Document of The World Bank

FOR OFFICIAL USE ONLY Public Disclosure Authorized

Report No: 32276-AFR

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CEDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 25.6 MILLION (US$40 MILLION EQUIVALENT)

TO THE

REPUBLIC OF GHANA

IN SUPPORT OF THE FIRST PHASE OF THE

US$ 100 MILLION COASTAL TRANSMISSION BACKBONE PROJECT

OF THE WEST AFRICA POWER POOL (APL) PROGRAM Public Disclosure Authorized June 1,2005

Energy Unit Infrastructure Group Africa regional Office

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

(Exchange Rate Effective May 13,2005)

Currency Unit = Ghanaian Cedis Cedis 9015 = US$1 US$1.51209 = SDRl

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS ACC Area Coordination Centers AFD Agence Franqaise de Dkveloppement/(French Development Agency) AfDB African Development Bank APL Adaptable Program Lending bbl Barrel (of oil) BOAD Banque Ouest Africaine de Dkveloppement / Bank for West Africa Btu British Thermal Units CAS Country Assistance Strategy CEB CommunautC d’ElectricitC du BCnin/(Togo/Benin Bi-national Electricity Company) CFAA Country Financial Accountability Assessment CIE Compagnie Ivoirienne d’Electricitk/(Ivorian Electricity Operation Company) COM Committee of Ministers EA Environmental Assessment EEO ECOWAS Energy Observatory EBID ECOWAS Bank of Investment and Development ECOWAS Economic Community ofWest African States ECSEE Energy Community of South East Europe EEP ECOWAS Energy Protocol EIB European Investment Bank EIRR Economic Internal Rate ofReturn FMR Financial Monitoring Reports FMS Financial Management System GWh Giga Watt hours ICB International Competitive Bidding IDA International Development Association IF1 International Financial Institution ITWG Institutional and Technical Working Groups KFAED Kuwaiti Fund for Arab Economic Development KWh Kilo Watt hours LCO Light Crude Oil MBtE Monitoring and Evaluation MDA Ministries, Departments and Agencies MIS Management Information System mm million MW Mega Watt NEPA Nigerian Electric Power Authority NEPAD New Partnership for African Development FOR OFFICIAL USE ONLY

NPV Net Present Value OMVG Organisation pour la Mise en Valeur du Fleuve Gambie/(The Gambia River Basin Development Authority) oms Organisation pour la Mise en Valeur du Fleuve SCnCgall(The Senegal River Basin Development Authority) OPGW Composite Ground Wire with Optical Fiber PIC Project Implementation Committee PIM Project Implementation Manual PPIAF Public Private Infrastructure Advisory Facility PURC Public Utilities Regulatory Commission RAP Resettlement Action Plan RIAS Regional Integration Assistance Strategy RRDP Regional Regulatory Development Project RVP Regional Vice President SA Spccial Accosnt ._ SAPP South African Power Pool SBD Standard Bidding Documents sc Steering Committee SCADA Supervisory Control and Data Acquisition SICC Secretariat and Information Coordination Center SIL Sector Investment Loan SOE Statement of Expenditure SOPE Sociktk d’Operation Ivoirienne d’Electicitk/(Ivorian State-Owned Assets Management Company TIC0 Takoradi Intemational Company TSO Transmission System Operator TWh Tera Watt-hours USAID United States Agency for International Development VRA Volta River Authority WAGP West Africa Gas Pipeline WAPP West Ahca Power Pool

Vice President: Gobind Nankani RegionaVCountry Directors: Mark Tomlinsoflats Karlsson Sector Manager: Yusupha Crookes Task Team Leader: Amarquaye mar Program Assistant: Rita Ahiboh

~~ 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.

AFRICA West Africa Power Pool (APL) Program CONTENTS

Page

A . STRATEGIC CONTEXT AND RATIONALE ...... 4 1. Country and sector issues...... 4 2 . Rationale for Bank involvement ...... 6 3 . Higher level objectives to which the program contributes ...... 7

B. PROGRAM AND PROJECT DESCRIPTION ...... 7 1. Lending Instrument ...... 7 2 . WAPP APL Program objective and phases ...... 7 3 . WAPP APL 1 project development objective and key indicators ...... 9 4 . Project components (WAPP APL 1) ...... 10 5 . Lessons leamed and reflected in the project design ...... 12 6 . Alternatives considered and reasons for rejection ...... 13 C . IMPLEMENTATION ...... 13 1. Partnership arrangements...... 13 2. Institutional and implementation arrangements ...... 14 3 . WAPP APL 1 (First Tranche) executing agency ...... 15 4 . Monitoring and evaluation ofoutcomesh-esults ...... 15 ... 5 . Sustainability...... 15 6. Critical risks and possible controversial aspects ...... 16 7 . Loadcredit conditions and covenants ...... 17 D. APPRAISAL SUMMARY ...... 18 1. Economic and financial analyzes ...... 18 2 . Technical ...... A...... 20 3 . Fiduciary ...... 20 4 . Social...... 20 5 . Eiivironment...... 20 6. Safeguard policies ...... 21 7 . Policy Exceptions and Readiness ...... 21 Annex 1: Country and Sector or Program Background...... 22 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 35 Annex 3: Results Framework and Monitoring ...... 36 Annex 4: Detailed Project Description...... 40 Annex 5: Project Costs ...... 43 Annex 6: Implementation Arrangements ...... 44 Annex 7: Financial Management and Disbursement Arrangements ...... 46 Annex 8: Procurement Arrangements...... 52 Annex 9: Economic and Financial Analysis ...... 56 Annex 10: Safeguard Policy Issues ...... 72 .. Annex 11: Project Preparation and Supervision ...... 81 Annex 12: Documents in the Project File ...... 83 Annex 13: Statement of Loans and Credits ...... 85 Annex 14: Country at a Glance ...... 87

MAP(S) IBRD # 33825133827 WESTERN AFRICA

GHANA COMPONENT - FIRST PHASE OF THE USD 100 MILLION COASTAL TRANSMISSION BACKBONE PROJECT OF THE WEST AFRICA POWER POOL (APL) PROGRAM

PROJECT APPRAISAL DOCUMENT

AFRICA

AFTEG

Date: June 1,2005 Team Leader: Amarquaye Atmar Country Director: Mark TomlinsonMats Karlsson Sectors: Power (100%) Sector ManagerDirector: Yusupha Crookes Themes: Regional integration (P) Project ID: PO75994 Environmental screening category: Partial Assessment Lending Instrument: Adaptable Program Loan Safeguard screening category: Limited impact

[ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other:

For Loans/Credi tdO thers : Total Bank financing (US$m.): 40.00

Financing Gap 0.00 0.00 0.00 Total: 9.30 74.20 83.50

Borrower: Government of Ghana Ministry of Finance and Economic Planning P. 0.Box M40 Accra, Ghana Tel: 233 21 667069; Fax: 233 21 663854 Responsible Agency: Volta River Authority 28' February Road P. 0.Box MB 77 Accra, Ghana Tel: 233-21-666037; Fax: 233 21 662610 [email protected]

1 Estimated disbursements (Bank FY/US$m) FY 06 07 08 09 0 0 0 0 0 Annual 1.50 10.50 19.50 8.50 0.00 0.00 0.00 0.00 0.00 Cumulative 1.50 12.00 31.50 40.00 0.00 0.00 0.00 0.00 0.00

Does the project depart from the RIAS in content or other significant respects? Re$ [ ]Yes [XINO PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [XINO Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ [XIYes [ ]No PAD D. 7

Project development objective Re$ PAD B.2, Technical Annex 3

The goal ofWAPP is to establish a well-functioning, cooperative, power pooling mechanism for West Africa, as a means to increase access of the citizens ofECOWAS to stable and reliable electricity at affordable costs. The WAPP APL program would help the ECOWAS Member States to develop a robust platform for WAPP, comprising three (3) distinct but mutually reinforcing sub-regional infrastructure development projects. The developmental objective of the WAPP APL 1 project - the US$100 million Coastal Transmission Backbone Project - is to increase access of C6te d’Ivoire, Ghana, Togo/Benin and Nigeria (WAPP “Zone A” coastal states) to more stable and reliable electricity as a means to alleviate power supply deficits and/or to reduce their collective vulnerability to drought-induced power supply disruptions.

Project description [one-sentence summary of each component] Re$ PAD B.3.a, Technical Annex 4

This first credit would launch the WAPP APL program and provide the first tranche of investment support to enable Ghana’s VRA to expand transmission capacity, extend the operational lifetime ofkey transmission facilities, and improve the quality and reliability of bulk power transfers along the Aboadze- Volta segment of the 330kV Coastal Transmission Backbone. The components are: (a) development (supply ofconductors and insulators supply and installation of SCADA and communications systems) ofthe Aboadze-Volta segment ofthe WAPP 330kV Coastal Transmission Backbone; (b) Upgrade ofthe VRA System Control Center at Volta (Tema); (c) Upgrade of the Switchyard (Circuit Breakers and Relays) of the Akosombo Generation Station; (d) Engineering services in support of project implementation; and (e) Technical assistance/consulting services for implementation of an “Operational Mitigation and Security Plan” for the Coastal Transmission Backbone.

Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10

The first tranche of the WAPP APL 1 project triggers the safeguard policies on environmental assessment and involuntary resettlement.

2 Significant, non-standard conditions, if any, for: Re$ PAD C.7

Board presentation: Not applicable. Ghana has already met the initial WAPP APL program eligibility conditions and the components to be supported under the first tranche of the WAPP APL 1 project comply with Bank safeguard policies.

Loadcredit effectiveness: Not applicable. Ghana has already met the initial WAPP APL program eligibility conditions and the components to be supported under the first tranche of the WAPP AF'L 1 project comply with Bank safeguard policies.

Covenants applicable to project implementation: Not applicable. The WAPP APL program is directly linked to the countries' commitments under the ECOWAS Energy Protocol. Triggers would not be applied to IDA credits already approved. As an example, credits approved as part ofAPLl (first tranche) do not have significant non-standard conditions (equivalent to dated covenants). The WAPP APLl (first tranche) credit has a financial performance target for VRA, financial management covenants and undertakings about safeguards, such as the implementation of the environmental management plan and resettlement action plan, as approved by the Bank.

3 A. STRATEGIC CONTEXT AND RATIONALE

1. Country and sector issues

Regional Overview 1. The 15 Member States’ of the Economic Community of West African States (ECOWAS) occupy some five million square kilometers and are currently home to about 250 million people, which is projected to reach 380 million by 2020. Half of the present population lives in poverty, with per capita income barely above US$300 per year. Despite the region’s large energy endowment, the region’s per capita consumption ofelectricity is among the lowest in the world. In 2003, the combined total consumption of electricity was about 40000 GWh (approx. 160 kWh per capita) and peak power demand was 6500MW. Talung into account the regional drivers of electricity demand (economic growth, population growth, increased access to electricity and improved satisfaction of suppressed demand), the curent projection is for electricity demand to grow at over 7% per year, reaching 140000 GWh (approx. 370 kWh per capita) by 2020 and resulting in a regional peak power demand exceeding 22000MW.

2. Faced with this power system expansion challenge, ECOWAS Member States have acknowledged that past efforts to achieve national self-sufficiency in electricity supply have been uneconomical due to the high cost of establishing power generation and transmission infrastructure. They also acknowledge two major shortcomings in the region at the present time: (a) increasing reliance on hydro-based power systems will not provide sufficient regional security of electricity supply, and (b) the lack of adequate transmission infrastructure (within and between national power systems) is the weakest link in the drive towards greater cooperation in power sector development.

ECO WAS Vision - U‘est Africa Power Pool 3. The principle goal of ECOWAS is to establish an open, unified, regional economic space in West Africa, through inter alia the setting up ofregional markets for infrastructure services, including electricity. The community’s vision is to develop and put in place the West Africa Power Pool (WAPP) - a cooperative power pooling mechanism for integrating national power system operations into a uniJied regional electricity market - with the expectation that such mechanism would, over the medium to long term, assure their citizens a stable and reliable electricity supply at affordable costs.

4. The long term scenario is for the WAPP to help meet the region’s projected electricity requirement by harnessing electricity from:

0 Several large capacity hydropower facilities (Akosombo, Kainji, Manantali) sited on the region’s major (Niger, Volta, Senegal) rivers which produce relatively low-cost electricity (US$O.O 1- O.O3kWh),

0 The substantial but as yet untapped hydro resources of Guinea, some 6000 MW ofwhich is potentially economic to develop and can generate around 20-25 TWh per year of electricity at relatively low cost (between US$0.02-0.3/kWh); and

0 An expansion ofgas-fired power generation, leveraging the community’s parallel track strategy to expand access to Nigeria’s enormous natural gas reserves (3500 billion cubic meters ofproven natural gas reserves) via the proposed West Africa Gas Pipeline (WAGP) project.

Benin, Burkina Faso, Cape Verde, C6te d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.

4 5. A four-fold increase in power system interconnection capacity among ECOWAS Member States over the period 2005-2020 is required to provide a robust infrastructure platform for the WAPP. Moreover, as a pre-condition to mobilize financing on a larger scale than has hitherto been forthcoming for regional energy integration in West Africa, the community needs to establish a transparent and harmonized policy, regulatory and commercial framework for cross-border electricity trade.

WAPP Cooperation Framework 6. Building on their positive experiences in promoting regional energy cooperation, and also the region’s limited but significant track record of promoting mutually beneficial cross-border electricity trade arrangements, the “Meeting of Energy Ministers” ofECOWAS Member States’ formulated a proposal to set up the WAPP, which was subsequently endorsed by the ECOWAS Council of Ministers and submitted for consideration by the community’s highest decision-making body - the Summit of the Heads of State and Government of the ECO WAS Member States.

7. From December 1999 to the present, the following policy milestones have been achieved:

The 25thSummit of the Heads of State and Government of the ECOWAS Member States approved the “Mechanism for Financing the WAPP”, appointed the bbMeetingof Energy Ministers” as the WAPP Steering Committee, to be assisted by a WAPP Project Implementation Committee (PIC) composed of Chief Executives of the region’s national power utilities?

The 2fjthSummit of the Heads of State and Government of the ECOWAS Member States signed the ECOWAS Energy Protocol (EEP) to set up a unified regional umbrella to facilitate harmonization of legal, regulatory and institutional frameworks for WAPP, the WAGP and other similar regional energy initiatives. The EEP is undergoing ratification processes by the legislative bodies of the signatories.

The 2thSummit of the Heads of State and Government of the ECOWAS Member States approved the “ECOWAS Revised Master Plan for the Generation and Transmission of Electrical Energy”.’

8. The above policy decisions, taken by the community’s highest level body, provide clear evidence of ownership by ECOWAS Member States ofthe WAPP initiative. The WAPP Steering Committee, assisted by the WAPP Project Implementation Committee (PIC), has taken a deliberate, step-by-step approach to forge consensus and secure approval of the core (legal, regulatory, technical, investment programming) building blocks for WAPP. This clearly demonstrates the collective commitment of ECOWAS Member States to implement WAPP as a truly regional project.

’Resolution of the “Meeting ofEnergy Ministers”, issued in Accra, Ghana (November 1999). ECOWAS/ CEDEAO (2001). 25th Session ofthe Authority ofHeads of State and Govemment. Decisions A/Dec.8/12/01 Relating to the Establishment ofa Mechanism ofthe West African Power Pool (WAPP). Dakar, 20 - 2 1 December 2001. The Chief Executives of national power utilities of ECOWAS Member States subsequently signed an Inter-Utility Memorandum ofUnderstanding (March 2001). ECOWAS/ CEDEAO (2005). 28th Session ofthe Authority ofHeads of State and Government. Decision A/Dec.7101/05 Relating to the ECOWAS Revised Master Plan for the Generation and Transmission of Electrical Energy. Accra, 19 January 2005.

5 2. Rationale for Bank involvement

9. The Regional Integration Assistance Strategy (RIAS) for West Africa, which was presented to the World Bank Board on August 2,2001, is a translation ofthe World Bank‘s greater focus on regional integration in Africa, as originally introduced to the Board at the technical briefing on April 2, 200 1. To reduce fragmentation of the West Africa Region’s economies, the Bank has been pursuing well- defined and phased integration efforts in key sectors where the countries would benefit significantly from cross-border trade - notably road and air transport, energy, and, more recently, telecommunications. The objective of the RIAS is to help the countries concerned create a more unified regional economic space through the integration of markets of goods, financial and infrastructure services. The envisaged program, which fits in the framework ofthe RIAS, is designed to facilitate cross-border electricity trade and help put in place at the national and regional levels the pre-requisites (infiastructure, institutional, operational, commercial and regulatory) for sustainable implementation of the EEP. The envisaged Bank lending operation is the principal vehicle for providing IDA co-financing to physically integrate the power systems of about 10 ECOWAS Member States.

10. World Bank Group Strategy: To achieve this RIAS objective for energy integration among ECOWAS Member States, the Bank and its partner international financial institutions (IFIS),in consultation with the WAPP Steering Committee, WAPP PIC and the ECOWAS Secretariat (Annex 2), agreed to put in place a multi-year programmatic framework in support ofWAPP. The Bank strategy, inter alia, aims to:

e Focus Bank lending support on a phased approach to the integration ofnational power systems within WAPP, initially targeting opportunities to create distinct, self-standing and mutually reinforcing cooperative power pooling agreements between groups of three to five power utilities. Reflecting the findings, conclusions and recommendations of the United States Agency for International Development (USAID) sponsored study by NEWT6,each agreement would aim to promote commercially sustainable power exchanges between groups of national and/or multi-national power utilities in the community (collectively, the “WAPP Cooperation Agreements”).

e Target Bank non-lending services (including the PPIAF, Public Private Infrastructure Advisory Facility) on WAPP-related institutional capacity building activities to assist the WAPP PIC to establish an autonomous regional entity which would, in turn, develop, put in place and deploy a robust and self-sustaining power utility-led institutional platform to ensure long term viability of WAPP, including a WAPP Secretariat and Information Coordination Center that will network with several strategically located WAPP Area Coordination Centers (collectively, the “WAPP Organization”).

Leverage the World Bank’s Adaptable Program Lending (APL) instrument as a regional multi-yeadmulti-country umbrella to mobilize co-financing fiom development partners, donors and private investors, where feasible, to ensure timely implementation of WAPP-related investment and technical assistance activities, especially those deemed necessary and economically justified to achieve the medium term (2004-201 1) developmental goals of WAPP (the “WAPP APL Program”).

e Align Bank Country Assistance Strategies (CAS) for each ECOWAS member state with the broader goals ofWAPP, thereby ensuring inter alia that country-specific Sector Investment

West African Regional Transmission Stability Study comprises a 5-volume report (presented in October 2004) to ECOWAS Secretariat and USAID.

6 Loans (SILs), such as the proposed Nigeria Electricity Development Project, would be supportive of, and reinforce, the regional goals embodied in the EEP. The recently approved IDA-Partial Risk Guarantee for the WAGP project also falls under this same regional umbrella.

