrigation systems, a minimum of 10 percent of activities will be set aside for vulnerable groups, such as women and youth.

22. Under, Component 2, the Project will finance Feasibility Studies, Environmental and Social Assessments and RAPs for some new potential hydropower dams in the Niger River Basin, ofwhich one or several dams may be financed under WRDSEM 2.

23. The Project will finance a Strategic Regional Environmental Assessment (SFWA) and preliminary RAPs for the Niger River Basin to identify a priority investment plan acceptable by all major stakeholders. This priority ranking will be based on technical, economic, social and environmental screening and ranking criteria. In this First phase project, there will be no environmental and social impacts from this option assessment and planning process.

Environmental management during the construction and operational phases a) Construction phase.

24. Environmental and social impacts caused during construction by the sub-project local level activities will be small. The environmental management requirements will be included in the bidding documents. The ESMF will be part of the bidding documents. Normal standard environmental clauses, including awareness creation by the Contractor of their staff and surrounding communities with regard to HIV/Aids, will be included in the contract with the Contractors. These mitigation measures will limit environmental and social impacts. b) Operational phase

25. It is expected that with the increase of water management infrastructure and improved access of communities to water bodies, including stagnant water, the prevalence of waterborne diseases, such as urinary schistosomiasis may increase. In addition, the prevalence rate of malaria might further increase as a consequence of the increase in the area of stagnant water, even though malaria is already endemic in the Basin. The First Phase will include a monitoring program to assess the situation on a regular basis. If needed, WRDSEM 2 will include a component to address the waterborne diseases as an additional mitigation measure.

26. A complete overview of the environmental and social problems in the Niger River Basin can be found in the ESMF, the Environmental and Social Audit for the Kainji and Jebba Dams, the RPF and the Social Assessment.

Institutional Elements and Monitoring and Evaluation

27. The scope and reach of this multi-sectoral project requires robust and decentralized monitoring and evaluation (M&E) system that is robust and decentralized to facilitate systematic data collection in each ofthe five riparian countries. It is important that there is M&E capacity in

- 124- the specific areas of intervention to track data to feed into a central data repository at the level of the Observatory of the MA. This will be the responsibility of the NBA’s Environmental Monitoring Service, which is in place since 2005. A proposed list of environmental and social indicators can be found in the ESMF.

28. Data will be tracked for each of the indicators identified in the Results Framework at a national level and aggregated at a regional level by the M&E unit of the NBA’s Observatory. There will be emphasis on the collection of data related to the overall effectiveness and efficiency in the delivery and performance of the Project as well as the tracking of data on its overall outcomes and impact. Outcome data will be tracked during the First Phase Project ofthe Niger Basin Program. It is anticipated that the successful outcome ofthe First Phase will trigger the implementation of WRDSEM 2.

Institutional Capacity for M&E within the NBA

29. A limited amount of data is currently being collected by the NBA through the M&E unit of its Observatory. This unit relies on national networks to collect and transmit data to it for storage, analysis and reporting. The First Phase intends to use the existing national networks. Each of the national networks will be strengthened to collect data related to the indicators in the Results Framework with an additional M&E specialist located within the National Focal Structures. The networks in each of the riparian countries will be assigned specific responsibilities for data collection. The networks will transmit the data to the M&E unit of the NBA’s Observatory which will collate and aggregate them for reporting to the Council of Ministers and the World Bank.

Risks

30. Due to differences in M&E capacity in the riparian countries, it could be challenging to track valuable data. More significantly, differences in implementation capacity could undermine the timely achievement of program outcomes. The First Phase Project of the Niger Basin Program intends to overcome these challenges through capacity strengthening and standardization of data collection instruments. The national networks will be linked to facilitate exchange of information. Development of a M&E guide should lead to the collection of quality data.

- 125 - Annex 11: Communication Strategy Summary AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Rationale for Communication

1. Fifteen million people are expected to benefit from this regional project. But to equally and completely share the benefits, these people must be aware of the Project and how they will be affected. It is therefore critical to disseminate information about the institutions, the project’s components and their impact on people’s lives. A comprehensive and inclusive dialogue with the different stakeholders will consolidate their ownership of the project and foster further constituency. This communication strategy responds to the need to create awareness, build popular support and reach consensus for the overall project and the governing institutions. It focuses on two components of the Project: (i)NBA Institutional Strengthening and Capacity Building; and (ii)Rehabilitation, optimization and development of regional Infrastructure - Kainji and Jebba in Nigeria.

Communications Objectives

2. As is the case of many infrastructure projects, community inclusion, participation, and endorsement increase the likelihood of success. This communication strategy aims to contribute to it by putting in place efficient communications mechanisms that can build support among the different stakeholders. It seeks to: (i) strengthen the NBA’s communications and create awareness for its mission and projects; (ii)foster collaboration among the NBA’s members and build trust for its operations; (iii)encourage participation and convince the public to endorse the NBA’s activities; and (iv) build a credible corporate image.