3. Higher level objectives to which the program contributes

11. The Bank supports regional efforts in West Africa to create an open, unified regional economic space through the integration ofmarkets for infrastructure services, the WAPP and the West Africa Gas Pipeline (WAGP) project being among the "flagship projects" ofECOWAS Member States. The WAPP is a regional infrastructure development program of the Economic Community ofWest African States (ECOWAS), fully aligned with the goals of the New Partnership for Africa's Development (NEPAD). ' It provides the power utilities of the region with a vehicle to achieve the vision embodied in the EEP -that of creating a "level playing field" to facilitate the balanced development ofdiverse energy resources of the ECOWAS Member States for their collective economic benefit, through long-term energy sector co- operation, unimpeded energy transit and increasing cross-border electricity trade. Through the proposed WAPP APL Program, the World Bank Group will support the ECOWAS Secretariat to coordinate implementation of the EEP.

B. PROGRAM AND PROJECT DESCRIPTION

1. Lending Instrument

12. The WAPP is a regional initiative, spearheaded by national power utilities of ECOWAS Member States, which directly contributes to the broader ECOWAS agenda to establish an open, unified, regional economic space in West Africa. It is proposed that IDA credit support be provided using the APL instrument, horizontally on a regional basis to support ECOWAS Member States (the active participation of up to 10 national power utilities is necessary to achieve expected outcomes) and vertically (each ECOWAS Member State can in principle receive support from more than one project over the WAPP APL program period). The APL instrument, by visibly committing substantial IDA resources and complementing activities supported by other IFIs and donors, would help ensure the availability of adequate resources to fund priority investments and technical assistance activities to underpin each WAPP Cooperation Agreement. The APL instrument would enable IDA credit support to be provided in a flexible manner - when borrowers have satisfied the policy triggers (country commitments under the EEP) and when individual WAPP priority investments are ready to receive IDA credit support. All ECOWAS Member States might not actually be granted IDA credits under the WAPP APL program. However, ECOWAS Member States would know up-front that they can rely on the Bank to support them in achieving the developmental goals of the WAPP if they meet specific eligibility criteria and if they need IDA credit support.

2. WAPP APL Program objective and phases

13. The goal ofWAPP is to establish a well-functioning, cooperative, power pooling mechanism for West Afma, as a means to increase access ofthe citizens of ECOWAS to stable and reliable electricity at affordable costs. The objective of the WAPP APL program is the development of a robust platform for WAPP comprising three (3) distinct but mutually reinforcing sub-regional power system infrastructure development projects (WAPP APL 1,2, 3 projects), as depicted schematically in Figure 1 below. The geographical coverage of the WAPP APL program is presented in Annex 15 (IBRD Map 33825).

'NEPAD was established to implement an integrated socio-economic development framework for Africa, and was formally adopted at the 37" Summit ofthe Organisation for African Unity in July 2001.

7 Figure 1 WAPP APL PROGRAM OUTCOMES WELL FUNCTIONING WEST AFRICA POWER POOL (WAPP)

~ COASTAL ZONE POWER POOL ME .L (WAPPAPL 1 -Ghana (ACCI Care d’lvoire TqoiBenin, Nigena )

PerformanWAva lability of Power Generation Assets Improved

WESTERN ZONE POWER POOL MECHANI \ (M’APP APL 2 Scncgal (ACC), Mali Guinoa, Guinea-Sssau, Gambia) -

PowInterconneCbon and Transfer Capadty EstaNished

&CC -Area Coordination Access to Coastat Power Generation Capacity lmprovea Centers

14. Each WAPP APL project combines generation and transmission infrastructure development components with the introduction of common “rules ofpractice” covering the institutional, regulatory, technicaVoperationa1 and commercial pre-requisites for promoting cross-border electricity trade - WAPP Cooperation Agreements. Although tailored to specific sub-regional power system configurations, each WAPP Cooperation Agreement will reflect the core principles embodied in the EEP. Over time, the expectation is that three sub-regional power pooling mechanisms will converge into a unified, well functioning regional power pooling mechanism - an important pre-condition for the future evolution of cross-border trading arrangements into a unified regional electricity market for West Afnca.

15. Following consultations with the WAPP PIC and the ECOWAS Secretariat, the following “Road Map” was agreed as the eligibility criteria and triggers for WAPP APL program design:

0 The eligibility criteria would be ratification of the EEP;

0 Policy triggers, which determine the eligibility of an individual member state to receive IDA assistance under the APL program, should be derived based on the core principles embodied in the EEP; and

0 Project triggers, which determine when an individual investment is eligible to receive IDA funds, should reflect pre-conditions for WAPP medium term (2004-201 1) investments, as defined in the ECOWAS Revised Master Plan for the Generation and Transmission ofElectrical Energy.

8 16. Accordingly, an ECOWAS Member State becomes eligible once it has ratified the EEP; thereafter, eligibility for IDA credits under the WAPP APL program continue to be valid as long as key obligations under the EEP are met and the Bank is satisfied that the borrower’s actions are contributing towards creating a well functioning power pooling mechanism. With this policy trigger, the Bank would reserve the right to defer or withhold WAPP APL support in cases where a borrower might have complied with the letter of its ECOWAS Energy Protocol obligations but not have implemented or launched a credible “WAPP Action Plan” to put in place critically needed measures/reforms, including, for example, reasonable (cost reflective) tariffs, prompt settlement of bills for cross-border electricity trade, and adherence to common operating rules ofpractice. In addition to the above, project-specific triggers will ensure that standard Bank requirements (including safeguards) are met and also that projects fit into the CAS (net of possible regional IDA). WAPP APL program triggers, discussed further in Annex 1 (Section 2), are therefore directly linked to the EEP.

3. WAPP APL 1 project development objective and key indicators

17. The first project under the WAPP APL Program (WAPP APL 1 project) involves the provision of IDA credits in the aggregate amount of US$lOO million equivalent to Ghana and Benin,* in two tranches as further elaborated in this document. The direct and indirect beneficiaries ofWAPP APL 1 project are five out of the ten involved ECOWAS Member States - Benin/, Togo, Ghana, C8te d’Ivoire and Nigeria (the WAPP “Zone A” coastal states).

18. The developmental objective ofthe WAPP APL 1 project is to increase access of WAPP “Zone A” coastal states to more stable and reliable electricity as a means to alleviate power supply deficits andor to reduce their collective vulnerability to drought-induced power supply disruptions. This developmental objective is to be achieved by: (a) implementing a WAPP Cooperation Agreement (Figure 2) to facilitate enhanced cross-border power exchanges between the four concerned Transmission System Operators (TSOs), namely CEB, CIE, NEPA and VU;and (b) establishing and fully deploying the cross-border electricity transfer capabilities ofthe proposed 330kV WAPP Coastal Transmission Backbone (Annex 15 - IBRD Map 33827).

19. The expected outcomes, reflecting the findings of the recently completed USAID-sponsored “WAPP Transmission Stability Studies”, include: . Increasing cross-border electricity trade between WAPP “Zone A” Coastal States; Reductions in power transfer losses in the principal transmission networks of the WAPP “Zone A” coastal states;

More cost efficient coverage ofpeak power demand through economy power exchanges between WAPP “Zone A” coastal states. 20. Above all, the WAPP APL 1 project would be considered successful if it provides ample capacity for unconstrained cross-border electricity trade between the five ECOWAS Member States for up to at least 2020.

Togo, a direct beneficiary of the WAPP APL 1, is presently in non-accrual status. Given it’s important role as an implementation partner with Ghana and Benin for this particular WAPP sub-program, consideration may be given to providing IDA credit support either through: (a) a co-financing arrangement with a regional bank (BOAI)) or (b) Benin, CEB co-owner with Togo, which may be amenable to take on the obligations to implement the CEB transmission components on behalf ofTogo.

9 Figure 2: WAPP Cooperation Agreement

WAPP ZONE **B”

Seasonal Exchanges

Coastal Transmission Backbone

Key progress and results indicators 21. Over the short term (up to 2006), key progress indicators for the WAPP APL 1 project will monitor the following actions: (a) evidence ofratification ofEEP by all countries involved in WAPP APL 1 and introduction of specific (legal and regulatory) measures - “WAPP Action Plans” - to ensure alignment ofreforms to the principles (e.g. non-discriminatory “open access”) outlined in EEP and to facilitate harmonization ofregulatory and contractual instruments for cross-border electricity trade among WAPP “Zone A” coastal states; and (b) establishment ofa WAPP Cooperation Agreement among the national power utilities/TSOs of the WAPP “Zone A” coastal states. Key results indicators for the project implementation cycle are presented in Annex 3.

4. Project components (WAPP APL 1)

22. Infrastructure Components: The WAPP APL 1 project aims to completeg and put into full operation the entire 330kV Coastal Transmission Backbone by 2009, in two tranches. The first tranche (FYQ5) of the WAPP APL 1 project will provide VRA with investment support to expand transmission capacity, extend the operational lifetime of key transmission facilities, and improve the quality and reliability ofbulk power transfers along the Aboadze-Volta segment ofthe 330kV Coastal Transmission Backbone. Subsequently, the second tranche (FY06) of the WAPP APL 1 project will provide investment support to both VRA and CEB (Table 1).

The AfDB is the lead co-fmancier for construction of the Sakktk (Benin) to Ikeja West (Nigeria) 330 kV line segment, with expected completion date in late 2006.

10 Table 1: IDA Investment Support - First and Second Tranches of the WAPP APL 1 Project

Component lStTranche (FY05) 2nd Tranche (FY06)

Construction of 330 kV Aboadze - Volta (Ghana) Prestea - Aboadze (Ghana) Coastal Transmission Backbone Volta (Ghana) - Mom6 Hagou (Togo)

Mom6 Hagou (Togo) - SakCt6 (Benin)

Upgrade of System Control VRA System Control Center CEB System Control Center (Lome, Togo) Centers (Volta, Ghana)

Upgrade of Strategic Power Upgrade of Switchyard at Relocation CEB Gas Turbines to Maria Generation and/or Akosombo Generation Station Gleta Terminal of WAGP (Benin) Transmission Assets. and Volta Sub-station (Ghana)

23. Project ImplementationSupport: The first tranche of the WAPP APL 1 project will finance the procurement by VRA of the full complement of engineering services (engineering design, preparation of bidding documents, bid evaluation, supervision of contractors, monitoring of environmental management plans and resettlement action plans, etc.) required to implement all of VRA’s contributions towards completion of the above components of the Coastal Transmission Backbone. Financing for CEB requirements will be provided as part ofthe second tranche of the WAPP APL 1 project.

24. Technical Assistance for Ghana’s “WAPP Action Plan”: The first tranche of the WAPP APL 1 project will finance the following technical assistance and capacity building activities required by the Ghanaian authorities to support the development and implementation of a comprehensive “WAPP Action Plan”:

An Expert Advisory Panel to assist VRA and the WAPP Task Force of TSOs (comprising representatives of CEB, CIE/SOPIE, NEPA and VRA) to develop and put in place the proposed WAPP “Operational Mitigation and Security Plan” for the 330 kV Coastal Transmission Backbone.

Consulting Services to assist VRA to develop and put in place a robust WAPP Generation Strategy to optimize Akosombo and Kpong hydropower operations to enhance regional peaking capability for WAPP “Zone A” Coastal States, utilizing the Coastal Transmission Backbone.

Consulting Services to assist the Ministry of Energy, the Energy Commission, the Public Utilities Regulatory Commission to develop and implement a comprehensive action plan, including licensing, regulations, tariff formulation, bid documents and contracts necessary to transform the VRA-transmission “business unit” into an autonomous and commercially viable TSO within WAPP.

11 5. Lessons learned and reflected in the project design.

25. The proposed WAPP APL program has been designed, taking into account broad lessons learned from the five decade long evolution ofthe best known regional power market - the Nordic power market which is operated by NordPool. In addition, lessons gained from the design of comparable Bank financed regional APLs for Southern Africa Power Pool (SAPP) and Energy Community of South East Europe (ECSEE) have been applied.

26. Design of Power Pooling Mechanism. A key lesson learned from the Nordic experience is that regional multi-country electricity power pooling arrangements, such as the one envisioned for WAPP, require active involvement of all transmission system operators. In the Nordic power market, NORDEL, an association comprising the TSOs ofNorway, Sweden and Finland initially put in place a robust cooperative mechanism as a means to create a secure and reliable platform for the progressive development of the increasingly unified and competitive regional electricity market that is now operated by NordPool.

27. The two most pertinent lessons that apply to the design ofthe WAPP APL 1 project are:

Lesson One: the key to successful expansion of multi-country, regional electricity trade is to initially establish an appropriate (simple, flexible and robust) institutional structure consisting ofthe national TSOs. Over time with growing economies and increases in electricity demand within a regional context, the scope ofmulti-country, regional electricity trade expands as TSOs build confidence in working together on a commercially sustainable manner to secure economic benefits and solve transitional problems. With limited interconnections in place among ECOWAS Member States and the present reliance on government-to-govemment power exchange agreements executed by national TSOs, it is prudent to focus on measures that are indispensable pre-conditions for replicating the basic power pooling mechanism that was pioneered by NORDEL - under the WAPP APL 1 project, the existing bilateral power exchange agreements between the TSOs ofBenidTogo, CBte d’Ivoire, Ghana and Nigeria (Annex 1, Section 4) would be consolidated into a unified WAPP Cooperation Agreement for the 330kV Coastal Transmission Backbone;

Lesson Two: in order to maintain balance in the transformation of power system operations from a national into a multi-country, regional operations regime, such as the envisioned WAPP Cooperation Agreement for the 330kV Coastal Transmission Backbone, it is preferable to promote greater autonomy for national TSOs so that potential conflicts ofinterest are minimized. In the specific WAPP APL 1 project context, the first step to be considered is functional (and not necessarily corporate) unbundling of TSOs - from the Nordic experience, this promotes uniformity ofpurpose in implementing the core principles embodied in the EEP, such as non-discriminatory “third party access” to generation and transmissicn facilities. The ongoing power sector reforms by the authorities in the four beneficiaries of WAPP APL 1 project (Ghana, C8te d’Ivoire and BeninRogo, Nigeria) are already proceeding in thht direction.

28. APLPr- * The following are three program design lessons ofexperience gained froni the SAPP APL (FY04) and ECSEE APL (FY05) programs, and applied to the WAPP APL:

Lesson One: the design of policy andor project specific triggers for the APL program should be gromded in a well-defined policy and institutional framework, have full backing ofthe beneficiary Member States and move at a pace tailored to each Member States’ situation. WAPP APL 1 project design is well grounded in the long track record (over 30 years) of power exchange agreements involving Ghana, CBte d’Ivoire and BenidTogo;

12 Lesson Two: stakeholders at both the national and regional levels should have a combined ownership of program implementation arrangements and institutions, so as to promote uniformity of purpose. The above notwithstanding, the least successful regional projects have tried to rely on new institutions to oversee project implementation, while the most successful one is often built upon the track record of exiiting institutions. All key project implementation activities of the WAPP APL 1 project will be handled by experienced power utilities, namely VRA and CEB; and

Lesson Three: the design of APL programs which provide a regional umbrella for multi-faceted, multiple-country infrastructure projects should focus on achievement of regional program goals (and not be diverted by national issues) to ensure their effective implementation. Furthermore, regional project implementation should be anchored as much as possible in the strongest performing of the beneficiary Member States covered by such regonal project. Accordingly, the WAPP APL 1 project is anchored in Ghana and Benin.

6. Alternatives considered and reasons for rejection

29. The Bank provides support for power sector rehabilitation, restructuring and/or expansion activities in ECOWAS Member States which, to a large extent, already promote the goals of WAPP. The common practice is to provide IDA credit support through regular single-country sector investment lending instruments. A recent example is IDA co-financing for implementation of the 225 kV Bobo Dioulasso - Ouagadougou segment ofthe C8te d’Ivoire-Burkina Faso Interconnection Project.” This avenue for financing WAPP priority investments will continue on a selective basis, especially for those countries that require extensive reinforcement of national power systems (for example, Nigeria and C8te d’Ivoire). The exclusive use of that IDA financing option was also considered but was rejected, in favor of this more visible and coordinated regional programmatic lending instrument which gives IDA the flexibility to match its regional integration commitments to the pace ofits clients. The regional APL instrument allows IDA financing to be applied in phases, as and when discrete investments become ready for implementation, and thereby provides eligible ECOWAS Member States with up-front assurance that they can rely on IDA financing as and when they meet project specific eligibility criteria. In contrast, the use of a regular instrument (sector investment loadcredit) would have required IDA to commit the full US$100 million APL amount upfront through a series of country-specific operations in Ghana and BenidTogo, well ahead of the clients being able to actually utilize the funds. The use of the horizontal attributes of the APL instrument also enables IDA to better target its support to mutually consistent investment packages to be implemented under each of the envisioned subregional WAPP Cooperation Agreements (Section B2).

C. IMPLEMENTATION

1. Partnership arrangements

30. First and foremost, WAPP is a partnership between the governments of ECOWAS Member States who collectively have resolved to put in place the regional power pooling mechanism as the preferred means to achieve their long term vision (Section A.l). The ECOWAS Member States are in the process ofratifying the EEP to provide a legal and regulatory framework for all regional energy integration initiatives, including the WAPP and WAGP projects. Second, WAPP is an emerging partnership whose membership is open to any power (public or private) utility that operates in any ECOWAS Member State. Finally, WAPP is a partnership between the ECOWAS Member States, donors and IFIs, including the World Bank. As shown in Table 2, financing for the first tranche (FY05) ofthe WAPP APL 1 project is

loThe Burkina Faso Power Sector Development Project (component on “Extension and Reinforcement of Transmission Lines ”), approved by the Board Approval in December 2004.

13 being provided on a parallel track basis by the KFAED and the EIB. For the second tranche (FY06), the indicative financing plan includes a co-financing package with the AfDB, BOAD and EBID. The main sources ofgrants required by the ECOWAS Secretariat for WAPP capacity building activities are currently the USAID and the AFD (Annex 2).

-IDA AfDB BOAD KFAED EIB EBID Infrastructure Components Ikeja West- Sakktk Segment FY04 FY04 FY04

(US0 millions) Source: ECOWAS Secretariat, based on “Meetings of WAPP Donors”

2. Institutional and implementation arrangements

3 1. WAPP APL Program Coordination: The coordination and implementation arrangements for WAPP activities are comprehensive (Annex 1, Section 1). The set up for WAPP APL program implementation, monitoring and evaluation is as follows:

0 WAPP Steering Committee (SC), established by the Meeting of Energy Ministers, will maintain overall oversight of all initiatives supported by the WAPP APL Program. The SC will give overall policy guidance to the WAPP organs, formally review and approve (by the mechanism of WAPP Resolutions) specific proposals formulated by the WAPP organs to facilitate program implementation.

0 The WAPP PIC, supported administratively by the Energy Division of the ECOWAS Secretariat, will continue to monitor progress on project preparation, appraisal and implementation of WAPP Cooperation Agreements (Section B.2), using the results framework being developed for each ofthe three projects.

0 The ECOWAS Energy Observatory, created in 2004 as a first step towards establishing an autonomous WAPP Organization, will handle data collation tasks necessary for tracking indicators ofWAPP APL 1 project outcomes (Section C.3). Such responsibilities will eventually be transferred from the ECOWAS Energy Observatory to the future Secretariat and Information Coordination Center of the WAPP Organization (WAPP SICC).

a The WAPP Task Force of TSOs, created by the WAPP PIC, includes representatives of CEB, CIE/SOPIE, NEPA and VRA that will be responsible for developing and putting in place the proposed WAPP “Operational Mitigation and Security Plan” for the 330 kV Coastal

14 Transmission Backbone. Technical assistance, in the form of an Expert Advisory Panel, will be provided to assist the WAPP Task Force ofTSOs (Section B.4).

3. WAPP APL 1 (First Tranche) executing agency

32. Ghana - Volta River Authority. VRA formally came into existence on April 26, 1961, under the Volta River Development Act, 1961 (Act 46) of the Republic of Ghana. The Act provided for the establishment of VRA and charged it with the duties of generating electricity by means ofhydroelectric potential of the Volta River and other generation sources. VRA started with the development ofthe hydroelectric potentials of the Volta River and the construction and maintenance ofa nation-wide grid transmission system. The authority’s primary functions currently include the bulk supply and transmission ofelectrical energy for large industrial and mining consumers and the two electricity distribution companies in Ghana, one of which is the Northern Electricity Department (NED) of VRA. In 1997, VRA registered a wholly owned subsidiary company - the National Grid Company Ltd (GRIDCO) as a first step towards enhancing the operational autonomy ofthe transmission system operation “business unit”. But to date, VRA has not transferred transmission and load dispatch assets to that subsidiary company. Details of project implementation arrangements to be followed by VRA for the WAPP APL 1 project are presented in Annex 6.

4. Monitoring and evaluation of outcomes/results

33. Annex 3 presents the WAPP APLl results framework which was developed jointly with the relevant power utility beneficiaries of the Coastal Transmission Backbone (CEB, CIE/SOPIE, NEPA and VRA) during appraisal meetings held in Accra, Ghana, on April 13 and 14,2005. It was agreed that technical assistance will be provided through the WAPP APLl project to enable the ECOWAS Secretariat‘ECOWAS Energy Observatory to develop an integrated WAPP M&E system, building upon the existing country-specific M&E systems, to report on overall program outcome indicators (Annex 1 Section 3). Given the varying degrees of advancement in the preparation ofresults frameworks for each of the projects under the WAPP APL Program, it is important to develop, first, an M&E system for the WAPP APLl project. Once the core M&E system that is based on the results framework for WAPP APL 1 project is built and well hnctioning, it would be adopted and replicated to cover subsequent projects and, eventually, the entire WAPP APL program.

34. Mmitoring ofthe project implementation activities ofVRA (and CEB) under the WAPP APL 1 project would be carried out through the normal review procedures for procurement, regular supervision missions, the Financial Monitoring Reports (FMRs), the monthly reports to be provided by VRA, independent annual financial audits ofthe project and of the financial statements ofthe VRA, and reports prepared under the technical assistance components. IDA would also carry out a mid-term review by June 2007.

5. Sustainability

35. This cluster of ECOWAS Member States (BenidTogo, C6te d’Ivoire, Ghana and Nigeria) that will implement WAPP APL 1 have already established a significant track record ofpromoting mutually beneficial cross-border energy trading arrangements in electricity and petroleum products. In particular, the WAPP APL 1 project leverages 30 years of experience that these countries have gained in establishing and expanding cross-border electricity trade, based on govemment-to-government bilateral power supply contracts that have typically been executed by national power utilities (Annex 1, Section 4). The proposed WAPP Cooperation Agreement will reduce their collective vulnerability to power supply outages by jointly irnplenienting a specific “operational mitigation and security plan” for the 330kV

15 Coastal Transmission Backbone. It will also use the relevant provisions of existing (10 year renewable) power exchange agreements to increase cross-border electricity trade within this sub-region.

36. ECOWAS Member States are fully committed to implement two “flagship projects”, namely the WAGP and the WAPP, which will secure the short- and medium-term sustainability ofthe regional energy integration process in West Africa. Over the long-term, the key to achieving sustainability of regional energy integration initiatives, such as WAPP, lies in the establishment and strengthening of the emerging power utility-led institutional framework - the WAPP Organization (WAPP Secretariat and Information Coordination Center and the network ofWAPP Area Coordination Centers to be set up in Cate d’Ivoire, Ghana, Nigeria and Senegal).

6. Critical risks and possible controversial aspects

37. The risks the World Bank faces in moving ahead with the proposed APL program derive from the risks to the integration process in West Africa itself. Other sector specific challenges and risks are outlined below.

38. The greatest challenge for the entire process of regional energy integration at this point is in finding ways to encourage ECOWAS Member States to relax adherence to national self-sufficiency approaches to addressing particular domestic energy constraints in favor of the regional approach (shared generation reserves, economically sized generation facilities, harmonization ofregulatory instruments, etc.). Given the collective commitment of ECOWAS member states (Section A. 1) to implement the WAPP, this risk is low. Through the EEP, a general consensus has emerged among ECOWAS Member States that there is the need to establish a regional regulatory capability to function at arm’s length from the governments. This notwithstanding, there remains the risk that no specific institutional framework would be acceptable and agreeable to all stakeholders. Accordingly, the 28’ ECOWAS Summit decided that the ongoing ECOWAS Regional Regulatory Development Project (RRDP), funded by the AFD, should focus initially on helping the community to develop a consensus-based regulatory framework for WAPP.”

39. A second set ofrisks concern the non-application or non-respect ofcommitments made by ECOWAS Member States, or simply a few Member States, to adhere to EEP principles that stakeholders consider to be critical for the long-term viability ofWAPP, especially: (a) the assurance ofthird party acccss to power generation and transmission facilities regardless of their nationality and location within ECOWAS (Article 6); and (b) free transit of electricity (power wheeling) without distinction as to the origin, destination or ownership of such electricity (Article 7). To help mitigate this risk, policy triggers for the WAPP APL program (Annex 1, Section 2) are designed to reinforce the benefits of the regional approach by ensuring that eligible ECOWAS member states also demonstrate commitment by implementing credible, country-specific “WAPP Action Plans” to facilitate the establishment ofWAPP Cooperation Agreements.

40. Third, there are risks inherent in the relatively weak project implementation capacity of some national and multi-national power utilities of ECOWAS Member States. Taking into account lessons learned in addressing institutional capacity challengeshisks facing similar regional electricity cooperation initiatives elsewhere, the WAPP program, in its current phase: (i)relies almost exclusively on t3e project implementation capacity of the leading national and multi-national power utilities in the region; (ii)builds upon the regions’ two to three decade-long experience in coordinating operations across-national

’’ ECOWASI CEDEAO (2005). 28th Session ofthe Authority ofHeads of State and Government. Decision A/Dec.6/0 1/05 on the “Development of a Regional Regulatory Framework for the ECOWAS Electricity Sector, prior to the Establishment ofa Regional Regulatory Body”.

16 boundaries; and (iii)places emphasis on establishingheinforcing the operational autonomy ofnational and mu1ti-national transmission system operators so that they can deepen cross-border cooperation capabilities through an iterative process where lessons leamt from within and elsewhere are used to make adjustments/improvements.

41. All investment projects to be supported under the WAPP APL program are expected to use proven designs and are not expected to contain any particular risks or controversial aspects. This is the case with all infrastructure components of the WAPP APL 1 project.

7. Loadcredit conditions and covenants

42. The policy trigger for the WAPP APL Program is discussed in Section B.2. No other policy triggers would be applied (including non-compliance with undertakings under ongoing national projects as long as they do not directly affect compliance by each ECOWAS member states with the EEP). Project triggers would not be applied to loandcredits already approved. As an example, an IDA credit approved as part ofthe first tranche of the WAPP APLl project would not have conditions (equivalent to dated covenants) about the country having to meet future project triggers (that may apply to the second tranche ofthe WAPP APLl project) and a possible failure to meet such future triggers would not jeopardize the implementation of projects that are already under implementation. VRA and CEB, the two power utility beneficiaries of investments financed under the WAPP APL 1 project would have to meet financial management covenants (Annex 7 presents WAPP APLl project financial management system (FMS) arrangements) and undertakings about safeguards, such as the implementation of environmental management plans and resettlement action plans (Annex 10).

43. Ghana, the sole beneficiary of this first tranche ofthe WAPP APL 1 project, already meets the initial WAPP APL eligibility criterion and policy triggers. In June 2004, Ghana’s Parliament ratified the EEP, thereby endorsing the country’s active support for both the WAPP and the WAGP projects. Under Ghana’s ongoing power reforms, the country’s high voltage transmission system is by law (Section 23 of the Energy Commission (EC) Act, Act 541 of 1997) required to operate on non-discriminatory, “open access” principles, and cross-border electricity transactions are already delegated to the regional level (Section 18(5) of the Public Utilities Regulatory Commission (PURC) Act, Act 538 of 1998). To ensure alignment of the ongoing power sector reforms in Ghana with core principles embodied in the EEP, it was agreed during appraisal that technical assistance would be provided under the first tranche ofthe WAPP APL 1 project to enable the Govemmenthlinistry of Energy, the regulatory bodies (EC and PURC) and the state-owned electric utilities (VRA and the Electricity Company of Ghana Ltd.) to jointly prepare and implement a “WAPP Action Plan” (Section B.4).

44. The appraisal concluded that the specific VRA investments to be financed under the first tranche of the WAPP APLl project are in compliance with Bank safeguard policies (Section D 6). Furthermore at negotiations, the following covenants were agreed for VRA:

0 Financial Performance -not to incur any debt unless future debt service is estimated to be covered by at least 1.3 times the net revenue (VRA must not incur any new debt unless their net revenue for the following year is equal to at least 1.3 times their estimated debt service requirements for the following year).

0 Financial management - to maintain a financial management system, including records and accounts, and to prepare financial statements, in accordance with consistently applied accounting standards acceptable to the IDA, adequate to reflect its operations and financial condition and to register separately the operations, resources and expenditures related to the WAPP APL 1 project.

17 0 Safeguards -to implement the Environment Management Plan and the Resettlement Action Plan for the Aboadze-Volta transmission segment ofthe 330kV Coastal Transmission Backbone, as approved by the Bank.

0 Project Monitoring, Review and Reporting -to submit quarterly progress reports; cany out (in consultation with the Bank) a mid-termreview not later than June 30,2007; and to submit an implementation completion report not later than June 30,2009.

D. APPRAISAL SUMMARY

1. Economic and financial analyzes

45. 330kV Aboadze - Volta Transmission Segment. The 330 kV Aboadze-Volta Transmission Segment lies at the heart of the energy integration process among WAPP “Zone A” coastal states, since it greatly facilitates “power wheeling” from Cbte d’Ivoire through Ghana into Togo and Benin and also electricity transfers from the Takoradi Them1Power Complex (the foundation customer for the WAGP) in southwestem Ghana to the main load centers of southeastem Ghana, where electricity demand is growing. The new 330kV line will significantly reduce power transfer losses, enable the Ghanaian transmission network to satisfy N-1 planning criteria, and make available capacity to transfer ail additional 410 MW, corresponding to 2.6 GWh annually assuming a 72% annual load factor (VRA, 2005). From a WWP perspective, the new line will ensure that the VRA network has the capacity to wheel 200 MW across the Ghanaian system from Cbte d’Ivoire to Togo. Although the new line is located entirely within Ghana, its benefits go beyond its borders even in the absence of a fully constructed 330 kV Coastal Transmission Backbone. This follows because Cbte d’Ivoire’s capacity to export additional electricity is enhanced while TogoBenin’s capacity to import is equally improved. Moreover, the new line helps alleviate congestion in transferring power from the southwest to southeast within Ghana, a usual occurrence during drought years when availability of VRA’s hydroelectric generating stations at Akosombo and Kpong is curtailed.

46. The Economic Intemal Rate ofRetum (EIRR) ofthe project for Ghana alone is robust at 35% in the base case scenario when compared with the assumed economic opportunity cost of capital of 10%. The global EIRR of the project, taking into account the indirect benefits of the transmission line for Cbte d’hoire and TogoBenin, is higher at 40%. The table below presents a breakdown of the results.

Economic Analysis for 330 kV Aboadze - Volta Transmission Line

Ghana CBte d’Ivoire TogoBenin Global costs 53,809,360 0 0 53,809,360 Beaefits 195,326,955 26,467,686 8,3 11,212 230,105,853 Net Benefits 144.735,42 1 26,467,686 8,311,212 1793143 19 EIliR 35% not defined not defined 40% potlines from 1 January 2008. A discount rate of 10% is assumed to calculate the present values forthe economic EIRRs for C8te d’Ivoire and TogoBenin are mathematically not defined as none of these countries any costs from this project.

47. The primary quantifiable economic benefits of the project for the different countries include: (a) Ghana ( increased transmission revenue; increased power availability during years ofdrought; reduced transmission losses; reduced C02emissions through reduced transmission losses); (b) TogoBenin (guaranteed e1ectricit.l import availability during years of drought); and (c) Cbte d’Ivoire (guaranteed sale

18 cf s,~rlu., mergy during years of drought). ?lie primary quantifiabk ecoiiomic costs trs Lhe tots! invbstir,elil costs, :he OStM costs and various other costs. The latter includes costs of !ass of agiirultural land along the transmission line. The investnent costs include the construction of the ,4boa&e-’\’olta transniission line insulated at 330 kV, the construction of 330/161 kV substations (with 233/16! kV autotralisf~i~iiers)at Aboadze and Volta (Tema) and the installation of 161 kV, 150 hWA phase-shifting trar.sformers.

48. VRA Historical Financials. VRA’s financial performance over the past 3 years is documented in the published accounts for 2000,2001 and 2002. A distinct feature ofVRA’s recent financial performance is that the Authority sustained heavy net losses in each ofthe past three yews, rising to 1,269 billion cedis in 2002 compared to 329.69 billion in 2001. The main factors responsible for the loss inchided significant Eigher cost of thermal generation arising from high cost of Light Crude Oil (LCO), higher proportion ofpower imports from C6te d’ivoire to meet domestic demand, capacity payments to the Takorndi International Company (TICO), as well as difficult macro-economic and co~mercial environment prevailing over the period. Domestic inflation ranged from 16 to 33% and the exchange rate with the TIS$ had risafiom 3,500 cedis to the TJS$ at the beginning of 2000 to 8,350 ceJis to the US$ at the end of 2003.

-1.9.- However an operating profit of 391.10 billion cedis was recorded for 2003 as comparecl to the loss for ,596.16 billion cedis in 2002. VU’Sperformance in 2003 improved. The increase \$as rhe mainly t:, tariff increases granted to VRA by the PURC with effectqfrom August 1,2003 and the relative staLiliLaticm of the cedi (depreciated only 4% in the year 20033. The Debt Service CGveragc RAo, cm~entratio and the pre-tax working ratio covenants were not met from 2000 through 2002 due to weak huiicials VU. 1 Iowever with appropriatc tariff increases in 2003 and exchange rat3 depreciation beiiig 4% tornpared to the US$ thz financials for 2003 convey a better pictuie and all t5e covenants are met. It is important io note that the pre-tax working ratio improved from 0.98 in 2G02 to 1SO in 2003 and one of the contributing factors was the absence of the VALCO load. The VALCO tarifx’s haw consisten?ly been mwh below VMcost, which results in an implied subsidy.

50, VRA Financial Forecast. VRA’s finamial performance (2005 to 2014), were sialyzcd at appraisal. There is a lot ofuncertainty around the VALCO load which represented almost one-third of the total VUsales through 2002. VALCC) has been off-line for almost two years and Government of Ghana has now acquired a majority stake in VALCO. There are on-going discussions with regards to thc potcntial re-start ofVN.CO and thus three VRA supply-demand scenarios were developed for the financial analysis based on the VALCO timing. The base case assumes VALCO to re-start on January 1, 2003. Overall VRA is able to meet its existing financial covenants under IDA Credit 2682-1-GEI. The results highlight the following about VRA’s profitability:

’ 0 It improves because the resumption of power supply to VALCO, a large coiisumer that was receiving power at prices lower than VRA’s average cost, has been delayed till January 1, 2008. In addition, there is approximately 6% increase in sales growth per year. VEL4 has net .losses in certain years but is able to generate a sufficient level ofcash every year. One ofthe reasons for net losses is the increasirlg depreciation expenses due to revdluation of assets;

0 Pre-tax working ratios for VRA fall below 1.3 in years 2005 and 2006, but recover to 1.3 after the delivery ofNigerian gas supply to the thermal power plants. It is iniportant to note that for the scenario in which VRA resumes power supply to VALCO in 2005 (one pot-line causes inwh higher levels of dispatch of thermal generation facilities which results in significantly higher fuel expenses for VRA. The tariff assumed for VALCO currently is 2.7 c/k.vh which must be reviewed as part of on-going negotiations with VALCO. Under that scenario, the VUpre-tax working ratio is even lower in 2005 and 2006 than for the base

19 case (VALCO remains off-line in 2005 and 2006). Clearly, an earlier start-up for VALCO will undermine the financial health ofVRA, unless a significantly higher tariff for VALCO is applied.

2. Technical

5 1. Upon completion of the proposed 330kV Coastal Transmission Backbone, the transmission system operators ofWAPP “Zone A” coastal ctates will collectively need to establish and adhere to a common set ofrules for system protection, restoration and operation, to be codified under a specific WAPP Cooperation Agreement. Technical assistance to be provided under the WAPP APL 1 project places emphasis on the application of basic preventive and curative measures to deal with system disturbances, including: (i)sharing of spinning reserves as the first line of defence in response to loss of available generation capacity; (ii)coordinated load shedding as a fallback whenever system frequency falls below minimum criteria; and in the event of network collapse (iii)coordinated procedures for black , start and network restoration.

52. Specifically, s~pportwill be provided (through an expert advisory panel) for the development and implementation of an “Operational Mitigation and Security Plan” for the 330kV Coastal Transmission Backbone. Such plan, inter alia, would define and put in place specific procedures to: (i)allocate and monitor the sharing of spinning reserves; (ii)coordinate load shedding, if necessary; (iii)determine maximum loading limits for interconnection lines and monitoring compliance to ensure safe and secure regional operations; (iv) establish operational criteria for generators connected to the regional network and for deployment of designated black start units for execution ofnetwork restoration plans under mu1 tiple scenarios; and (v) communicate during emergencies and/or reporting of events.