3. , During the rehabilitation of Kainji and Jebba Dams, this strategy will put in place instruments that will: (i)inform constituencies about the Project and its impact on their livelihoods; (ii)consult the public, listen to their needs and concerns; (iii)create an inclusive, two-way dialogue with the different stakeholders; (iv) generate and sustain level ofparticipation and adhesion to the Project; and (v) build trust in the managing institutions.

Guiding Principles of the Communications Strategy

4. The Communications Strategy should be based on the following key principles: (i) inform while respecting the diversity within the communities in terms ofcultures, languages and gender; (ii)create an inclusive, open and reliable dialogue with the public in order to get feedback and readjust the strategy as needed; (iii)use a multimedia approach combining print and electronic media, traditional and direct communications to ensure that all segments ofthe population are reached; (iv) encourage staff and management to stay informed and be accessible to both the media and the public; and (v) give visibility to the NBA and the institutions managing the Kainji and Jebba Dams, and present them as credible organizations with a clear vision.

- 126 - 5. This strategy will: (i)identify stakeholders or target audiences and their perceptions, knowledge and attitude towards the Project; (ii)address potential risks with a multi-pronged approach; and (iii)propose activities that will foster dialogue and promote the image of the institutions.

Communications Target Audiences

Component 1: NBA Institutional Strengthening and Capacity Building

6. A study was conducted by an independent firm to assess the NBA’s communication and determine the perceptions and expectations of people affected by its projects. For each country, the study presents social and cultural context, telecommunications infrastructure, and existing media. The study reveals that no effort has been made by the member countries to make the organization known. Government agencies are aware of its existence but within the population, there is not much knowledge of the NBA and its objectives. This is caused by an absence ofcorporate communication as well as a scarcity ofadequate communications media in the region.

7. As a regional agency, the NBA will need to foster relations with the following stakeholders living in the nine riparian countries:

(i) Institutions including the NBA’s staff, national coordinating agencies and ministries, partners and donor community involved in the project management. They must stay informed and be able to provide adequate information to both the media and the public.

(ii) Project Area Residents and Project Affected People who must stay abreast of the Project led by the NBA and be informed about how they will be directly or indirectly affected. Some of the Project’s activities might include resettlement and will require a specific approach to ensure that it is organized in an equitable manner.

(iii) The General public which is not aware of the NBA and its objectives but has great hope that the project will improve their lives.

(iv) Local elites such as traditional chiefs, mayors, community elders and opinion leaders who can relay information and encourage the community’s participation.

(v) Civil society including local associations, women’s groups, youth organizations, trade unions and national and international NGOs. Infrastructure and specifically water projects have been the subject of many controversies. Keeping these groups well informed about the project and their positive impact will be crucial to mobilize support within the countries and internationally.

(vi) Media based in the different riparian countries and which vary in their languages and audience.

- 127 - Component 2: Rehabilitation and Upgrading of Existing Infrastructure - Kainji and Jebba, Nigeria

8. The rehabilitation of the Kainji and Jebba dams will trigger or heighten concerns for waterborne diseases, malaria, chemicals affecting non treated water, migration and subsequently the spread of HIV/AIDS and STDs, land disputes and social conflicts between farmers and herders. To minimize potential risks and tensions, a dialogue should enhance the rehabilitation features of this component and should be created with the following stakeholders:

(i) Staffwho may face safety issues because of insufficient equipment. The families of the upper and middle staff live on the dam sites, and have dedicated schools and hospitals.

(ii) Populations asking for more benefits from the dams operations i.e. power, water, and access to the plant’s hospitals. These can be divided into three groups: (a) resettled populations who were compensated during the dams construction but whose descendants are now asking for more; (b) people living voluntarily in flood plains for economic reasons (fisheries, agriculture) or for cultural beliefs (some believe they have a spiritual link to the river and must live close to it); and (c) project area residents living close to the dams and power lines.

(iii) Institutions including Kainji and Jebba business units and the PHCN Headquarters which are going through reform, the Niger Basin Authority supervising the overall Niger Basin Resources Development, technical ministries, the Nigerian government and neighboring country clients ofthe dams.

(iv) Civil society including local associations, women’s groups, youth organizations, trade unions, national and international NGOs; and

(v) National media.

Communication Actions and Components

9. The strategy will be divided into five components: (a) internal communication; (b) corporate communication; (c) grassroots communications; (d) external communication; and (e) media relations.

a) Internal Communication - There is an urgent need to support the NBA’s overall communications program by identifying key activities to make the NBA known, build a positive image and strengthen its corporate image. A well trained communications team, working closely with management, should be created within the NBA to act as source of information. Its key role will be to create a forum for dialogue with the stakeholders by disseminating accurate, timely information. A conducive work environment can be created by establishing communications procedures and enhancing appropriate communication technology that will eliminate poorly managed meetings, delayed mail,

- 128 - lack of telephone, fax, and email access which create bottlenecks in the flow of information. Staff at Kainji and Jebba should be more educated about safety issues and be aware ofthe proper behavior that will keep them and their families safe. Signage, posters and brochures should be used to remind them to wear protective equipment.

b) Corporate Communication - A corporate image must be built with: i)a single and common logo recognized and used by all members; ii) corporate branding; and iii) revamped and updated website with timely information about the institution and its achievements, its activities highlighted by speeches, conference summaries, news articles, and multimedia information.