3. Fiduciary

53. The Bank’s standard fiduciary requirements apply also to the projects and power utilities supported under the WAPP APL program. Lending under the WAPP APL program will be through IDA credits to individual countries. The Bank will review the financial management systems ofthe executing agencies and audit reports will be required to be submitted. Procurement will be in accordance with the Bank Guidelines for Procurement and Bank Guidelines for the Use of Consulting Services will apply, The proposed IDA credit to Ghana under WAPP APLl project will apply standard fiduciary and procurement arrangements (Annexes 7 and 8 present arrangements for VRA).

4. Social

54. There are several potential benefits to be gained from regional energy cooperation through WAPP, including: (a) a projected region-wide lowering of electricity supply costs than would be achievable on an individual country basis; and (b) an improved reliability and security of supply leading to reduced overall vulnerability to drought-induced power siipply disruptions (Annex 3). Moreover, WAPP provides a tangible demonstration that regionally integrated infrastructure initiatives are powerful drivers for more comprehensive socio-economic and political integration, as envisioned under NEPAD.

5. Environment

55. The investment to be financed under the first tranche ofthis WAPP APL1 project has been categorized as “B” under OP4.01 since it is a transmission line through already developed areas of Ghana with little to no environmental sensitivity, and through which an existing line already runs. In many places, the new line will parallel the existing line. Subsequent investments for the second tranche of the

20 WAPP APL 1 project (and other subsequent projects under WAPP APL Program) will be independently categorized under OP4.01.

56. The VR4 and the Ghanaian EPA have more than adequate capacity to satisfactorily manage the environmental dimensions oftransmission line projects, through the Environmental Assessment (EA) and more generally. The project raises no environmental policy, regulatory and institutional issues, and will not compromise people's health from environmental risks and pollution. Normal environmental management practices will suffice to avoid or minimize any concerns during construction and operation.

6. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) E1 EX1 Involuntary Resettlement (OP/BP 4.12) EX1 [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) El EX1 Forests (OP/BP 4.36) 11 [XI Safety ofDams (OP/BP 4.37) El EX1 Projects in Disputed Areas (OP/BP/GP 7.60)* El 1x1 Projects on International Waterways (OP/BP/GP 7.50) El [XI

57. VRA has prepared and will implement an Environmental Management Plan (EMP) and a Resettlement Action Plan (RAP) for the first tranche of the WAPP APL 1 project. As mentioned above in Section D5, the VRA and the Ghanaian EPA have more than adequate capacity to manage the safeguards dimensions (environmental and resettlement) of transmission line projects, and no capacity building will be required. The key safeguard issues raised by the project are not significant, and can be readily managed through normal route finalization, construction and operation procedures and practices. These issues include: (a) Final route alignment and tower placement to avoid disturbing locally sensitive areas (e.g. wet or poorly drained areas, erodible slopes); and (b) compensation to land ownerdusers along the right-of-way. These land ownerdusers, as well other stakeholders such as District Assemblies, other Government agencies and NGOs, were consulted during the EA and RAP studies, and during preparation of the EA addendum. They will be consulted again when the final alignment is set and other preparations for construction get under way. Local concerns were generally about the loss of crops and land use, and a few sacred groves/shrines.

7. Policy Exceptions and Readiness

58. Nopolicy exceptions are sought.

* By .supporting the propoxdproject, the Bank does not intend to prejudice thefznal determination of the parties' claims on the disphted areas

21 Annex 1: Country and Sector or Program Backgrourid AFRICA: West Africa Power Pool (APL)Program 1. WAPP

1. WAPP Objectives and Vision: The 15 Member States” ofthe ECOWAS have acknowledged that their past efforts to achieve national self-sufficiency in electricity supply have been uneconomical due to the high cost ofestablishing country-specific power generation and transmission infrashucture. Faced with the challenge of meeting regional growth in electricity demand (Table Al-1), they have acknowledged two major shortcomings in the present regional strategy: (a) increasing reliance on hydro- based power systems will not provide sufficient regional security ofelectricity supply, and (b) the lack of adequate transmission infrastructure (within and between national power systems) is the weakest link in the drive towards greater cooperation in power sector development. They have collectively resolved to develop and put in place the WAPP - a cooperatise power pooling mechanismfor integrating national power system operations into a unijied regional electricity market -expecting that such mechanism would, ovir the medium to long term, assure their citizens of stable and reliable electricity supply at affmdable costs.

2. The goal ofWAPP is to establish a well-functioning, cooperative, power pooling mechanism for Wert Africa, as a means to increase access of the citizens ofECOWAS to stable and reliable electricity at affordable costs. The long term vision is for the WAPP to help meet the region’s projected deztricity reqt.kmer_ls by achizving a four-fold increase in power system interconnection capacity among ECOWAE Member States and harnessing the elzctricity production potential of:

0 Several large capacity hydropower facilities (Akosombo, Kainji, Manantali) sited on the region’s major (Niger, Volta, Senegal) rivers which produce relatively low-cost electricity (US$O.O 1- 0.03kWh);

’*Benin, Byrkiiia Faso, Cape Verde, CBte d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.

22 The substantial but as yet untapped hydro resources ofGuinea, some 6 000 MW ofwhich is potentially economic to develop and can generate around 20-25 TWh per year ofelectricity at relatively low cost (between US$0.02-0.3/kWh); and

e Gas-fired power generation capacity, leveraging the community’s parallel track strategy to expand access to Nigeria’s enormous natural gas reserves (3500 billion cubic meters ofproven natural gas reserves) via the proposed West Africa Gas Pipeline (WAGP) project.

3. WAPP Cooperation Framework: Building on their positive experiences in promoting regional energy cooperation, and also the region’s limited but significant track record ofpromoting mutually beneficial cross-border electricity trade arrangements, the “Meeting of Energy Ministers” ofECOWAS Member States13 formulated a proposal to set up the WAPP, which was subsequently endorsed by the ECOWAS Council of Ministers) and submitted for consideration by the community’s highest decision- mahng body - the Summit of the Heads of State and Government of the ECO WAS Member States,

4. From December 1999 to the present, the following policy milestones have been achieved:

The 25thSummit of the Heads of State and Government of the ECO WAS Member States approved the “Mechanism for Financing the WAPP”, l4appointed the “Meeting of Energy Ministers” as the WAPP Steering Committee, to be assisted by a WAPP PIC composed of Chief Executives ofthe region’s national power utilities.”

e The 2dhSummit of the Heads of State and Government of the ECO WAS Member States signed the EEP to set up a unified regional umbrella to facilitate harmonization of legal, regulatory and institutional frameworks for WAPP, the WAGP and other similar regional energy initiatives. The EEP is undergoing ratification processes by the legislative bodies ofthe signatories.

e The 281h Summit of the Heads of State and Government of the ECO WAS Member States approved the “ECOWAS Revised Master Plan for the Generation and Transmission of Electrical Energy”.16

5. The above policy decisions, taken by the community’s highest level body, provide clear evidence ofownership by ECOWAS Member States ofthe WAPP initiative. They also have set up comprehensive coordination and implementation arrangements for WAPP.

6. WAPP Implementing Organs: The present set up is as follows:

0 WAPP SC ofEnergy Ministers maintains overall oversight ofthe initiative. The SC gives overall guidance to the WAPP, formally reviews and approves (by the mechanism ofWAPP

‘3Resolutionof the “Meeting of Energy Ministers”, issued in Accra, Ghana (November 1999). l4ECOWASI CEDEAO (2001). 25th Session ofthe Authority ofHeads of State and Government. Decisions A/Dec.8/12/01 Relating to the Establishment of a Mechanism ofthe West African Power Pool (WAPP). Dakar, 20 - 21 December 2001. l5The Chief Executives ofnational power utilities ofECOWAS Member States subsequently signed an Inter-Utility Memorandum ofUnderstanding (in March 2001) . l6ECOWAS/ CEDEAO (2005). 28th Session ofthe Authority ofHeads of State and Government. Decision AlDec.7/01/05 Relating to the ECOWAS Revised Master Plan for the Generation and Transmission ofElectrical Energy. Accra, 19 January 2005.

23 Resolutions) specific proposals formulated by the WAPP organs. Once the EEP is ratified, the SC will be transformed into the WAPP Committee of Ministers (COM).

0 WAPP PIC comprises the Chief ExecutivesDirector-Generals of all the power utilities of the ECOWAS Member States. The PIC functions under the general policy oversight of the SC, but is nevertheless responsible for developing and putting in place the formal WAPP organization itself. Based on a previous WAPP Resolution, the PIC is to be replaced by the WAPP Executive Board to be appointed by a proposed General Assembly of the WAPP organization (see below).

0 WAPP Institutional and Technical Working Groups (ITWG) which is composed of representatives of Ministries responsible for Energy and ofthe power utilities of ECOWAS Member States. The two Working Groups are supervised by the PIC and work closely with the ECOWAS Secretariat and USAID-sponsored consultants on all WAPP activities: (i)the InstitutionalWorking Group has been focusing on issues and options for the establishment of the WAPP organization plus preparations for the AFD-sponsored “Regional Regulatory Development Project”; and (ii)the Technical Working Group, has concentrated on the USAID-supported revisiodupdate of the “West Africa Regional Transmission Study” incorporating the stability and operational analyzes of the existing national power grids.

0 The Energy Division of the ECOWAS Secretariat provides administrative support for the SC and PIC so as to ensure full alignment with the policy framework defined by the higher authorities, in particular the Meeting of ECOWAS Heads of State and Govemment and the ECOWAS Council of Ministers. As s, an

0 The ECOWAS Energy Observatory (EEO), established as an interim measure until the formal establishment of the WAPP organization itself, functions administratively as a unit of the ECOWAS Secretariat, supervised by the Office of the Deputy Executive Secretary for Integration Programmes. Its specific function are to: (i)collect, analyze and disseminate the information on the regional energy integration process; (b) serves as an “early warning system” for the electricity sector in the ECOWAS Member States; and (c) monitor cross- border electricity trade among the WAPP member power utilities. The EEO will initially be responsible to set up the monitoring and evaluation system for WAPP (Annex 1, Section 3).

7. Future WAPP Organization: At its meeting in Accra, Ghana on 5” April 2002, the WAPP Steering Committee endorsed the recommendation ofthe WAPP PIC to set up a permanent WAPP organization, whose primary mission would be to to promote technical cooperation and operational coordination among power utilities in ECOWAS Member States. Eligibility to join the WAPP Organization will be open to any entity, public or private, which either owns (a) generation facilities of 20 MWor larger, and/or (b) “major transmission facilities in the region”, if such facilities are physically interconnected and have an impact on systems operations in the region. The highest decision making body for the WAPP Organization is the WAPP General Assembly, which would elect an Executive Board. The annual meetings ofthe WAPP General Assembly would be facilitated by a WAPP Secretariat and Information Coordination Center, which, inter alia, would maintain intemational cooperation arrangements with “power pool” organizations in other parts ofthe world and liaise with other relevant power sector stakeholders in ECOWAS Members States and throughout Africa. Actual day-to-day operational coordination and information sharing/exchange between WAPP Operational Coordination Centers wGuld be intermediated through a proposed WAPP Secretariat and Information Coordination Center.

24 8. The ECOWAS Energy Protocol (EEP): A pre-condition to mobilize financing on a larger scale than has hitherto been forthcoming for regional energy integration in West Africa is the establishment of a transparent and harmonized policy, regulatory and commercial framework for cross-border electricity trade. The EEP is intended to put in place such transparent and harmonized policy, regulatory and commercial framework for long term energy cooperation, based on complementarities and mutual sharing ofbenefits.

9. The EEP also establishes the “Meeting of Energy Ministers” of ECOWAS Member States as the formal organ responsible for its implementation. Presently, the EEP is undergoing ratification processes by legislative bodies of the signatories and will come into force on the 90” day after the last instrument of ratification has been deposited with the ECOWAS Secretariat in Abuja, Nigeria.

10. From the WAPP standpoint, a key provision of the EEP is Article 7 which requires each ECOWAS member state, inter alia, to: (a) take the necessary measures to facilitate the transit of energy; and (b) encourage relevant entities (national and/or multi-national power utilities) to cooperate in modernizing energy (transmission) facilities, developing and operating energy (transmission) facilities for regional benefit, facilitating the interconnection of energy (transmission) facilities and apply measures that would mitigate the effects of energy supply interruptions. Other key provisions include Article 6 (ECOWAS member states to assure all participants in regional energy trade of open and non- discriminatory access to power generation sources and transmission facilities), Article 19 (safeguards for environmental impact mitigation) and Article 22 (no less favorable treatment ofthird parties compared to state-owned electric utilities and/or energy entities).

11. The EEP also outlines dispute resolution framework reflecting the general consensus that has emerged among ECOWAS member states. The EEP envisions the establishment of a regional regulatory capability, to function at arm’s length from the governments. Towards that end, the AFD is funding the ECOWAS Regional Regulatory Development Project (RRDP) under which independent consultants and regulatory experts will help the WAPP SC to develop an appropriate regulatory framework for WAPP.

2. WAPP APL Program

12. The RIAS for West Africa: To reduce fragmentation of the West Africa Region’s economies, the Bank has been pursuing a well-defined and phased integration effort in key sectors where the countries would benefit significantly from cross-border trade - notably road and air transport, energy, and, more recently, telecommunications. The objective ofthe RIAS is to help the countries concerned create a more unified regional economic space through the integration ofmarkets ofgoods, financial and infrastructure services. The WAPP APL program, which fits in the framework ofthe US,is intended to develop a robust platform for WAPP, combining (generation and transmission) infrastructure development components with the introduction of common “rules ofpractice’’ covering the institutional, regulatory, technical/operational and commercial pre-requisites for promoting cross-border electricity trado - WAPP Cooperation Agreements.

13. The Use of APL for WAPP: To achieve this RIAS objective for energy integration among ECOWAS Member States, the Bank and its partner FIs, have agreed to put in place a multi-year programmatic framework in support of WAPP. It is proposed that IDA programmatic support be provided using the APL instrument, horizontally on a regional basis to support ECOWAS Member States (the active participation of up to 10 national power utilities is necessary to achieve expected outcomes) and vertically (each ECOWAS Member State can in principle receive support from more than one project over the WAPP APL program period). The APL instrument, by visibly committing substantial IDA

25 resources and complementing activities supported by other IFIs and donors, would help ensure the availability of adequate resources to fund priority investments and technical assistance activities to underpin each WAPP Cooperation Agreement. The APL instrument would enable IDA credit support to be provided in a flexible manner - when countries responsible for a specific WAPP Cooperation Agreement have met the policy triggers (country commitments under the EEP) and when individual investments associated with each WAPP sub-program are ready to receive IDA credit support. All ECOWAS Member States might not actually be granted IDA credits under the WAPP APL program. However, ECOWAS Member States would know up-front that they can rely on the Bank to support them in achieving the developmental goals of the WAPP if they meet specific eligibility criteria and if they need IDA credit support.

14. APL Eligibility Criteria and Triggers: Followingproject preparation review consultations with the WAPP PIC and the ECOWAS Secretariat, the following “Road Map” was agreed as the primary basis for WAPP APL program design:

0 The eligibility criteria would be ratification of the EEP;

0 Policy triggers, which determine the eligibility of an individual Member State to receive IDA assistance under the APL program, should be derived based on the core principles embodied in , theEEP; and

0 Project triggers, which determine when an individual investment is eligible to receive IDA funds, should reflect pre-conditions for sustainable deployment of WAPP medium term (2004- 201 1) investment priorities, as defined in the ECOWAS Revised Master Plan.

15. Accordingly, the following eligibility criteria and policy triggers would align the WAPP APL program to the EEP:

0 An ECOWAS Member State becomes eligible once it has ratified the EEP. It is currently expected that all prospective beneficiaries of the WAPP APL program would have met this condition by mid-2006 at the latest. Ghana, the sole beneficiary of the first tranche of WAPP APL1 project already has met this initial conditions and is therefore eligible for IDA support under the WAPP APL program;

0 An ECOWAS Member State remains eligible for Bank support under the WASP APL program as long as it meets its key obligations under the Protocol. In particular, the member state would prepare and implement a “WAPP Action Plan” under which it would:

a) Review the extent to which present laws and regulations are aligned with the Protocol and, as necessary, prepare rules and procedures to ensure key provisions of the Protocol, such as open access to power generation and transmission facilities by third parties regardless of their nationality and location within ECOWAS (Articles 6) are complied with within its borders;

b) Prepare, and if necessary, amend national energy regulations and/or rules ofpractice to ensure that relevant regulatory entities cooperate in implementingnecessary measures to facilitate the interconnection ofpower systems, assure for third parties of free transit of electricity (power wheeling) without distinction as to the origin, destination or ownership ofsuch electricity, ensure coordinated development and operation of power generation and transmission facilities and mitigate the effects of interruptions in electricity supply (Article 7); and

26 c) Restructure andor reform the operations of state-owned electric utilities andor energy entities to ensure no less favorable treatment of third parties, regardless of their nationality and location within ECOWAS (Article 22).

0 For an ECOWAS Member State (borrower) to be or remain eligible for IDA support under the WAPP APL program the Bank also needs to be satisfied that the borrower has the ability to effectively participate in the development of the emerging regional electricity market. With this policy trigger, the Bank would reserve the right to defer or withhold WAPP APL support in cases where a borrower might have complied with the letter of its EEP commitments but not have implemented or launched a credible “WAPP Action Plan” to put in place critical measures/reforms that are needed to create a well functioning power pooling mechanism, including, for example, reasonable (cost reflective) tariffs, prompt settlement of bills for cross- border electricity trade, and adherence to common “rules ofpractice” for power system operations.

16. Phases of WAPP APL Program: The objective of the WAPP APL program is the development of a robust platform for WAPP in three (3) mutually reinforcing phases. Each phase is structured as a distinct sub-regional infrastructure development project (WAPP APL 1,2, 3 projects) that would yield a specific sub-regional power pooling mechanism, based on a WAPP Cooperation Agreemen.t. Over time, the expectation is that three sub-regional power pooling mechanisms will converge into a unified, well functioning regional power pooling mechanism - an important pre-condition for the future evolution of cross-border trading arrangements into a unified regional electricity market for West Africa.

17. Based on current estimates, the overall WAPP APL program requires a total of about US$350 million equivalent in IDA credit support to eligible ECOWAS Member States. Subject to further review and change, the tentative breakdown by APL phases is: (a) APL 1 (US$ 100 million in two tranches) for the Coastal Transmission Backbone; (b) APL 2 (US$ 125 million in two tranches) for OMVS/OMVG power system development; and (b) APL 3 (US$ 125 million) for interconnections between the Coastal and Sahelian power systems.

18. This document introduces the WAPP APL Program and presents for Board consideration and approval under regular procedures, the first tranche ofthe WAPP APL 1 project. The approval of the second tranche of the WAF’P APL 1 project is delegated to the President and exercised by the Regional Vice Presidents (RVP) under the oversight of the Managing Director. Followingthe approval of the APL Program when the first tranche of the WAPP APL 1 is approved, projects under subsequent APL phases (WAPP APL 2 and WAPP APL 3 projects) would be processed each at its own pace and when ready, each PAD would be submitted for approval by the Africa RVP. Each PAD would be circulated to the Board for information after Management approves the follow-on operation in principle. Management approval becomes effective 10 working days thereafter, unless at least three Executive Directors request a regular Board discussion during the 10-day time period. Each tranche/project of an APL phase could proceed at its ow11 pace and not be held back by the Bank needing to combine several projects for the purpose ofprocessing or approval.

3. WAPP APL 1 Project: Coastal Transmission Backbone

19. The Revised ECOWAS Master Plan identifies as an investment priority the establishment ofa 330 kV Coastal Transmission Backbone for WAPP “Zone A” by significantly expanding the power transfer capacity all the way from Prestea Substation in western Ghana to Ikeja West substation in Lagos, Nigeria. A map of the proposed 330 kV network linking CSte d’Ivoire, Ghana, Togo, Benin and Nigeria is shown in Figure Al-1. Although built for operation at 330 kV, the new lines will initially be energized at 161 kV until load growth justifies the higher voltage. The WAPP SC expects that the 330 kV Coastal

27 Transmission Backbone will provide ample capacity for unconstrained power trade between WAPP “Zone A” Coastal States countries for at least the next 10 years.

Box Al-1: WAPP Cooperation Agreement for “Coastal Transmission Backbone”

The WAPP Cooperation Agreement is intended to integrate existing bilateral power exchange agreements (between CIE-VRA, CEB-VRA, CIE-CEB and CEB-NEPA) into a common mechanism, leveraging the Coastal Transmission Backbone, to: (i)minimize generation and transmission investment requirements due to greater sharing of generation resources; (ii)improved cooperation on technical matters for mutual benefit; and (iii)enhanced coordination ofsystem operations to harness complementarities for mutual benefit.

The WAPP Cooperation Agreement will be a formal undertaking among the four TSOs which, inter alia, would define common “rules ofpractice” for the day-to-day operation ofthe interconnected (hydro-thermal) power systems on the Coastal Transmission Backbone, so that total variable operating costs, based on short-run marginal cost (SRMC) principles, are minimized. Each ofthe four TSOs will be required to continuously compute the SRMC within its operational control area; whenever the differences between SRMCs of adjacent areas exceeds a pre-agreed value, temporary (economy) exchanges would be made and benefits would be shared. In addition, the four TSOs would jointly develop and maintain common rules - “operational mitigation and security plan, including transfer capability limits on interconnections, system protection and restoration measures during disturbances, and so on” - whose application would ensure the stable and reliable operation ofthe Coastal Transmission Backbone.

The WAPP Cooperation Agreement also would require the four TSOs to schedule and dispatch power generation plants in their respective service areas, based on economic merit order computations and bilateral contracts for cross- border electricity trade; TSOs would coordinate operational (pre-dispatch) planning activities, including scheduling of bilateral (fmpower supply) contracts, seasonal planning for economy exchanges involving hydropower availability, day-ahead planning for economy exchanges based on computed SRMC of the hydro-thermal systems, and real-time planning for procuring ofancillary services for system security needs.

20. The major benefits ofthe network enhancements are reduced losses and operating costs, replacement of inefficient aging facilities, reduced generation investments and increased reliability. Traiismission stability studies demonstrate that the projects:

Increase the capacity to supply demand; Alleviate the overloading of the existing lines Akosombo-Lome-Cotonou-SakttC and Akosombo-Kumasi; Enhance the reliability of the transmission system in compliance with N-1 planning criteria; and Improve the dynamic response of the power system in reaction to faults and outages.

21, The above notwithstanding, the transmission stability study concluded that impending interconnection ofNigeria with the other countries poses a major challenge for the region. At present, the NEPA transmission system is severely overloaded and NEPA’s ongoing manual load shedding regime results in poor stability, voltage and frequency control. Before the Reja West (Nigeria) - SakitC (Benin) Interconnection is energized, the utilities must agree on an “operational mitigation and security plan” in case of power system disturbances originating in Nigeria. Therefore the pre-condition for developing the proposed Volta - Mom6 Hagou - SakM segment is establishing agreement between the beneficiary WAPP power utilities (CEB, CIE, NEPA and VU)on the institutional and commercial arrangements for utilization of the entire Coastal Transmission Backbone - it was agreed at appraisal that the four power

28 utilities would sign a Memorandum of Understanding to establish a time-bound action plan to put in place a WAPP Cooperation Agreement for the Coastal Transmission Backbone,

22. The Bank, in consultation with the ECOWAS Secretariat and the two beneficiary power utilities - VRA (Ghana) and CEB (TogoBenin) - has identified and prepared the WAPP APL 1 project, as a vehicle to complete and put into full operation (by 2009) the entire 330kV Coastal Transmission Backbone.

Figure Al-1 WAPP 330 kV Coastal Transmission Backbone

- - Committed 330 kV line ...==.Committed 161 kVline Proposed 330 kV operated at 161 kV I - - I

23. First Tranche: The proposed IDA credits for WAPP APL 1 project will be made available in two tranches, as follows. Two of the segments, the 330 kV line from Sak6t6 in Benin to Ikeja West in Nigeria and the 330 kV line from Aboadze to Volta in Ghana, are already committed. The Sak6t6 - Ikeja West Line is set for construction to begin, with financing being provided by a consortium led by AfDB For the Aboadze - Volta, partial financing (5 million Kuwaiti Dinars) has already been secured from the Kuwait Fund for Arab Economic development and negotiations are underway to secure US$ 10 million from the European Investment Bank (EIB). ECOWAS Secretariat, on behalf of the WAPP SC, has requested IDA to provide financing on a “fast track” basis in order to close the financing gap so that the line can be made operational by 2007. In response, the Bank is making available to VRA the first (FY05) tranche of WAPP APL 1 project (US$25 million) as parallel financing for the construction ofthe 330 kV line segment from Aboadze to Volta in Ghana. The first tranche also will finance the upgrade VRA’s Volta System Control Center (Tema) and the replacement of circuit breakers and relays to modernize the switchyard of the 1020MW Akosombo Generation Station.

24. Second Tranche: This is intended to co-finance development of the remaining segments ofthe Coastal Transmission Backbone: (a) the Prestea - Aboadze Segment (2008); and the Volta - Mom6 Hagou - SakM Segment (2009). The Bank will make available to VRA and CEB the second (FY06) tranche of the WAPP APL 1 project to co-finance these remaining segments. The second tranche will also finance the upgrade of the CEB System Control Center (Lome), the relocation of the 20MW CEB gas turbines from the Cotonou Sub-station to the Maria Gleta terminal ofthe WAGP, and complete the modernization of the Volta Sub-station in Ghana. Under this phase ofthe WAPP APL program, the Bank will provide the financing required to upgrade the system control centres ofVRA and CEB (target operational date of 2008) plus comprehensive technical assistance in the form of an Expert Advisory Panel to assist the WAPP Task Force of TSOs (CEB, CIE, NEPA and VRA) to formulate a WAPP

29 Cooperation Agreement for WAPP “Zone A” Coastal States, incorporating the “Operational Mitigation and Security Plan”.

25. The main infrastructure components and the indicative parallel financing plan for both tranches of the WAPP APL 1 project are presented in Tables A1-2 and A1-3.

Table A1-2: Components of the 330kV Coastal Transmission Backbone

WAPP WL 1 Projec Component 1‘’ Tranche (FY05) 2nd Tranche (FY06)

Construction of 330 kV Aboadze - Volta (Ghana) Prestea - Aboadze (Ghana) Coastal Transmission Backbone Volta (Ghana) - Mom6 Hagou (Togo)

Mom6 Hagou (Togo) - Sakttt (Benin)

Upgrade of System Control VR4 System Control Center CEB System Control Center (Lome, Togo) Centers (Volta. Ghana)

Upgrade ofStrategic Power Upgrade of Switchyard at Relocation CEB Gas Turbines to Maria Generation andor Akosombo Generation Station Gleta Terminal of WAGP.(Benin) Transmission Assets. and Volta Sub-station (Ghana)

Table A1-3: Indicative Parallel Financing Plan for WAPP APL 1 Project

-IDA AfDB BOAD KFAED EIB EBID Infrastructure Components Ikeja West- Sakkt6 Segment FY04 FY04 FY04

Aboadze-Volta Segment FY05 FY04 FY05 VRA System Control Center FY05 Akosombo Switchyard Upgrade FY05 Volta Sub-station Upgrade FY05 I I - I - I - 1 --m

Source: ECOWAS Secretariat, based on “Meetings of WAPP Donors”

26. M&E Plan, It was agreed at appraisal that the results framework for the WAPP APLl project (Aniiex 3) will be further developed by the ECOWAS Energy Observatory (EEO) into a full-fledged M&E system for the entire WAPP APL program that will also: (a) track outputs that are necessary to achieve the target project and program outcomes; (b) make full use of the regional resources and (c) enhance the competencies of WAPP member power utilities to coordinate the collection and dissemination of reliable data.

30 27. During the startup of the WAPP APLl project, the EEO will work closely with the power utilities (CEB, CIE/SOPIE, NEPA and VRA) to develop an M&E implementation plan as the first step to launch the WAPP M&E system. Based on such plan, they will align the outputs and outcomes of the WAPP APL 1 project to the existing country-specific and ECOWAS regional M&E systems. Such plan will include arrangements to be made between the EEO, CEB, CIE/SOPIE, NEPA and VRA to monitor indicators, prepare a common M&E manual, and cooperate to build capacity for M&E activities among all WAPP member power utilities. Also, a Management Information System for WAPP (WAPP MIS) will be developed, under the auspices of the EEO, to serve as a computerized platform for the implementation of the WAPP M&E plan. The proposed WAPP MIS will provide critical support for WAPP decision- making, and require close collaboration within WAPP to effectively cover project/program management (inputs) and implementation (processes) functions, in addition to tracking indicators of project/program outputs and outcomes.

28. M&E Data Sources. The data source for most of the outcomes indicators for the Coastal Transmission Backbone will come from the data recorded by CEB, CIE/SOPIE, NEPA and VRA, and collatedintegrated by the designated WAPP Area Coordination Center (in this case, the Volta System Control Center of VRA). The project’s M&E data will be maintained as an integral part of the Management Information Systems (MIS) of each power utility and, on a periodic basis, the date would be reported to the Volta System Control Center and also the EEO.

29. M&E Capacity Building. Even though the majority of the data for trachng indicators of projedprogram outputs and outcomes already exist, there is an urgent need to improve the method of collection, storage, and reporting of data. The WAPP APLl project will provide technical assistance to: (a) enable the EEO to implement an M&E capacity building plan; and (b) train to the relevant personnel in CEB, CIE/SOPIE, NEPA and VRA to establishhpgrade in-house M&E units, harmonize and standardize data collection, analysis, and dissemination, and use a common framework to gather and share data and information on projectlprogram outputs and outcomes.

30. Use of M&E reports. The information generated by the proposed WAPP M&E system for the Coastal Transmission Backbone will be disseminated through the quarterly progress reports on the WAPP APL 1 project (and through other EEO reporting systems). The information will be used by the WAPP Steering Committee, the WAPP Project Implementation Committee (eventually the WAPP Executive Board), senior management of VRA (and CEB), and donors/development partners and stakeholders to assess progress towards the achievement of WAPP APL program development objectives. More specifically, the reports will be used to assess the contribution of WAPP APL 1 project outputs to the achievement of targeted outcomes.

4. Ghana Power Sector and VRA

3 1. The electricity sector is a key driver of economic growth in Ghana, and is therefore accorded prominence in Ghana Poverty Reduction Strategy (GPRS). Though electric power constitutes only 10% of Ghana’s energy supply mix, it plays an important role in the country’s economy, powering its industrial, commercial and urban development. The industry and services sectors which together account for nearly 75% of Ghana’s GDP, rely critically on electricity. Therefore organized development of the sector, steady improvement in the provision ofreliable and affordable electricity services and growing electricity access are all important determinants ofGhana’s economic performance and the quality oflife of Ghanaians. Because of its size and resource requirements, the sector also has a significant fiscal and macroeconomic impact.

32. In recent times, regional energy integration has added a new dimension to the sector’s development. Ghana is one ofthe key players in the regional push towards energy trade. The Parliament

31 of Ghana ratified the EEP in June 2004 to pave the way for the financial closure for the WAGP and the WAPP. Both regional projects are critical to enhance energy security in Ghana, since the WAGP would enable Ghana together with Benin and Togo) to gain access to natural gas resources in Nigeria and the WAPP would facilitate Ghana’s access to, and sharing of the region’s rich hydro and natural gas resources. Ghana will play a prominent role in this market in view of its physical location, its political significance and the large hydropower resource in the form of the Akosombo hydro complex.

33. Within Ghana, far-reaching reforms in the electricity sector are underway including the introduction ofprivate management of distribution and thermal generation utilities. A large investment program, to be financed by the private sector and by the government and donor development partners, is contemplated over the next 4-5 years to upgrade infrastructure, install additional generation capacity and expand rural access to energy services. Under the first round of sector reforms initiated in 1995, significant measures implemented include:

0 Enactment of the Public Utilities Regulatory Commission (PURC) Act of 1997 (Act 538) and Energy Commission (EC) Act of 1997 (Act 541). The PURC vets and approves tariff proposals from the utilities and develops consumer protection guidelines. The EC’ s operational areas cover licensing and technicalloperational regulation ofthe industry participants, and also advising the Ministry of Energy on policy and planning matters.

0 Tariff adjustments by PURC to re-balance tariffs at or close to LRMC levels, reflecting the outcome ofthe “Transitional Plan for Wholesale Power Supply””. In 2003, the PURC introduced an automatic price adjustment mechanism to effect quarterly adjustments for changes in the foreign exchange fluctuations. In parallel, the EC has put in place several pieces of subsidiary legislation (“Legislative Instruments”) that are key for more transparent regulation of the electricity supply industry.

0 The functionally un-bundling ofthe transmission system business unit ofVRA, in line with a Government policy directive. In 1998, VRA registered (in 1999) a wholly owned subsidiary company - the National Gnd Company Ltd (GRIDCO) and initiated action to transfer national transmission and load dispatch assets to an Electricity Transmission Utility (ETU). In the latest reform phase, the Government announced a further decision to completely separate the ETU from VRA - through the enactment of the VRA (Amendment) Bi11.18 .

34. VRA Role in Promoting Regional Electricity Trade. The VRA formally came into existence on April 26, 1961, under the Volta River Development Act, 1961 (Act 46) ofthe Republic of Ghana. The Act provided for the establishment of VRA and charged it with the duties of generating electricity by means of hydroelectric potential of the Volta River and other generation sources. VRA started with the development ofthe hydroelectric potentials of the Volta River and the construction and maintenance of a nation-wide grid transmission system. It has since assumed responsibility for the development ofthe Takoradi Thermal Power Complex as well. The authority’s primary functions are the bulk supply and transmission ofelectrical energy for large industrial and mining consumers and the Electricity Company of Ghana Ltd. (ECG). The Northern Electricity Department (NED) of VRA, created when the distribution function was transferred from ECG to VRA in 1987 as an integral part ofthe larger Northern Electrification and System Reinforcement Project, is responsible for electricity distribution in the Brong- Ahafo, Northern, Upper East and Upper West Regions ofGhana.

l7Refer to “Transitional Plan for Wholesale Power Supply - Final Report to Ministry ofMines and Energy” (dated June 2000). VRA corporate restructuring is one ofseveral power sector reform-related policy triggers (commitments) for IDA programmatic support under the Ghana PRSC series.

32 35. Followingthe interconnection of Ghana’s transmission system with Togo/Benin in 1972 and C6te d’Ivoire in 1984, VRA pioneered cross-border electricity trade in West Africa through two separate bilateral contracts: (i)a firm energy supply contract with CEB of Togo/Benin; and (ii)a contract with CIE ofC6te d’Ivoire which allows for annual determination of the volume of economy energy exchanges and/or energy banking that is deemed necessary to optimize the use of hydropower reservoirs in Ghana and C6te d’Ivoire. VRA power exports to Ghana’s neighboring countries continued to grow because of VRA’s ability to supply energy and firm capacity from the Akosombo hydropower facility, CEB’s and CIE’s internal supply constraints, and the continuation of a large enough cost advantage in VRA‘s favor. These factors not only made economy energy exchanges and energy banking arrangements with CIE worthwhile, but also assured CEB of reliable electricity supply from VRA. It also enabled CEB to defer generation investments beyond completing the Nangbeto hydroelectric station. In 1992, VRA exports peaked at about 900 GWh.

36. After 1992, the rapid increase in domestic demand in Ghana and major disruptions in hydropower production capability due to recurring droughts (1993 and 1998), led to a major shifi in the cross-border electricity trade balance in favor of Cdte d’Ivoire. During this period, C6te d’Ivoire built up sufficient natural gas-fired power generation capacity through IPPs (CIPREL and CINERGY) which enabled CIE to emerge as a major source of thermal complementation support to VRA. Moreover, VRA and CEB upgraded their bilateral trading pact into a multi-faceted power exchange agreement, which opened the way for CIE to begin transferring power through Ghana into Togomenin for sale to CEB.

3 7. VRA maintains cross-border electricity trading arrangements with all three neighbors. Specifically, VRA has established long term power exchange agreements with the Ivorian power utility (CIE), the bi-national power utility ofTogoBenin, and a power supply agreement with the Burkina Faso national power utility (SONABEL). The VRA-CEB Power Exchange Agreement, signed in November 1997, is a 10-year contract which is considered as a key build block for the proposed WAPP Cooperation Agreement (Box A1-1):

the supply of “guaranteed power and energy” by VRA to CEB under terms and conditions, including an indexed pricing formula, that would be maintained over a 10 year period (1998-2007);

the reciprocal exchange of “economy/secondary energy” between VRA and CEB on an interruptible basis, taking into account annually pre-specified operational parameters (e.g., estimates of maximum electric power capacity and/or energy desired, and time period for which electric power capacity and/or energy is desired);

the reciprocal use of available hydropower reservoirs of VRA and CEB for “banking/storage” ofenergy on an as-needed basis, under mutually agreed terms and conditions; and

the supply of energy for the mutual assistance/emergency power grid operations of VRA and/or CEB, under reciprocal terms and conditions for time-bound restoration of energy supplied on a unit for unit basis;

the provision of “power wheeling” services to accommodate proposed third party electricity supply transactions, in particular: (a) purchase by CEB of firm electric power supply fi-om CIE, for which VRA would provide “power wheeling services” along the existing Abobo-Prestea 225 kV line and other relevant segments ofthe Ghanaian transmission network; and (b) purchase by VRA of economy/secondary energy fi-om NEPA (Nigeria), for which CEB would offer “power wheeling services” to transfer

33 electricity via the proposed Ikeja West-Sakiti 330 kV line and also the existing 161 kV transmission corridor linking SakktC to Lome and then into Ghana. The agreement specifies the principles under which VRA and CEB would establish tariffs for services provided for the above “power wheeling” scenarios.