10. Knowledge exchange is restricted to a bulletin, ABN Infos, which is produced on an ad hoc basis. The seminars and workshops organized bring members together without fostering a desire for better collaboration. To promote knowledge exchange and a shared vision, there is a need to have standard tools that will promote cross country dissemination of information and build trust in the member states: (i)exchange fora including mailing list, face-to-face meetings, and briefings; (ii)common information package including facts sheets, leaflets, presentation ofthe NBA; (iii)newsletters published periodically on progress and achievements; and (iv) workshops dedicated to knowledge exchange and networking. Kainji and Jebba business unit and the PHCN Headquarter once on board, will need to build its image as a credible, result-oriented group using similar techniques.

a) Grassroots Communication - This component focuses on providing adequate information to the local communities, listening to their concerns and grievances, and helping them maximize their benefits from the project. Key officials or local leaders will be also identified as champions to help build consensus. The main activities should be comprehensive and allow the community as a whole to have access to the information. Many of the riparian populations are illiterate; therefore it is critical to design specific tools they can understand. These will include: (i)frequent face-to-face meetings; (ii) consultations with the communities divided into groups of chiefs and elders, local political leaders, women, and youth; (iii)letters, short videos, poster, and community radio; (iv) traditional media such as street theatres, village messengers, local stars and singers; and (v) crisis communications for flood or other natural crisis, especially as part of the EPP.

b) External communication - A website can help reach the public at large as well as international audience. It should be a reference to those seeking information about the project and serve as an interactive forum where concerns can be discussed. The positive impacts of the project must be highlighted to build support. The World Bank should be also featured as well as its effort towards regional integration. Videotapes and CD-rom presenting this information in succinct and useful way will be also produced and widely disseminated.

c) Media relations - Presently, the NBA’s only interaction with the media is through a videotape produced after the yearly meetings and given to the different national televisions for diffusion. For the Kainji and Jebba dams’ management, the local radio and

- 129 - television are only used as part of the flood warning system. A well trained communications team, working closely with the management will ensure constant interaction with the media. Effort should be made to work with the media in creating a favorable environment and getting feedback from the communities. Approaches will include: (i)preparing adequate information about the NBA, its objectives, and achievements; (ii)appointing and training spokespersons; (iii)organizing press briefings to provide accurate, synthesized information; (iv) organizing radio and television interviews and discussions, and placing articles and op-eds; and (v) preparing a communication plan specifically targeting the media in case of crisis.

- 130 - Annex 12: Programmatic Approach Note AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

1. The development objective of the Niger River Basin Water Resources Development and Sustainable Ecosystems Management Program (WRDSEM) is to enhance regional coordination, development and sustainability of water resources management in the Niger River Basin. The Program will span 12 years and will be implemented in two successive phases of five and seven years. This will support the riparian countries of the Niger River Basin and the Niger Basin Authority, (NBA) to: (i)improve institutional coordination for regional management and development of water resources in the Niger River Basin; (ii) improve performances of rehabilitated hydroelectric plants in targeted areas; (iii)improve irrigated agriculture in targeted areas; and (iv) improve watershed management in targeted areas.

Overview of the Program

2. The first phase of the APL, WRDSEM APL 1, will include selected countries in the main stem of the Niger River, namely Guinea, Mali, Niger, Benin and Nigeria. The centering of the program’s first phase in the riparian countries ofthe Niger River main stem is an important step forward in consolidating the agreed shared vision process and in taking advantages of existing “low hanging hits” to test develop concrete actions on the ground prior to the adoption of the Sustainable Development Action Program (SDAP) which includes the nine riparian countries. WRDSEM APL 1 will finance the institutional strengthening and capacity building of the NBA and associated National Focal Structures enhancing the overall capacities at regional and national levels. In addition, rehabilitation, optimization and development of regional infrastructure will also be financed so as to address the degradation ofwater infrastructure and the efficient management ofresources in the Basin. Finally, funding under the First Phase (WRDSEM APL 1) will support the rehabilitation of small water infrastructure rehabilitation combined with ecosystems management in order to stimulate appropriate income-generating activities at local level and help to collectively translate an effective management ofcommon goods at all levels.

3. The bundling of institutional strengthening and capacity building, regional water infrastructure rehabilitation, optimization and development and local level activities associated with ecosystem management is vital for realizing legitimacy and constituency at all levels throughout the Basin. The opportunities for water and ecosystem development are huge but only a very limited potential has been developed to date. The hydropower potential is estimated at 30,000 gigawatt hours per year, of which only 6,000 gigawatt hours have been developed. The irrigation potential is estimated at 2.5 million ha, of which only 0.5 million ha have been developed. There is significant livestock and fisheries potential but not commercially developed due to high reliance on water variability and energy shortages. The Niger River’s annual flood can reach 200 km3,yet there is no comprehensive enhanced flood management, early warning system and adequate storage options which will help reduce the devastating impacts of floods and help further mitigate the impacts of droughts. The productive ecosystems of the Basin such as the Fouta Djallon watershed, the Inland and

- 131 - Maritime Delta can yield significant benefits for the overall sustainability of the water resources and ecosystems of the Basin, but their management lacks a holistic and enhanced environmental management plan.