38. VRA Investments for WAPP. The proposed 330kV WAPP Coastal Transmission Backbone incorporates several segments of the VRA southern transmission network, from Prestea through Aboadze to Volta and then onwards to the border with Togo. The installation of the 330 kV Volta-MomC-Hagou segment is long overdue since it will relieve the existing double circuit 161 kV line from Akosombo to Lome. This link, already over 30 years in operation, is experiencing unsustainably high losses due to overloading because the actual power wheeled by VRA to CEB exceeds the 65 MW firm rated capacity of the line.

34 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

AFRICA: West Africa Power Pool (APL) Program

1. The following is a selective listing of projects and technical assistance activities related to the WAPP APL 1 project that are being sponsoredfunded by international financial institutions and bilateral donor agencies that the ECOWAS Secretariat has formally designated as the “Meeting of WAPP Donors”.

2. The World Bank has ongoing and/or planned projects in the electricity sector ofall ECOWAS Member States. Several of those projects directly contribute to the achievement ofWAPP goals, in particular: (a) Benin Energy Services Delivery APL; (b) Burkina Faso Energy Sector Reform SIL; and (c) Nigeria Transmision Development SIL. The World Bank is also funding wide ranging technical assistance activities in support of several national power utilities involved in WAPP. In addition, PPIAF has funded a study to assist in formulating strategy and plan of action to set up the proposed WAPP Secretariat and Information Coordination Center.

3. The AFDB is the lead co-financier ofthe 330 kV Ikeja West (Nigeria) - SakCtC (Benin) Segment ofthe 330kV Coastal Transmission Backbone. Other co-financiers are the BOADand the EBID. As the administrator ofthe NEPAD Infrastructure Project Preparation Facility (IPPF), the AFDB has provided two project preparation facilities to the ECOWAS Secretariat to support pre-investment activities for the Volta (Ghana) - Mom6 Hagou (Togo) - SakktC (Benin) Segment ofthe 330kV Coastal Transmission Backbone, sourced as follows: (a) US$500,000 from the NEPAD - IPPF, and (b) US$300,000 from the AFD-DBSA-PPF. The BOAD is also providing a grant of US$500,000 to CEB as a project preparation facility for the Volta (Ghana) - Mom6 Hagou (Togo) - SakCtC (Benin) Segment of the 330kV Coastal Transmission Backbone.

4. The KFAED is financing (5.0 million Kuwaiti Dinars) VRA to implement the initial phase of the Aboadze-Volta Transmission Line segment ofthe 330kV Coastal Transmission Backbone (Annex 4).

5. The EIB has appraised (March 2005) a proposed project to provide VRA with financing (US$ 10 million equivalent) to implement the Aboadze-Volta Transmission Line segment of the 330 kV Coastal Transmission Backbone ofWAPP (Annex 4).

6. The USAID initiated a multi-year program of technical assistance to the ECOWAS Secretariat in September 2000. Since then, USAID has provided wide-ranging technical and capacity building support to the WAPP SC, WAPP PIC and the ITWG. USAID-sponsored consulting firms assisted in key pre- investment activities, including preparation ofthe “West Africa Regional Transmission Stability Study” and the “Guidelines for Environmental and Social Impact Assessment ofElectric Power Generation and Transmission Systems in West Afnca”. Documentation from the USAID technical assistance program is listed in Annex 12.

’7, The French Ministry of Foreign Affairs and AFD are providing capacity building support to the ECOWAS Secretariat for the set up ofthe ECOWAS Energy Observatory and for the proposed ECOWAS Regional Regulatory Development Project (RRDP). The AFD has pledged a Euro 5 million grant to set up and support the implementation ofthe RRDP.

35 Annex 3: Results Framework and Monitoring AFRICA: West Africa Power Pool (APL) Program

WAPP APL 1 Results Framework

1 PDOfOutcome Outcome Indicators Use of Outcome Information PDO: To increase access of WAPP “Zone A” Coastal States (CBte d’Ivoire, Ghana, BenidTogo and Nigeria) to more reliable electricity to alleviate supply deficits during peak power demand periods and/cr reduce vulnerability to hydro- induced power supply disruptions.

OUTCOMES P1- Quantity of electricity traded - Shows the contribution of the project to the - Increased cross-border power exchanges (ImportExport) between the WAPP “Zone achievement of WAPP program objective of between the WAPP “Zone A” Coastal States. A” Coastal States, disaggregated by power facilitating the development of a unified utility electricity market among ECOWAS member states.

- Reduced pcwer transfer losses in the principal P2- Percent reduction of power losses - High level of power losses may flag possible transmission networks of the WAPP “Zone A” along the principal transmission (technical andor operational) problems in the Coastal States. interconnectionlinks among WAPP “Zone deployment of WAPP Cooperation Agreement A” Coastal States, disaggregated by power to integrate the national power grids of utility ECOWAS member states.

- Improved satisfaction of peak power demand P3- Percent of the peak power demand met - High levels shows contribution of the project through economy power exchanges between the through economy power exchanges along to the realization of core principle embodied in WAPP “Zone A” Coastal States. the WAPP Coastal Transmission Backbone, the ECOWAS Energy Protocol -“open disaggregated by power utility access” to power generation assets in ECOWAS member states.

Component/Intermediate Results Results Indicators for Each Component Use of Results Monitoring

Component I: Infrastructure Development - Coastal Transmission Backbone - To assure “open access” to lower cost power generation sources (gas-fired thermal power Outcome: Increased capacity for power C1.l Increased quantity of electricity producers in Cote d’Ivoire and southwestem exchanges between WAPP “Zone A” Coastal transferred between WAPP “Zone A” Ghana) through the Coastal Transmission States. Coastal States, disaggregated by power Backbone. utility.

Component II: Upgrade of System Control Centers - Coastal Transmission Backbone

Outcome. Improved monitoring and control of C2.1 Percent reduction in the number and - To implement WAPP “Operational power exchanges between WAPP “Zone A” frequency of power outages along the Mitigation and Security Plans” in order to Coastal States. Coastal Transmission Backbone, assure secure and reliable power exchanges disaggregated by power utility. along the Coastal Transmission Backbone.

C2.2 Percent reduction in the - To determine operational effectiveness of detectiodresponsetime for operation system control centers of WAPP “Zone A” problems along the Coastal Transmission Coastal States. Backbone, disaggregated by power utility.

36 Component III: Upgrade of Strategic Power Generation Stations C3.1 Percent of time strategic power Ensure that the strategic power generation - Coastal Transmission Backbone generation stations (e.g., VRA Akosombo stations (with load following capability) in in Hydro, CEB Gas Turbines at Maria Gleta) the WAPP “Zone A” Coastal States are Outcome. Improved availability of strategic are available for dispatch to meet power functioning at their peak capability in support power generation capacity to satisfy peak power supply contingencies (economy and/or ofWAPP Cooperation Agreements. demand and mitigate power supply contingencies emergency exchanges) in the WAPP “Zone in the WAPP “Zone A” Coastal States. A” Coastal States.

Component IV: WAPP Institutional Capacio Building

Outcome. Enhanced capability of EEO C4.1 Power Sector M&E data of the Adjustments in WAPP policies and better (eventually the WAPP “Information ECOWAS member sates collected, targeting of resources to achieve goals Coordination Center”) to coordinate M&E analyzed, and disseminated. embodied in ECOWAS Energy Protocol. functions among power utilities of ECOWAS member states. C4.2 Fully implemented and well functioning WAPP Cooperation Agreement for the Coastal Transmission Backbone.

* WAPP “Zone A” Coastal States are: Nigeria, min/Togo, Ghana and CBte d’Ivoire,

37 Q .a 8

5 i II

I i

I e II

3 0 0 N 00 00 0 - O"O WWOI-

2N 00-00 0 D 00 0 00 ow-0 "OW 3 OONW f - 1 00 I1 * 0 0 00 0 i N I-W 00 0 2 0-30 "Om II

0 0 om om-c 2ZOZ

0 0 om om-0 ZZOO

02 m om-c 2soo II I a

v1

Pz m 8 $4e

h b P

sss 0s g 0 do,-b E: 2

ssg 0s sm ddb 2 m

ssg d g 0s d o, r- o, m

ssg d g do, b 00

ssg dtb Annex 4: Detailed Project Description AFRICA: West Africa Power Pool (APL) Program

Component 1: Infrastructure Development,

1. Development ofthe WAPP 330kV Coastal Transmission Backbone is a priority for the Revised ECOWAS (Generation and Transmission) Master Plan. The 330kV Coastal Transmission Backbone is being developed in segments, as follows: (a) the Ikeja West (Nigeria) to Sak6tC segment is currently under construction, for which the AfDB is the lead co-financier and the expected commissioning date is late 2006; (b) the Aboadze to Volta segment in Ghana is presently being developed (to operate initially at I61 kV) with partial financing secured (in 2003) from the KFAED; and (c) the remaining segments, which are Prestea to Aboadze (Ghana) and Volta (Ghana) to Mom6 Hagou (Togo) to SakCtC (Benin) are earmarked for co-financing by IDA, the AfDB and the BOAD under the umbrella of the proposed WAPP APL 1 Project.

2. The WAPP ;1pL 1 project is designed as a two-tranche operation, for which the first tranche will focus on investments intended to: (a) upgrade the Aboadze-Volta segment to 330kV operation, (b) upgrade the Volta System Control Center into a WAPP Area Coordination Center that is required to implement the proposed “Operational Mitigation and Security Plan” for the 330 kV Coastal Transmission Backbone, and (c) retrofit aged equipment (breakers and relays) for the switchyard at the Akosombo Generation Station of VRA, thereby enhancing reliability ofpower evacuation from the Akosombo Generation Station into the 330 kV Coastal Transmission Backbone.

3. 330 kV Transmission Line from Aboadze to Volta - (KFAED and IDA). This component consists of the supply and erection of215 km of 330 kV transmission lines from Aboadze to Volta in Ghana. The Transmission Line will be implemented in two packages as follows:

(i) Package A: This package includes the supply of conductors and insulators (2x432 sq. mm ACSR twin bundle tern conductor with V-shaped insulator strings) for the 330 kV line. This package will be financed bv IDA for the foreign currency component and by VRA for the local currency component.

(ii) Package B: This package includes the construction and installation of the 330 kV transmission line. This package is financed by the KFAED for the foreign currency component and by VRA for the local currency component

4. 330 kV substations at Aboadze and Volta (KFAED and EIB). This component includes works at the two substations, supply and installation of all terminal equipment and switchgear, and the supply and installation of one phase shifting transformer and two autotransformers. The substations will be procured in three packages as follows:

(i) Package C: This package includes the construction of the Aboadze and Volta 330 kV substations. This lot is financed by the KFAED for the foreign currency component and by VRA for the local currency component.

(ii) Package E: Supply and installation of all terminal equipment at both substations. This package is financed by EIB for the foreign currency component and by VRA for the local currency component.

40 (iii) Package F. This includes the supply and installation of a 161 kV phase-shifting transformer and two 330/161 kV autotransformers. This package is financed bv EIB for the foreign currency component and by VRA for the local currency component.

5. Reinforcement and extension of the SCADA and communication system (IDA). This component will be procured as a single responsibility contract to design, manufacture, test, deliver to site and install the system (a Composite Ground Wire with Optical Fiber (OPGW) and the Power Line Carrier (PIX) system, fully integrated into the VRA “master” at the Volta System Control Centre, Tema). The system would be capable of tele-protection of the entire remote control and tele-metering facilities that are installed along the 330kV transmission line and substations on the Aboadze-Volta segment. This Package D is financed bv IDA.

6. Environmental Impact and MitigationMeasures (VRA). This component (US2.41 million) is financed by VR4 and implemented by VRA.

7. Upgrade of the Volta System Control Center (Tema) of VRA (IDA) This component will uygrade the Volta System Control Center of VRA so that it is fully equipped to monitor operations on the entire 330kV Coastal Transmission backbone and communicate with the other system control centers in WAPP “Zone A” Coastal States so as to coordinate implementation of the WAPP “Operational Mitigation and Security Plan”. This component will be financed bv IDA,

8. Upgrade of Switchgear at the Akosombo Generation Station of VRA (IDA). This component will replace (i)over-aged oil circuit breakers and disconnects, for which essential spares are no longer available; and (ii)obsolete electromechanical relays on the Akosombo - Volta transmission circuits. It involves a tumkey contract to the design, manufacture, testing and erection of substation equipment, such as circuit breakers and disconnection switches, protection and control facilities, that would assure efficient and reliable power evacuation from the Akosombo Generation Station into the Coastal Transmission Backbone. This component will be financed bv IDA.

9. Upgrade of Switchgear at Volta Sub-station of VRA (IDA). This component is also intended to replace outdated control and protection switchgear with upgraded equipment that can accommodate the increased power exchanges (and facilitate implementation of the “operational mitigation and security plan”) on the Coastal Transmission Backbone. It involves a tumkey contract to the design, manufacture, testing and erection of substation equipment, such as circuit breakers and disconnection switches, protection and control facilities, that would assure power supply reliability along the Coastal Traiismission Backbone. IDA would finance this component.

Component 2: WAPP APL 1 Project Implementation (IDA).

10. Engineering Consulting Services The foreign currency component is financed in parallel by IDA (US$4.50 million) and the KFAED (US$ 1.20 million) and the local currency component is financed by VRA (US$0.30 million). This component will be financed by IDA.

11. Logistics Support for Project Implementation This component, financed by IDA, will support institutional capacity building and provide logistics support for the VRA Project Implementation Unit, as presented in the Project Implementation Manual. -This component will be financed by IDA.

41 Component 3: Technical Assistance for “WAPP Action Plan

12. An Exuert Advisorv Panel, financed by IDA, will assist VRA and the WAPP Task Force of TSOs (comprising representatives of CEB, CIE/SOPIE, NEPA and VRA) to develop and put in place the proposed WAPP “Operational Mitigation and Security Plan” for the 3 30 kV Coastal Transmission Backbone.

13. Consulting Services, financed by IDA, will assist VRA to develop and put in place a robust WAPP Generation Strategy to optimize Akosombo and Kpong hydropower operations to enhance regional peaking capability for WAPP “Zone A” Coastal States, utilizing the Coastal Transmission Backbone.

14. Consulting Services, to assist the Ministry of Energy, the Energy Commission, the Public Utilities Regulatory Commission to develop and implement a comprehensive action plan, including licensing, regulations, tariff formulation, bid documents and contracts necessary to transform the VRA- transmission “business unit” into an autonomous and commercially viable TSO within WAPP.

42 Annex 5: Project Costs AFRICA: West Africa Power Pool (APL) Program

Local Foreign Total Project Cost By Component and/or Activity US $million US $million US $million

...... esettlement Action Plan

b ...... ~ Volta System Control Center Upgrade ! j ! 1+...... ~ ...... ". 0.15 -...; ...... 5.65 "...... '...... 5.80 ! I 4 I ...... ".... ." .I.. I...... i Volta Sub-station Upgrade I I I ...... "..... t(.l.(...l..((...l...... - 0.25...... I..(...... (...... I 8.75 ...... + 9.00 1 I I Akosombo G. S." SwitchyardI.." " I... UpgradeI... I I 11.1." ...... " ~ 0.13 ~ _.. I " 4.87 -.I 500t. - 1 ...... 1 ...... ! j 1 i !

...... "......

...... "..... " 1 Engineering Services (2) i ...... v...... Y.. _ +_ i ~ ...... ij PIU Logistics and Training I 150 ...... I...... "...... i ...... :...... ; "..1.50 ! I

1 ! ! i j ...... ~ ...... i j...- j j I ! ! Total Baseline Cost 8.50 67.71 76.21 Physical Contingencies 0.80 4.09 4.89 Price Contingencies Total Project Costs' 9.30 71.80 81.10 Interest During Construction 2.40 2.40 Total Financing Required 9.30 74.20 83.50

'Identifiable taxes and duties are US$O.OO million, and the total project cost, net of taxes, is US$ 83. 50 million. Therefore, the share of project cost net oftaxes is 47.90%.

43 Annex 6: Implementation Arrangements

AFRICA: West Africa Power Pool (APL) Program

WAPP APL 1 Project (VRA/Ghana)

1. VRA has the in-house experience to manage all aspects of transmission system development and operations. At appraisal, it was agreed that VRA will set up a Project Implementation Unit (PIU) to manage the implementation of all components of the WAPP APL 1 project. The PIU, which will be headed by a Project Director and staffed by the full complement of engineers and other technical, financial, accounting, administrative and other supporting staff (Figure A6.1 below), will coordinate the procurement of goods and works, and also manage disbursements from the IDA credit. The PIUwill also coordinate the consolidation ofinformation and prepare progress reports on the project. In short, the PIU will act as the executing arm of VRA in all matters connected with the implementation of the project. VRA will employ Consultants to assist the PIU to effectively and efficiently implement the project. The service of the Consultants shall be for: (a) Technical and Engineering Advisory Support; and (b) Monitoring of Environmental Impact Mitigation activities. ,

2. VRA has prepared a Project Implementation Manual (PIM) and a Procurement Plan. The bulk of procurement will be arranged through international competitive bidding (ICB), in accordance with Bank guidelines. Most of the contracting will be on a “supply and installation’’ basis, and will only require supervision from VRA. The procurement aspects of project implementation are presented in Annex 8.

3. VRA has prepared and will implement an Environmental Management Plan and a Resettlement Action Plan for the project. These aspects of project implementation are covered under the Bank’s safeguard policies, as presented in Annex 10.

4. VRA will monitor and evaluate on an ongoing basis the carrying out of the project and the achievement of the objectives, and will submit to the Bank, at the end of each calendar quarter, quarterly progress reports. VRA will also prepare and hishto the Bank, by January 31,2007, a mid-termreview report integrating the results of the monitoring and evaluation activities. VUwill review the mid-term report with the Bank, by June 30, 2007, and will take all measures required to ensure the efficient completion of the project, based on the conclusions and recommendations ofthe mid-term review.

44 n I

*. Annex 7: Financial Management and Disbursement Arrangements

AFRICA: West Africa Power Pool (APL) Program Financial Management and Disbursement Arrangements

Executive Summary

1. The objective of the Financial Management Assessment is to determine whether the entity identified for the implementation ofthe West Africa Power Pool Program (WAPP), has acceptable financial management arrangements in place. The assessments include reviews ofthe entity’s system of accounting, reporting, auditing and internal controls. The entity’s arrangement are acceptable if they are considered capable of recording correctly all transactions and activities, support the preparation ofregular and reliable financial statements, safeguarding the entity’s assets, and are subject to satisfactory auditing process.

2. Financial management assessment was carried out for the Volta River Authority (VR4) and in particular the accounting arrangement within the Project Team. The assessment was carried out jointly by a World Bank Financial Management team and persons responsible for financial management in VRA. Financial management internal control questionnaires and interviews of key financial personnel were used as part ofthe assessment.

3. The Project Team of VRA will be responsible for overall project implementation including financial management; however the day-to-day financial management responsibility for the project will be vested in the project accountant. He will report to the Director ofFinance and Chief Accountant on technical matters of finance and accounting, and on day to day work he will report to Leader ofthe Project Team.

4. The financial management arrangements for the purpose ofmanaging project funds which is part of the system ofVRA, is fully documented in a procedures manual. The staff assigned, the project accountant, is qualified and has previous experience in the management of World Bank funded project and familiar with the Bank’s disbursement procedures.

5. The conclusion ofthe financial management assessment is that the arrangement put in place to manage thc financial resources of the project are satisfactory and meet the minimum financial management requirements of the World Bank.

Country Issues 6. The Government of Ghana has implemented several reforms in response to the findings of the Country Financial Accountability Assessment (CFAA) for Ghana, carried out in 200 1 and updated in June 2004. Some of the key actions taken include the enactment of;

i> Financial Administration Act 2003, in response to the identified weakness of the fragmented legal structures that governed public financial management;

ii) the Internal Audit Agency Act 2003, in response to the setting up ofthe non existence of modem internal audit for government departments;

iii) the Public Procurement Act, to improve the efficiency ofpublic procurement systems and practices.

46 7. The summary risk analysis is based on the country work and knowledge of the systems of Volta River Authority (VRA), the institution responsible for the management of the project.

Table A7-1: Summary of Financial Accountability Risk Analysis

Risk Risk Risk Mitigation Measure Rating Inherent Risks: Country a) Non-effective implementation of S Government has introduced a new comprehensive New Financial Administration Act legal framework for public financial Management- the

(FAA) * Financial Administration Act (FAA), with related regulations for implementation. There is need for close monitoring to ensure effective implementation ofthis Act. b) Non-compliance of statutory Government needs to institute measures that ensure regulations and non-enforcement of the systematic review, update and enforcement of penalties. IH penalties for non-compliance. c) MDA may not fully comply with S Government has passed legislation, Internal Audit new Internal Audit Agency Act, in Agency Act (Ca), for all MDAs to establish the establishment of internal audit internal audit function within their offices. Assistance units within their offices. will be provided to strengthen the Internal audit of VRA to meet the Act’s requirements. Overall Inherent Risk I S

Control Risks

Staffing at the VRA and

Accounting staff at the VRA may VR4 is a strong establishment and is likely to attract leave or resign from employment. and recruit qualified staff as replacement ofany staff who resigns or leave. That management may over ride M VRA has a strong Board oversight. There is also an internal controls in operation at audit committee that reviews all audit weaknesses and VRA. ensure corrective actions by management. Funds Flow Delays in the submission ofrequest M VR4 will be requested to submit monthly request for (WA) for funds. replenishment oftheir SA. VRA already has experience in management of Bank funded project and this will be an advantage. Internal Audit Internal audit (IA) function exists, S VRA has a good internal audit unit. Head has direct but are not effective and reporting links to Board ofDirectors. recommendations not fully implemented at VRA. Project will also monitor management implementation and use ofinternal audit reports. External Audit Audited financial statements likely M VRA will be required to ensure that audits are to be submitted late. conducted on timely basis. Prior to end of each year, VRA will be required to submit its audit program for

47 the relevant year as agreed with their auditors, and monitored to ensure compliance.

1 Reporting and Monitoring Delays in the submission of agreed M Since disbursement isbased on the submission of Financial Monitoring Reports FMR, there are incentives for the preparation and (FMRs), and other relevant reports. submission ofthe required reports. There will be support provided by the partners to improve overall the financial management ofVU. Information Systems M Overall Control Risk M

Accounting Systems at VRA

8. VR4 is a revenue earning entity wholly owned by the Government of Ghana. It has a Board of Directors, which has the overall responsibility for ensuring the financial viability of the Authority. The day to day management is vested in a Chief Executive, who is assisted by Deputy Chief Executives, 1 in charge of Engineering and Operations (E&O), one in charge ofFinance and Investments (F&I) and the other in charge ofResources and Services (R&S).

9. The Accounts Department (AD),which has responsibility for maintaining the accounting records and books ofthe Authority is headed by a Director ofAccounts (Chief Accountant), who reports to the Deputy Chief Executive (F&I). The AD has 3 sections; (i)budgeting, costing & consolidation; (ii)general accounts; and (iii)projects accounts. The financial year ofthe Authority, follows that of the Government of Ghana, from January to December of each year.

Budgeting

10. The financial year starts with its budgeting cycle. In August each year, guidelines are provided to all the departments ofthe authority for the submission of their estimates. Departments are then requested to justify their submissions and after adjustments are made, the Authority’s budget is finalized and submitted to the Board for approval prior to the beginning of the financial year to which it relates.

Revenue

11. Customers are billed on agreed modalities, which vary for key stakeholders some on monthly others within sixty days in arrears. As soon as the bills are raised they are recognized as income and taken into the books ofthe Authority. Customers are expected to pay their bills within 30 to 60 days of issue. These monies are paid directly through the banking systems.

48 Expenditure

12. Based on the approved budgets, Departments set their expenditure limits within which they can initiate, authorize and effect payments for all incurred and eligible expenditures.

13, Monthly financial reports are sent to the head office for consolidation. The financial reports received are further analyzed and quarterly variance analysis reports prepared, with explanations and justification for unfavorable variations, for management review and actions.

Project Financial Management

14, As part of the implementing arrangements under the project, a Project Team has been set up with VRA with all the needed expertise to carry out the implementation ofthe project. Included in the team is a project accountant who will be responsible for managing the day to day accounting records ofthe project activities. He will report to the Director of Finance and Chief Accountant on technical matters of finance and accounting, and on day to day work he will report to Leader of the Project Team. VRA has previous experience in managing Bank funded projects and key staff have been trained on Bank disbursement procedures.

15. Since the project will use the financial management system of VRA, the Director of Accounts will be responsible for ensuring that all the accounting policies and procedures in VRA are followed by the project accountant. He would also ensure that project activities are also subject to internal audit periodic reviews.

16. The project accountant will be responsible for maintaining adequate accounting records, preparing financial reports and statements and ensuring that the project’s financial management arrangements are acceptable to the Government and the World Bank at all times. The project accountant will also be responsible for ensuring that the project financial reports including the financial monitoring reports are submitted to government and World Bank on time.

Flow of Funds

17. The project arrangements are such that there will be no implementing entities at any decentralized position and will therefore operate a centralized funds management system for the project. All requests for payment will be sent to the projects Accountant for processing and payments. No funds will be sent to any decentralized unit for activities.

Auditing Arrangements

18. Independent and qualified auditors acceptable to the Partners would carry out the annual financial audit of the program. The financial auditors are already in place and will be available by effectiveness of the program. It is recognized that it is the responsibility ofthe Auditor General ofGhana to audit State Owned Enterprises, like VRA, however in the past the Auditor General has appointed a private fm and a state owned firm of auditors to audit such entities. Agreements will be reached with the auditor to competitively select such auditors for VRA, who will audit both the financial statements ofthe project as well as VRA entity.

19. The Bank’s new audit policy provides the possibility ofone audit to include the project activities. At appraisal, VRA agreed on the modalities to incorporate the project activities in one audit of VRA.

49 20. The auditors’ reports and opinion including the Managements letter of the annual financial audit would be furnished to the World Bank within six months of the close of each fiscal year.

Reporting and Monitoring

21. The Bank requires projects to prepare quarterly financial monitoring reports (FMRs) in the areas of finance, procurements including contract details and project progress. The quarterly FMRs include;

e The Quarterly Financial Reports; consisting of Sources of Funds and their Uses, Statement of Uses of Funds by Project Components and Activities, Special Account Reconciliation statement and a six months Project Cash Forecast where need be;

Quarterly Project Progress Report; consisting of Output Monitoring Report on contract Management and on Unit of Output by project activity;

0 Quarterly Procurement Report; consisting of procurement process monitoring and contract expenditure reports for goods, works and consultants’ services. The report compares procurement performance against the plan agreed at negotiations and appropriately updated at the end of each quarter. The report should also provide any information on complaints by bidders, unsatisfactory performance by contractors and any contractual disputes.

22. VRA (or PMU) will be responsible for preparing and submitting the FMR required to be produced under the program and submit copies to the Bank within 45 days ofthe end ofeach quarter. The contents and format of the FMRs will be agreed at negotiations.

Disbursement Arrangements

23. The proceeds ofthe Credit would be disbursed over a 3-year period (or such extensions as shall be agreed with the Bank). Disbursements under the Credit will be transaction based. It is estimated that about 50% of all IDA financed expenditures for goods, specifically the purchase of conductors and installation of circuit breakers, will paid directly out of the credit to the suppliers or through Special Commitment letters issued to commercial banks.

Table A7-2: Estimated Disbursement Profile

Estimated disbursements (Bank FY/US$m) FY 6 7 8 9 10 Annual 1.50 10.50 19.50 8.50

-.. . Cumulative I 1.50 I 12.00 I 31.50 I 40.00 I Project implementation penod: Start September 1, 2005 End: June 30,2009 Expected effectiveness date: September 1, 2005 Expected closing date: December 3 1,2009 I Use Statement of Expenditures (SOEs)

24. Disbursements for all expenditures would be made against full documentation, except for items of expenditures for: (a) contracts for goods in an amount ofnot less than US$200,000 (b) contracts for consulting firms in an amount less than US$ 100,000 equivalent; (c) contracts for individual consultants in an amount less than US$50,000 equivalent; and (d) operating costs, which would be claimed on the basis of SOEs. All supporting documentation for SOEs would be retained by the VRA and made readily

50 accessible for review during periodic IDA implementation review visits, financia: reviews and extemal audits .

Table A7-3: Allocation of Credit Proceeds

Category 1 Amount of the credit Allocation % of Expenditures to be 1 (Expressed in SDR Equivalent) Financed

~~ ~

(1) Goods 20,000,000 100% of foreign expenditures and 90% of local expenditures

(2) Consultants’ 5,000,000 90% of total costs services

(3) Unallocated 1,500,000

I 26.500.000

Special Account

25. To facilitate disbursements, a US$ Special Account at a commercial bank, under terms and conditions satisfactory to the IDA will be opened. Upon Credit Effectiveness, IDA would deposit a sum ofUS$2,000,000 into this account. Replenishments would be made into the account against withdrawal applications supported by appropriate documentation by the VRA.

51 Annex 8: Procurement Arrangements

AFRICA: West Africa Power Pool (APL) Program

A. General

1. 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; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, 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 Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2. The WAPP APL 1 is intended to build the 330 KV Coastal Transmission Backbone extending from Prestea through Aboadze and Volta (Ghana) to Mom6 Hagou (Togo) and Sakttt (Benin) where it links up with Sakttt to Ikeja West segment (currently under construction with financing from a consortium led by the AfDB . WAPP APL 1 is structured in two tanches: (a) the first tranche (FY05) cover the Aboadze- Volta Transmission segment; and (b) the second Tranche (FY06) proceeds when project-specific triggers are achieved, manly related to the proposed joint implementation by VRA & CEl3 (BenidTogo) of the 330 KV Volta-Momt-Hagou-Sakttt transmission interconnection segments.

3. Procurement packages for Lot 1 (the Aboadze-Volta segment of the Coastal Transmission Backbone) which are covered through parallel financing arrangements between VRA, the Kuwait Fund and the European Investment Bank are the following:

0 Package 1-B - Construction of Transmission Line will be done following the funding agency (KFAED) procedures; and

0 Package 1-C - Construction of Substation Works will be done following the procedures of the funding agency (KFAED)

0 Package 1-E - Supply and Installation of Terminal Equipment and Construction of 330 KV substations will be done following the funding agency (EIB) procedures;

0 Package 1-F - Supply and Installation of Phase Shifting Transformer will be done following the funding agency (EIB) procedures.

4. Procurement packages to be financed under the first tranche of the WAPP APL 1 project are the following:

0 Package 1-A - Supply of Conductors and Insulators for the Aboadze-Volta Transmission Line;

0 Packages 1-D - Supply and Installation of an integrated "SCADA" and communication system will be done using the Design, Build and Transfer single responsibility contract approach.;

52 0 Lot 2- Hardware and software systems necessary for the upgrade of the Volta System Control Center of VRA, executed based on a Design, Build and Transfer basis;

0 Lot 3 - Hardware (circuit breakers and relays) necessary for the upgrade of the Switchyard at the Akosombo Generation Station.

0 Lot 4 - Hardware (circuit breakers and relays) necessary for the upgrade of the Volta Sub- Station.

5. Procurement of Works: Not applicable.

6. Procurement of Goods/Supply and Installation: The procurement of Lot 1, D, Lot 2, Lot 3 and Lot 4 will be done using the Bank’s-SBD (Supply and Installation ofPlant and Equipment) appropriately modified to reflect the requirement of design and build single responsibility contracts, especially the risks associated with such contracts. The procurement ofPackage 1-A will be done using the Bank SBD (Goods).

7. Procurement of non-consulting services: Not applicable

8. Selection of Consultants: The Borrower will select and hire consultants to provide engineering, technical, procurement and construction supervision assistance. The Borrower will also select and hire firms and/or individual consultants to assist VU,the WAPP Task Force of TSOs, and the WAPP Working Group. Consultancy services by firms estimated to cost above US$100,000 per contract and US$ 50,000 in the case of individuals and all single source selection of consultants will be subject to prior review by the Bank. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely ofnational consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. The Bank’s Standard Request for Proposals will be used for the selection of firms for all consulting assignments.

9. Operating Costs: Not applicable

Others: 10. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Procurement Plan which is an integral part ofthe Project Implementation Manual.

B. Assessment of the agency’s capacity to implement procurement

11. VRA, the ImplementingAgency for the first tranche of the WAPP APL 1 project has been a beneficiary of many IDA credits and is well organized professionally to manage the procurement. They have capable and qualified personnel to do this. Some minor improvements are required in procurement records management and the Bank has already provided guidance on the improvements required.

12. The overall project risk for procurement is low.

C. Procurement Plan

13. The Borrower, at appraisal, developed a Procurement Plan for project implementation which provides the basis for the procurement methods. This plan was discussed in detail during project

53 negotiations and accepted by the Bank after making the necessary refinements. The agreed Procurement Plan is summarized in Section E - it will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. The Procurement Plan will also be available in the Project’s database and on the Bank’s external website.

D. Frequency of Procurement Supervision

In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended one supervision mission each year to visit the field to carry out post review ofprocurement actions

E. Details of the Procurement Arrangements Involving International Competition

1. Goods, Works, and Non Consulting Services

(a) List ofcontract packages to be procured following ICB, LIB, NCB and direct contracting: - -1 2 3 4 61718 9 Ref. Contract Estimated Procurement Domestic Review Expected Comments/ No. (Description) cost Method Preference by Bank Bid-Opening Contracts (yeslno) (Prior / Post) Date Signature - Date 1A Supply of 9,400,000 ICB NO Prior 10/03/05 03/10/06 Conductors and Insulators for the 330kV Aboadze- Volta - Transmission Line 1D S&I Contract for 1,650,000 ICB No Prior 10/03/05 03/10/06 the SCADA and Communication System 2 S&I of Hardware 5,800,000 ICB No Prior 11/05/05 06/12/06 and Software to Upgrade the Volta System Control Center 3 S&I of Modem 5,000,000 ICB No Prior 09/19/05 04/26/06 Circuit Breakers and Relays at Switchyard of the Akosombo - Generation Station 4 S&I of Modem 9,000,000 ICB 0411 7/06 Circuit Breakers and Relays at the Volta Sub-station 5 Project Vehicles 500,000 ICB 1013 1105 04/07/06 - 6 Office/Field 500,000 Various 1013 1/05 04/07/06 - Equipment Methods 7 Training and 500,000 Various 1013 1105 04/07/06 Factory Methods Acceptance Tests

54 (b) All contracts estimated to cost US$200,000 equivalent or more per contract and all direct contracting will be subject to prior review by the Bank.

2. Consulting Services

(a) List of consulting assignments with short-list of international firms.

11 2 3 4 5 6 I 7

Ref. Description of Estimated Selection Review Expected Comments/ No. Assignment cost Method by Bank Proposals Contracts (Prior / Submission Signature Date Post) 1 Engineering services 4,500,000 QCBS Prior forwAPP APL 1 WAPP Generation 1250,000 QCBS Prior 02/15/06 0410 1/06 Strategy Study for Akosombo G.S. & Kpong G. S. Expert Advisory Panel 250,000 IC Prior NIA I 03/26/06 (Individuals) for WAPP “Operational Mitigation and Security Plan” Consulting Services for 1,000,000 Various Prior “WAPP Action Plan” Methods (TBD)

(b) Consultancy services by firms estimated to cost above US$ 100,000 per contract and US$50,000 per contract in the case of individuals and all single source selection ofconsultants will be subject to prior review by the Bank.

(c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely ofnational consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

55 Annex 9: Economic and Financial Analysis

AFRICA: West Africa Power Pool (APL) Program

Economic Analysis

1. The Global Economics ofthe WAPP. The cooperation ofcountries across the West African region on electricity is marked by rather heterogeneous development both historically and as it is projected for the future. While the electricity networks in Zone A began interconnection as early as 1972 through the connection of Ghana's transmission network with the power grids ofTogo and Benin, Zone B's first interconnection between Senegal and Mali was only constructed in the late nineties. Similarly, the largest consumer and producer ofelectricity in the WAPP is located in Zone A with Nigeria's year 2002 demand at 3,500 MW and 3,700 MW available capacity. The largest consumer and producer of electricity in Zone B is Senegal at a level ofdemand ofonly 3 19 MW and 368 MW power installed in 2003. Power generation is diverse and covers hydroelectric power, diesel and HFO power plant, and gas power plant.

2. As a result of the existing heterogeneity benefits from cooperation for the overall region are significant. This follows because the marginal cost of production (MC) and the marginal willingness to pay (WTP) differ significantly. Trading of electricity will be beneficial as it will enable equalization of MCs and the WTP to bring them closer to the economic optimum. While a full cost benefit analysis ofthe West African Power Pool (WAPP) remains to be undertaken, preliminary studies conducted with the Purdue Optimization Model have quantified the potential gains from unimpeded electricity trade within West Afr~ca..'~The model illustrates that the cost savings from free (unimpeded) electricity trade, as compared to a country by country self-sufficiency scenario, falls in the range between 15 to 20 percent, depending on the level of thermal and hydropower reserve margins that are desired. Moreover, the cost differences in the investment value to guarantee higher thermal and hydropower reserves are only 2% in the WAPP scenario compared with 7.6% in the independence scenario (Table A9-1).