4. Comprehensive water resources development associated with ecosystems management is, therefore, crucial to address the growing demand for water and food and to ensure its efficient and sustainable use amongst the riparian countries in the Basin. Preliminary studies within the preparation of the SDAP have already laid out a cooperative development program with a strong emphasis on developing water infrastructure and improving the ecosystem management to positively impact on livelihoods of the people living in the Basin. The regional optimization and management options of water infrastructure which will also be undertaken in WRDSEM APL 1 will enable a cooperative planning and efficient management of the Basin water resources associated with key investments and optimal development of the Basin opportunities. The design of WRDSEM APL 2 will stem from the performance outcomes ofWRDSEM APL 1 and the infrastructure investments agreed by the riparian countries in the SDAP.

5. Building on the First Phase, WRDSEM APL 2 emphasizes the development ofwater infrastructure and storage capacity and the associated river flow regularization and hydropower generation so as to move the vulnerable riparian economies to a more secure development track. In parallel, it is anticipated that the scope of activities relating to ecosystem management and small hydraulics infrastructure will be expanded and the income-generating activities initiated in Phase 1 will be scaled-up. Effective coordination and consolidation of the NBA’s role and responsibilities will be completed in WRDSEM APL 2, to ensure effective and sustainable implementation ofthe SDAP.

6. The rationale for using the APL instrument is to ensure long-term commitment in phasing the different interventions in the Basin for scaling up water resources development and promoting sustainable ecosystems management in the Niger River Basin. The phased approach facilitates the prioritization of investments in alignment with appropriate funding. The APL instrument will allow the NBA and the Niger Basin countries to consolidate their cooperative framework with the implementation ofthe SDAP.

Client commitment and long-term vision for development

7. Cooperation for the development of the Niger Basin commenced in 1963 when the nine riparian countries (Benin, Burkina Faso, Cameroon, Chad, C8te d’Ivoire, Guinea, Mali, Niger and Nigeria) created the Niger River Commission (NRC) with a view of developing navigation and access to the water resources to all member countries. In 1980, the transformation of the Niger River Commission into the Niger Basin Authority was a clear expression of the member countries to empower their regional institution but most importantly to ensure that the new competition provides a powerfil platform to ensure integrated development in all areas including energy, water, agriculture, forestry, transportation and communication and industry. Despite this large platform, the NBA’s past performance has been relatively modest, its most significant achievement being the development ofbasin wide hydrological data collection and analysis. Such activities, though

- 132 - important and allowed the NBA to survive, distanced it from its core mandate to manage and develop the Basin’s water resources.

8. The adoption by the Heads of State Summit ofthe Shared Vision process, supported by the SDAP in 2002, set the principles for the renewal ofthe NBA and the identification of relevant priorities for Basin development. To fully implement these principles, the NBA member countries have progressively made steps forward, ie. institutional and organizational reforms have been completed, stakeholders participation and decision making are encouraged with the on-going preparation of the SDAP. The Bank has played a pivotal role in these advancements and can continue to effectively support the NBA and the riparian countries through this APL. The Paris Declaration of April 2004 signed by the Heads of State and Governments ofthe Niger Basin reinforced the NBA’s mandate by setting forward key principles and clear and strategic objectives to be achieved by 2025. The three principles refers to: (i) enhancing coordination and stakeholders participation for the overall management of the Basin resources thus fostering legitimacy at all levels; (ii)consolidating cooperation between riparian countries in building a basin-wide shared vision supported by a development program through the SDAP; and (iii)strengthening the partnership framework of actions with the harmonization of donors interventions to support the NBA. The key strategic development objectives embodied in these principles include: (i)institutional strengthening at local, national and regional levels for efficient water resources management; (ii)effective planning, development and optimization of water infrastructure; (iii)increases in income-generating activities at local levels to alleviate rural poverty in the Basin; and (iv) protection of ecosystem and stimulation of common public goods management. These objectives are aligned with the overall regional instruments such as NEPAD to ensure region’al integration and foster growth with the development of water infrastructure and related activities. Moreover, all of the above illustrate that the NBA renewed capacity and supported by member countries renders it well-positioned and prepared to undertake the multi-sectoral investments proposed in this program.

Development Partners Coordination to Support the WRDSEM Program

9. The creation of the Niger Basin Commission later re-established as the Niger Basin Authority responds to the regional goal of addressing the Basin’s development challenges. The nine riparian countries are all signatories of relevant Acts and Decisions that have governed the NBA since 1963. In addition, the NBA’s Consultative Donors Committee, established in 2000, is the mechanism to complement the Bank’s relationships with donors that support the NBA. Furthermore, the Donors Coordination Framework is led by the World Bank. The First Phase Project of the Niger Basin Program builds upon these current engagements and complementarity to advance the agreed actions and steps with the implementation of the first phase of this APL. The First Phase complements activities funded by other partners such as CIDA, AFD, EU and AfDB all of which contribute to the Shared Vision Process and the preparation ofthe SDAP. It is prudent to continue to maintain a coherent and coordinated donors consortium. Such an arrangement allows the best regional solutions to emerge, while at the same time, allows each donors to focus on its comparative advantage, thus providing more effective support to the riparian countries and the NBA.

- 133 - Table 12.1: Niger Basin WRDSEM APL 1 & WRDSEM APL 2 APL Phases and Financing

SEMl&W 2A Fin mil

Strengthening capacity of NBA IDA 3.77 4.72 NBA CIDA Strengthening capacity of national water IDA 1.16 0.71 NBA AFD, resources management institutions CIDA

equipments Rehabilitation of auxiliary services IDA 1.16 PHCN Civil works IDA 7.25 PHCN Upgrading of instrumentation and IDA 0.39 PHCN monitoring equipment Prevention oftree invasion IDA 0.2 PHCN Reinforcement of the maintenance IDA 1.19 PHCN workshops I

- 134 - Complementary studies for Fomi dam NBA/Fomi dam IDA 3 2.07 AFD, EU site (Guinea). Authority NBNTaoussa IDB, Complementary studies for Taoussa dam IDA 2 2.07 dam Authority AfDB, site (Mali). EU Complementary studies for Kandadji NBMandadji DB, dam site (Niger) IDA 1.1 2.07 Dam Commission A~DB Prepare feasibility & detailed studies for NBARHCN IDA 4.8 Zungeru dam site (Nigeria)

Rehabilitation and diversification of CeRPA, DAERA IDA 2.4 small dams CeRPA, Rehabilitation and construction of small IDA 9.26 AGETIER, irrigation schemes I 1 I I DAERA Support to the community-based AGETIER, IDA 4.91 develoDment of fisheries I I DAERA CeRPA, Watershed restoration and agro-forestry I IDA I 20.12 34.00 AGET IER , AfDB I I DAERA, DNGR I I CeRPA, Operational Support to National IDA 3.09 AGETIER, Implementing Agencies 1 1 DAERA, DNGR

Proposed APL Phase II - Component l:.NBA institutional strengthening & capacity building (US$7 million) Institutional consolidation and NBA & other IDA 3 TBD strengthening relevant agencies Implementation of regional water NBA & other IDA 3 TBD management rules relevant agencies Implementation of remaining water NBA & other IDA 1 TBD charter elements relevant agencies Component 2: Rehabilitation, optimization and development of regional infrastructure (US$389 million) Harmonization of equipment for Kainji IDA 50 30 PHCN/NBA TBD dam Contribution to the financing of Zungeru IDA 25 40 PHCN/NBA TBD dam AfDB, Contribution to the development of NBNTaoussa IDA 25 35 Taoussa dam or another option dam Authority KDF,IDB, EU

26 This component includes a parallel financing ofUS$34 million from African Development Bank 21 The US$200 million cofinancing for Phase I1will vary based on donors’ commitment with priorities agreed on the SDAP.

- 135 - Contribution to the financing of Fomi NBARomi dam AFD, EU IDA 25 35 Dam or another option Authority AfDB, Contribution to the financing of Kandadji NBAKandadji IDA 25 35 dam dam Authority KDFIDB, Benue sub-basin Master plan IDA 4 TBD NBNGarouaPort TBD Rehabilitation of the Garoua port IDA 30 Authority NBNLagdo dam TBD Rehabilitation of Lagdo dam IDA 30 Agency

Scaling up of income generation National activities in Guinea, Mali, Niger, and IDA 40 5 parastatal & other TBD Benin relevant agencies Development of income generation National activities at local level around Kainji and IDA 23 5 parastatal & other TBD Jebba reservoirs relevant agencies Development of income generation National activities in Burkina Faso, Cdte d’Ivoire IDA 30 15 parastatal & other TBD and Chad relevant agencies

- 136 - Annex 13: Project Preparation and Supervision AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Planned Actual PCN review 0 1/27/2005 12119/2005 Initial PID to PIC 01/28/2005 01/05/2006 Initial ISDS to PIC 02/14/2005 03/2 1/2006 Appraisal 04/10/2007 04/11/2007 Negotiations 05/08/2007 05/08/2007 BoardmVP approval 07/03/2007 Planned date ofeffectiveness 11/01/2007 Planned date ofmid-term review 03/15/2010 Planned closing date 0 1/3 1/20 13

Key institutions responsible for preparation ofthe project: NBA

Bank staff and consultants who worked on the project included:

Name Title Unit Ousmane Dione Sr. Water Resources Management AFTU2 Specialist/TTL Zie I.Coulibaly Infrastructure Specialist AFTU2 Marie-Adele Tchakounte Language Program Assistant AFTU2 Alessandro Palmieri Lead Dam specialist OPCS Giovanni Ruta Economist ENV Madjiguene Seck Communications Associate EXT Federico Ciampitti Sr. Electromechanical Engineer/ AFTU2 Consultant Aissata Zerbo Procurement Analyst AFTU2 Irina Luca Lead Procurement Specialist AFTPC Mamadou Yaro Sr. Financial Mgt Specialist AFTFM Afiica Eshogba Olojoba Sr. Environmental Specialist AFTS3 Andrew Osei Asibey Sr. M&E Specialist AFTKL Helene Bertaud Sr. Counsel LEGAF Marie-Christine Balaguer Paralegal LEGAF Pierre Lorillou Water Resource Mgt Specialist AFTU2 Waqar Haidar Sr Energy Specialist AFTEG Robert Robelus Sr Environmentalist Specialist/ AFTU2 Consultant Abdoul Wahab Seyni Social Development Specialist AFTS3 Kisa Mfalila Environmental Specialist ENV Francois Onimus Sr Irrigation Specialist AFTS4 Wolfgang Chadab Finance Officer LOAG 2 Agnbs Albert-Loth Sr Finance Officer LOAG 2

- 137 - Chau-Ching Shen Sr Finance Officer LOAG 2 Jeffrey N. Lecksell Cartographer GSDPG Luiz Gabriel Azevedo Peer Reviewer ECA Reynold Duncan Peer Reviewer h4NA Armarquaye Armar Peer Reviewer EWDEN Jean Christophe Carret Peer Reviewer AFTS3 Simeon Ehui Peer Reviewer AFTS3 Richard G. Scobey Operations Advisor AFTQK

Bank funds expended to date on project preparation: 1. Bank resources: US$634,870 2. Trust funds: 0.0 3. Total: US$634,870

Estimated Approval and Supervision costs: 1. Remaining costs to approval: 0.0 2. Estimated annual supervision cost: US$200,000

- 138 - Annex 14: Documents in the Project File AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

1) ADRH, APAVE, 2005 : Rkformes institutionnelles et organisationnelles. Renforcement des capacitks et des ressources humaines. Rapports No 1 et 2. Niger Basin Authority.

2) Barrett, C B, C M Moser, 0 V Mc Hugh, and J Barison (2004), “Better Technology, Better Plots, or Better Farmers? Identifying Changes in Productivity and Risk Among Malagasy Rice Farmers”, American Journal of Agricultural Economics Vol 86 (4), pp. 869-888.

3) Colenco Engineering Ltd, 2005: Piloting Performance Based Procurement of Energy Infrastructure Services Functional Specifications (Rehabilitate-Operate-Transfer of Hydropower Facilities) - Kainji Hydroelectric Project - Case Study Material and Technical Concept Note.

4) Coyne et Bellier, November 2003: Final Inspection Report - Rehabilitation of Kainji Power Station, National Electric Power Authority (NEPA).

5) Coyne et Bellier, April 2002: Inception Report relevant to the Rehabilitation of Kainji Power Station. National Electric Power Authority (NEPA).

6) Coyne et Bellier, February 2006: Tender Appraisal Report for the Complete Rehabilitation ofUnit 1G12 (100MW). PHCN(formerly NEPA).

7) Haskoning, 2006 : Etude d’optimisation des opportunitks de dkveloppement dans le bassin du Niger - Rapport Final.

8) Niger Basin Authority, 2004 and 2005: National diagnosis and regional synthesis reports on the multi-sectoral studies for the Sustainable Development ofthe River Niger Basin.

9) Niger Basin Authority, 2002 to 2006: Relevant decisions from NBA Council of Ministers’ and Heads’ of State.

10)Niger Basin Authority, 2007: Projet de Dkveloppement des Ressources en Eau et Preservation des Ecosystkmes dans le Bassin du Niger. - Cadre de Politique de Rkinstallation des Populations (CPRP).

11)Niger Basin Authority, 2007: Projet de Dkveloppement des Ressources en Eau et PrCservation des Ecosystbmes dans le Bassin du Niger. - Cadre de Gestion Environnementale et Sociale (CGES)

- 139- 12) Niger Basin Authority, 2007: Project “Development of Water Resources and Preservation of Ecosystems” in the River Niger Basin. - Report on the Social and Environmental Audit of Kainji and Jebba dams.

13)Niger Basin Authority, 2007: Projet de Dkveloppement des Ressources en Eau et PrCservation des Ecosystbmes dans le Bassin du Niger. - Socio-Economic Study.

14) Niger Basin Authority, 2006: Project “Development of Water Resources and Preservation of Ecosystems’’ in the River Niger Basin. -Diagnosis of the Sedimentation in Kainji and Jebba reservoirs.

15) Niger Basin Authority, 2006: Project “Development of Water Resources and Preservation of Ecosystems” in the River Niger Basin. - Safety inspection Kainji and Jebba dams.

16) Niger Basin Authority, 2006: Project “Development of Water Resources and Preservation of Ecosystems” in the River Niger Basin. - Study on the Enhancement of Flood Early Warning System; Installation of Additional Equipment in the Kainji Reservoir Zone. Review of Status and Options for Improvement.

17) Niger Basin Authority, 2006: Programme de renforcement des capacitds de I’ABN (2007- 2009).

18) Olivry, J.C. 2002 : Synthkse des connaissances hydrologiques et potentiel en ressources en eau du fleuve Niger. World Bank.

19)PHCN with the assistance of Coyne et Bellier, 2005: Bidding Documents for the Complete Rehabilitation of Unit 1G12 (100MW). PHCN.

20)Saiiyu Consultants Co. Ltd et al, March 1995: Study on National Water Resources Masterplan. Federal Republic ofNigeria. 4 Volumes.

21) SENES, 2006 : Etude de mise en place des Structures Focales Nationales de 1’AutoritC du Bassin du Niger (ABN). Rapport provisoire de Phase 2.

22) US Army Corps of Engineers, September 2001: Kainji Dam and Power Station Technical Assessment Report. USAID.

23)World Bank, 2005: I. Andersen, 0. Dione, M. Jarosewich-Holder and Jean-Claude Olivry. The Niger River Basin: A Vision for Sustainable Development. Washington, DC: World Bank.

24) World Bank, 2006: Water Resources Management & Development Opportunities in the Niger River Basin. Policy Note. Economic and Sector Work. Washington, DC: World Bank.

- 140- 25) World Bank, Country Assistance Strategies (CAS) and Poverty Reduction Strategy Papers (PRSP) from Benin, Guinea, Nigeria, Niger and Mali. Washington, DC: World Bank.

26)World Bank, 2004: Project Appraisal Document of the Project “Reversing Land and Water Degradation Trends in the Niger River Basin”

27) World Bank, 2006: Project Appraisal Document of the Senegal River Basin Multi- Purpose Water Resources Development Project

28) World Bank (2005), “Kainji Hydroelectric Project Case Study Material”, Report Produced under contract 713 137 1.

29)World Bank, June 30, 1997: Implementation Completion Report - Power System Maintenance and RehabilitationProject (Power VII) - Loan 31 16-UNI. The World Bank.

30)Zwarts, P.J.H. van Beukering, B. Kone & E. Wymenga (Eds.) (2005) The Niger, a lifeline: Effective Water Management in the Upper Niger Basin. Mali-PIN publication 2002-0 1. Wetlands International, Sevare/RIZA, Rijkswaterstaat, LelystadAltenburg & Wynienga conseillers ecologiques, Veenwouden.

- 141 - Annex 15: Statement of Loans and Credits AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

Difference between expected and actual Original Amount in US$ millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. ID Rev’d PO79734 2006 3A-E Afi Trade & Transp 0.00 184.02 0.00 0.00 0.00 199.97 0.00 0.00 Facil (FY06) PO92473 2005 3A-Afr Emergency Locust 0.00 59.50 0.00 0.00 0.00 5 1.07 6.43 0.00 Prj (FY05) PO80413 2005 3A-HIV/AIDs Great Lakes 0.00 0.00 0.00 0.00 0.00 19.55 2.14 0.00 Init APL (FY05) PO80406 2005 3A-ARCAN SIL (FY05) 0.00 0.00 0.00 0.00 0.00 7.79 1.27 0.00 PO75994 2005 3A-WAPP Phase 1 APL 1 0.00 40.00 0.00 0.00 0.00 37.62 0.00 0.00 (FY05) PO82613 2004 3A-Regional HIVAIDS 0.00 0.00 0.00 0.00 0.00 45.95 21.41 0.00 Treatment Prj (FY04) PO74850 2004 3A-HIV/AIDS Abidjan 0.00 0.00 0.00 0.00 0.00 8.96 2.61 0.00 Lagos Trnspt (FY04) PO74525 2004 3A-WAEMU Capital 0.00 96.39 0.00 0.00 0.00 95.72 40.55 12.77 Markets Dev FIL (FY04) PO70256 2004 3A-GEF Niger River Basin 0.00 0.00 0.00 13.00 0.00 5.24 1.88 0.00 (FY04) PO69258 2004 3A-Southern Afi Power Mrkt 0.00 178.60 0.00 0.00 0.00 182.37 106.66 0.00 APL 1 (FY04) PO64573 2004 3A-GEF Senegal River Basin 0.00 0.00 0.00 5.26 0.00 3.76 2.62 0.00 (FY04) PO72881 2003 3A-BEAC Reg Payment 0.00 14.50 0.00 0.00 0.00 7.84 3.14 0.00 System (FY03) PO70252 2003 3A-GEF Lake Chad Basin 0.00 0.00 0.00 2.90 0.00 2.37 2.70 1.10 (FY03) PO70073 2003 3A-GEF Nile Transbound 0.00 0.00 0.00 8.00 0.00 12.66 9.29 0.00 Env Action (FY03) PO63683 2001 3A-Trade Facil SIL (FYO1) 0.00 5.00 0.00 0.00 0.00 4.77 -0.3 1 0.00 Total: 30 777, ,o 144, ,o 0.00 1640, 796, 100, 0.00 0.00 0.00 0.00 0.00 0.00 0.00

- 142 - AFRICA: Niger Basin Water Resources Development and Sustainable Ecosystems Management APL 1 Project

STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed IFC IFC FY Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Approval 1999 AIF 0.00 37.14 0.00 0.00 0.00 19.61 0.00 0.00 1999 AIF (Mgmt) 0.00 0.12 0.00 0.00 0.00 0.06 0.00 0.00 2003 AIFH 0.00 18.38 0.00 0.00 0.00 0.02 0.00 0.00 2005 Afren 0.00 0.84 0.00 0.00 0.00 0.80 0.00 0.00 2005 Africa Re 0.00 0.00 10.40 0.00 0.00 0.00 10.40 0.00 2002 Africap 0.00 1.67 0.00 0.00 0.00 0.96 0.00 0.00 2005 Celtel 40.00 11.83 0.00 0.00 0.00 11.83 0.00 0.00 2005 LFI 0.00 1.90 0.00 0.00 0.00 0.27 0.00 0.00 2004 Olam 30.00 7.50 0.00 0.00 30.00 7.50 0.00 0.00 2002 Osprey 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 200 1 PAIP 0.00 27.80 0.00 0.00 0.00 8.30 0.00 0.00 2002 SABCO 12.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 2004 Tullow 0.00 14.40 0.00 0.00 0.00 14.40 0.00 0.00 Total portfolio: 82, 685, 50, ,O 30, 545, 50, 90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2004 Buspartners 0.00 0.00 0.00 0.00 2003 African Lakes 0.00 0.01 0.00 0.00 2006 Cape I1 0.00 0.01 0.00 0.00 Total pending ,O 0.00 2, 0.00 ,O 0.00 ,O 0.00 commitment:

- 143 - Annex 16: Niger River Basin Countries at a Glance

Niger River Basin at a glance 3/6/07

Niger Sub Rivmr Saharan LOW POVERTY and SOCIAL D.volopment dlamond' Basin Africa income 2006 Population, mid-year (millions) 176.8 741.4 2,353.0 Life expectancy GNI per capita (Atlas method, US$) 510 745 580 GNI (Atlas method, US$ billions) 90.8 552.2 1.363.9 - Average annual growth, 199946 Population (%) 2.4 2.3 1.9 Gross Labor force (%) 2.5 2.3 2.3 primary Most recent estimate (latest year available, 199945) capita enrollment Poverty (% of population below national poverty line) Urban population (% of total population) 47 37 31 Life expectancy at birth (yeas) 45 46 59 L Infant mortality (per 1,000 live births) 108 100 80 Child malnutrition (% of children under 5) 29 29 39 Access to improved water source Access to an improved water source (% ofpopulation) 49 56 75 Literacy (% ofpopulation ape Is+) 62 -Niger River Basin Gross primary enrollment (% of school-age population) 91 93 104 Male 100 99 110 -Low income group Female 84 87 99 KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1986 1996 2004 2006 Economic ratios* GDP (US$ billions) 34.7 38.2 88.1 115.2 Gross domestic InvestmenffGDP 9.6 16.5 20.9 20.1 Trade Exports of goods and services/GDP 16.8 38.5 46.2 45.5 Gross domestic savings/GDP 9.5 15.9 31.8 31.7 Gross national savings/GDP 10.5 22.8 25.0 Current account baiancelGDP -2.2 -4.8 2.3 9.7 Interest payments/GDP 4.0 2.5 0.7 4.4 Total debffGDP 68.1 113.9 55.2 28.0 Total debt service/exports 31.1 15.6 5.0 15.6 Present value of debffGDP 45.2 Present value of debffexports 94.0 Indebtedness 1986-96 1996-06 2004 2006 (avenge annual gmwth) -Niger River Basin GDP 4.2 4.1 5.3 6.5 GDP per capita 1.2 1.5 2.8 4.0 ~ Low income group Exports of goods and services 4.3 3.0 3.0 -1.2

STRUCTURE of the ECONOMY 1986 1996 2004 2006 Growth of capltai and GDP (%) (% of GDP) Agriculture 37.1 32.4 19.4 24.8 l5T I Industry 27.2 40.9 50.7 50.6 Manufacturing 8.5 5.7 Services 35.7 26.7 29.9 24.6 Household final consumption expenditure 77.1 73.3 49.0 49.8 1 00 01 02 03 04 General gov't final consumption expenditure 13.4 10.8 19.3 18.5 I -GDI -GDP O5 Imports of goods and services 16.9 39.2 35.3 33.9 I

1986-96 BS6-OS 2004 2006 ~ Qrowth of exports and Imports (%) (average annual growth) Agriculture 3.7 4.6 5.5 7.7 Industry 3.3 3.0 4.4 5.0 Manufacturing 3.8 4.2 8.5 7.3 Services 5.0 4.6 6.2 6.2 Household final consumption expenditure General gov't final consumption expenditure Gross capital fonation Imports of goods and services -0.4 7.9 1.8 18.6

Note: 2005 data are preliminary. This table was produced from the Development Economics LDB database Niger River Basin includes Benin. Guniea. Mali, Niger, and Nigeria.

The diamonds show four key indicators In the country (in bold) compared with Its income-group average. If data are missing, the diamond will be incomplete.

- 144- IBRD 31840 15° NIGER RIVER BASIN 0° 5° 10° 15°

Area of Map RIVER BASIN LIMITS ALGERIA EXISTING DAMS (H ≥ 15 M) LIMITES DU BASSIN

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APRIL 2002