Table A9-1: Total Costs in WAPP for 2002 to 2012 with Reliabilitv and Free Trade

3. Another aspect that is not considered in the Purdue Model is the impact of the decision to construct the West Africa Gas Pipeline (WAGP) between Ghana, Togo, Benin and Nigeria. This follows, because the study precedes the decision on the WAGP. The pipeline will make Nigerian gas readily available for combustion in Ghana, Togo and Benin. In the medium to long term gas-fired power plant

'' The Purdue model is a least cost expansion model, which is based on deterministic mixed integer methodology and programmed in GAMS. It contains all WAPP countries, excluding Cape Verde. More information about the model is available at https://enginerring.purdue.eddIE/Research/PEMRG/PPDG/MODEL.

56 will be constructed or gas will be used in existing power plant to the extent this is technically feasible and financially attractive. The WAPP Coastal Transmission Backbone that is to link Cdte d'Ivoire, Ghana, Togo, Benin and Nigeria through a 330 kV link - as planned under the WAPP APL 1 project - will assist in evacuating power from these plants and in balancing the deployment of hydropower and thermal power generation capacity through economy and/or emergency power exchanges, within the framework of the proposed WAPP Cooperation Agreement. Thus overall cost savings can be expected.

4. While overall gains from the WAPP are significant, different trading blocks will experience different levels of absolute gains (or net benefits). For example, in Zone A, which includes Nigeria, demand is estimated to increase by 13,777 MW between 2003 and 2020 while demand in Zone B is expected to increase by 1,799 MW between 2003 and 2020. The challenge for the WAPP as an institution will be to share these gains so that each trading participant will individually be better off by being in the WAPP than by staying outside the WAPP. Development of pricing rules for electricity trade will be key to ensuring that gains are shared to ensure this is the case. In addition, WAPP rules need to be specified so that the incentive to free ride on measures and investments taken by counties is minimized.

5. GhanaNR4: Aboadze - Volta Transmission Line: The Aboadze-Volta 330 kV transmission line is at the heart of West Africa's energy market development and is the investment coxponent of the first tranche of APL 1. It is part of the "WAPP Zone A Transmission Backbone", which is to extend from Abobo (Cdte d'Ivoire) via Volta (Ghana), Mom6 Hagou (Togo), and Sak6t6 (Benin) to Ikeja West (Nigeria). Completion of the Transmission Backbone is scheduled under tranche 2 of APL 1. The construction of this line is, in accordance with the findings of the USAIDmexant West Africa Regional Transmission Stability Study (Volume 2: Master Plan, 2004), fully consistent with the WAPP development scheme. The new line will ensure that power can be adequately evacuated from C8te d'Ivoire and westem Ghana to the load centers of AccrdTema (eastern Ghana) and to Benin and Togo during years of drought. In addition, the line will reduce losses and enable the transmission network to satisfy N-1 planning criteria. The 330 kV transmission line between Aboadze and Volta will significantly reduce the bottleneck of transmission between the supply in the westem part ofGhana and C8te d'Ivoire and the demand for electricity in the eastern part of Ghana and from CEB (Togo and Benin). The transmission line will make available additional 410 MW corresponding to 2.7 GWh (VRA, 2005). From a WAPP perspective, the project will ensure that the VR4 network has the capacity to wheel 200 MW across the VRA system from Cdte d'Ivoire to Togo. Figure 1 illustrates how the construction of the transmission line will enhance transmission capacity, and how this enables the evacuation of power from the westem part of Ghana.

6. Alternatives. An alternative to constructing this power line would be the construction of power plant closer to the AccraiTema load centers. Another alternative would be the construction of a 161 kV compared to the adopted 330 kV line between Aboadze and Volta. The first alternative is not least cost, while the second alternative does not provide any regional benefits.

7. Project Benefits and Costs. Although the project is only confined to the borders of Ghana, its benefits go beyond its borders even in the absence of a fully constructed "Transmission Backbone". This

57 follows because CGte d'Ivoire's capacity to export additional gas is enhanced while TogoBenin's capacity to import is equally enhanced. As a result, bottlenecks of transmission arising especially in drought years, when availability of power from the hydroelectric plants at Akosombo and Kpong is limited, can be readily bridged.

8. The EIRR ofthe project for Ghana alone is robust at 42%, as compared with the assumed economic opportunity cost of capital of 10%. The global EIRR of the project, taking into account the indirect benefits for CGte d'Ivoire and TogoBenin, is higher at 48%. Table 2 presents a breakdown of the results. The primary quantifiable economic benefits of the project for the different countries include:

0 Ghana o Increased transmission capacity for wheeling power from the West to the East; o Increased power availability during years of drought; o Reduced transmission losses; o Reduced C02emissions through reduced transmission losses; 0 TogoBenin o Guaranteed electricity import availability during years of drought; 0 CGte d'Ivoire o Guaranteed excess sales during years of drought.

9. The primary quantifiable economic costs are the total investment costs, the O&M costs and various other costs. The latter includes costs for loss of agricultural land along the transmission line. The investment costs include the construction of the Aboadze-Volta transmission line insulated at 330 kV, the construction of 330461 kV substations (with 330/161 kV autotransformers) at Aboadze and Volta (Tema) and the installation of 16 1 kV, 150 MVA phase shifting transformers.

10. Main assumptions. VRA derived three demandsupply scenarios as the basis for the economic analysis for 2005 - 2014. The scenarios have three different underlying assumptions regarding the future development of the aluminum smelter Valco, which until its closure was VM's most important client. The demand scenarios analyzed here are as follows:

0 Base Case: Valco is supplied at 3 potlines from January 1,2008 and thereafter; 0 Alternative Valco Case: VALCO is supplied at 1 potline in July 2005, and at 2 potlines from January 1,2006 and thereafter; 0 Low Case: Valco is not reconnected.

11. Beyond the year 2014, demand is expected to grow in line with expectations for the growth of GDP at 5%. The supply expansion is assumed to match the demand until the end ofthe lifetime of the transmission line in 2036. Electricity demand in the base case scenario starts at 7,622 GWh in 2005, and increases to 12,335 GWh (2010), 18,816 GWh (2020), and 41,074 GWh (2036). Electricity demand in the alternative Valco case starts at 7,947 GWh in 2005, and increases to 11,679 GWh (2010), 17,937 GWh (2020), and to 39,155 GWh (2036). Electricity demand in the low case (no Valco) starts at 7,622 GWh in 2005, and increases to 10,793 GWh (2010), 16,192 GWh (2020), and to 35,346 GWh (2036). Projected demand for TogoBenin and CGte d'Ivoire isbased on TogoBenin's and CGte d'Ivoire's own projections as communicated in the context ofthe WAPP Master Plan (op. ref. cf.).

12. Projected supply in Ghana takes the current generation capacity as given. Over time an additional thermal power plant is assumed to be built, including a 330 MW thermal plant in Tema, as it is planned under VU'Sexpansion plan. Hydropower is assumed to be supplied at its 95% confidence level, except

58 in years of exceptional drought. In line with the assumption of the lifetime of the transmission line the project is evaluated over a 30 year time horizon. Benefits itemized by benefits category are summarized in table 3. All values are of the year 2005 and where appropriate have been discounted to 2005 at the rate of 10%.

Table A9-2: Economic Analysis for 330 kV Aboadze - Volta Transmission Line (in US$, NPV at 10%) I Ghana I CBte d’Ivoire I TogoBenin I Global Base Case costs 53,809,3 60 0 0 53,809,360 Benefits 195,326,955 26,467,686 8,311,212 230,105,853 Net Benefits 144,735,42 1 26,467,686 8,311,212 179,514,319 EIRR 35% Not defined not defined 40%

costs 53,809,360 0 0 53,809,360 Benefits 192,017,937 21,869,439 11,856,169 225,743,545 Net Benefits 141,426,403 2 1,869,439 11,856,169 175,152,011 EIRR 35% Not defined Not defined 40%

costs 53,809,360 0 0 53,809,360 Benefits 156,963,449 13,007,047 8,311,212 178,28 1,708 Net Benefits 106,371,915 13,007,047 8,3 11,212 127,690,173 EIRR 27% Not defined Not defined 30% -- from 1 January 2008. A discount rate of 10% is assumed to calculate the present values for the economic analysis. The EIFU2s for CBte d’Ivoire and TogoBenin are mathematically not defined as none ofthese countries are incurring any costs from this project.

13. Investment cost stream. The flow ofcapital investments was taken from the cost estimate for the project, excluding taxes, duties and price contingencies (but including physical contingencies). Timing was based on the implementation schedule, which assumes that 25% of the construction will be undertaken in 2005,60% ofthe investment will be undertaken in 2006, and the remainder ofthe investment will be undertaken in 2007. The transmission line is assumed to have a lifetime of30 years.

14. Benefit stream: Ghana

(a) Increased transmission capacity for wheeling power from the West to the East: The construction ofthe power line will lead to an increase in general power availability by enabling all capacity in the West to be fully dispatched to the East. This includes both exports from C6te d’Ivoire up to 200 MW and exports from the power generation complex at EffasuM‘akoradi. The total increase in wheeling capacity has been estimated at 4 10 MW by VRA. It is evaluated at the price oftransmission facility usage, which amounts to US$0.009 per kwh generated. As this is the market price of transmission it constitutes the lower boundary to consumer’s actual willingness to pay. As for the purpose ofthis benefit component the transmission line provides electricity that would otherwise not be available,

59 a maximum economic value of additional electricity would be the cost of un-served energy. The analysis shows that the existing transmission line only constitutes a bottleneck for transmission from the year 201 1 onwards. Additional transmission revenue will only be reaped at that time.

(b) Increased power availability during years of drought: The lack of available electricity during years ofdrought due to the reduced availability of hydroelectric power results in a countrywide economic crisis. The drought of 1998, for example, led to a significant drop in power availability and a discontinuation of committed exports to BenidTogo. Benefits ofthis power line in addition to those under (i)arise therefore during years of drought when more capacity than in average hydropower years needs to be evacuated from the western part ofGhana to the East. Based on available hydrological data, the probability of hydro shortage is assumed to be 5% corresponding to a one in twenty year occurrence. In the past 30 years the incidence of hydro supply shortage has been higher at 10% or one shortage every ten years due to the unavailability of thermal complementation and associated transmission infrastructure to support hydro supply. The transmission project will provide the infrastructure to evacuate available thermal supply to complement hydro generation. On this basis an expected value ofincremental power transmission revenue is derived, which is evaluated at the price of transmission facility usage.

(c) Reduced transmission losses: Load flow analysis by VRA shows that the construction of the transmission line will lead to a reduction of overall system losses amounting to about 18 MW or 120 GWh per year. The net reduction of transmission losses in the grid through the construction of the transmission line is most appropriately valued at the cost of generation, which is estimated at an average US$0.05.

(d) Reduced Cot emissions through reduced transmission losses: Environmental externalities that are reduced through the transmission line include global, regonal and local pollutants such as carbon dioxide, sulphur oxide, carbon monoxide and particulates. These emissions reductions occur through a reduction of overall transmission losses. The main reduction is in emissions of C02as the marginal plant will become gas-fired power plant as soon as the West African Gas Pipeline (WAGP) begins operating in 2008. The emission estimates were based on the conservative assumption of a CCGT, which is operating at 50% efficiency. The World Bank’s Carbon Finance Business accords an emission factor ofaround 404kg/MWh to this type ofplant. Benefits in terms of foregone damage have been monetized by adjusting a value derived by EXTERNE reports for the case of Ghana. The average damage estimates derived for the European Union is at 32 US$ per ton ofCOz. Adjusted to the relative levels of income in Ghana compared to the European Union by using the 2003 GNI per capita (Atlas method and PPP) this yields an average damage estimate of about 3US$ per ton ofCOz. This value coincides with the price for carbon credits on the international greenhouse gas market in early 2005.

15. Benefit Stream: Togo and Benin

(a) Guaranteed electricity import availability during years of drought. During years of drought the transmission line will guarantee that power will continue to be delivered to TogoBenin. Put differently, it will avoid the cutting of electricity exports from Ghana as occurred, for example, during the 1998 drought. At that time Ghana retained all excess power from C8te d’Ivoire that its neighbor could provide and total thermal capacity was significantly lower than in 2005. For the purpose of this analysis it is assumed that Togo / Benin will receive the same amount of electricity as they currently do corresponding to 687 GWh per year from VRA and 3 13 GWh per year from C8te d’Ivoire. The net ~ benefit for Togo / Benin is derived based on the expected value of the cost differential ofproducing power domestically compared to the cost ofimporting it.

60 16. Benefit Stream: Cote-d’Ivoire

(a) Guaranteed excess sales during years of drought. The new transmission line will ensure that Cbte d’Ivoire will maintain its level of exports even during years ofhydro supply shortage. To monetize this, an expected value of guaranteed sales during drought it estimated on the basis of the sales price of electricity in Cbte d’Ivoire.

Table A9-3: Benefits by Category (in US$, NPV at lo%, Base Case) NPV (US$) I Ghana I Increased transmission revenue 105,839,666 Increased power availability during years ofdrought 30,615,232 Reduced transmission losses 57,640,682 Reduced C02emissions 1,23 1,375

Guaranteed excess sales during years of drought 26,467,686

Guaranteed electricity import availability during years of 8,3 11,212

Input Switching value (Change YO) Total Investment Costs + 385 Benefits Ghana - 73

18. A sensitivity analysis was also carried out to quantify the impact of alternative cost and benefit assumptions on the EIRR for Ghana and the global ERR. The results are summarized below:

Table A9-5 1 Change(%) I EIRR Ghana (YO) I Global EIRR (YO) Total Investment Costs + 25 35 40 Total Benefits to Ghana - 25 33 40 Probability ofDrought - 50 39 42 Transmission Losses - 50 32 39 Environmental Benefits - 50 42 48

61 Figure A9-2: Sharing of the Project Net Economic Benefits (on a NPV Basis)

Base Case

CBte d’lvoire Togo/Benin 14%

Ghana 82%

Alternative (VALCO) Case

Togo/Benin 6%

Ghana 82%

Low Case

Togo/ Ben in 6%

Ghana 85%

62 19. Table 5 illustrates again the robustness of results. The ERR is most sensitive to relative changes in the reduction of transmission losses, and least sensitive to the changes in environmental benefits. This reflects their relative magnitudes in the calculation. Benefits to C6te d’Ivoire and TogoBenin are zero if the marginal cost of generating electricity in Ghana and TogoBenin is lower than the sale price of electricity from C6te d’Ivoire. However, as long as C6te d’Ivoire has excess capacity, it is better off by selling its electricity at a price just below the cost of generation in either of these countries. A similar situation prevails, for example, in Europe where France prices its electricity exports to Italy and Germany accordingly. The benefits of the transmission line to CBte.d’Ivoire and TogoBenin are lower the lower the probability of drought in the region. As the above analysis shows, which uses conservative assumptions throughout, on the whole the net economic benefits of the project are significant. Although not investing in the project, both the economies of C6te d’Ivoire and of TogoBenin will benefit significantly from the project, as figure 2 above illustrates for the three demand scenarios.

VR4 Financial Review (2000-2003).

20. m:Revenue from sale ofpower increased by 41.4% from the previous year’s figure of $620.30 billion to $877.03 billion. The increase was due mainly to exchange gains on foreign exchange revenues as a result of the depreciation of the Cedi to the US dollar. An operating loss of $257.90 billion was recorded as compared to the profit of $79.1 billion over the previous year. The realized revenue was not sufficient to cover operating and financial costs. The main factors that contributed to the short fall were:

0 High cost of power imports amounting to $428.20 billion (1999 - 155.70 billion) procured to meet the growing domestic demand. 0 Depreciation of the Cedi by 96.8% in 2000 (1999; 49.0%) which affected cost of the imported power and fuel; 0 High cost of thermal generation from the Takoradi Thermal Plant amounting to $1 10.40 billion (1999; 106.1 billion) and capacity payments to TICO 0 Lower levels of tariff that failed to cover the full cost ofpower supply.

21. 2001: Revenue from sale of power increased by 58.8% to $1,393.13 billion over the previous year’s figure of $877.03 billion. The increase was due mainly to tariff increase granted the Authority by the PURC and the increase in power sold. An operating loss of $220.04 billion was recorded as compared to the loss for operating and financial costs despite the tariff increase granted. The main factors that contributed to the short fall were:

0 High cost of power imports amounting to $715.8 billion (2000; 428.2 billion) procured to support the growing domestic demand. 0 High cost of thermal generation from the Takoradi Thermal Plant due to the high cost of Light Crude Oil (LCO) import and the capacity payments to TICO. 0 Tariff that failed to cover the full cost of power supply.

22. 2002: Revenue from sale ofpower increased by 45.6% to $2,028.79 billion over the previous year’s figure of $ 1,393.13 billion. The increase was due mainly to tariff increases granted the Authority by the PURC with effect from August 1,2002. An operating loss of$582.5 1 billion was recorded as compared to the $220.04 billion loss for the previous year. The realized revenue was not sufficient to

63 cover operating and financial costs (including depreciation). The main factors that contributed to the short fall were:

0 High cost of power imports amounting to $ 1,462.10 billion (2001 ; 7 15.8 billion) procured to support the growing domestic demand. 0 High cost of thermal generation from the Takoradi Thermal Plant due to the high cost of Light Crude Oil (LCO) import and the capacity payments to TICO. 0 Depreciation of the Cedi against foreign currencies which increased the cost of imported inputs for power supply. 0 Tariffs that failed to cover the full cost ofpower supply.

23. 2003: Revenue from sale ofpower increased by 33.6% to $2,710.39 billion over the previous year’s figure of $2,028.79 billion. The increase was due mainly to tariff increases granted the Authority by the PURC with effect from August 1,2003. An operating profit of $391.10 billion was recorded as compared to the loss for $596.16 billion over the previous year. The Authority’s performance in 2003 improved. The main factors that contributed to the improvement were:

0 The relief accrued to the Authority under the assistance from the Ghana Government. 0 Tariff adjustments made during the year which reduced production losses. 0 The relative stabilization of the cedi (depreciated only 4% in the year 2003), which affected the cost of capital.

24. The Debt Service Coverage Ratio, current ratio and the pre-tax working ratio covenants were not met from 2000 through 2002 due to weak financials at VRA. However with appropriate tariff increases in 2003 and exchange rate depreciation being 4% compared to the US$ the financials for 2003 convey a better picture and all the covenants are met. It is also important to note that one of the reasons contributing to net losses for VRA is their practice of revaluing assets every year and re-computing depreciation expenses based on re-valued assets. They were able to generate positive cash flow in 2001 and 2002. It is important to note that the pre-tax working ratio improved from 0.98 in 2002 to 1.50 in 2003 and one of the contributing factors was the absence of the VALCO load. The VALCO tariffs have consistently been much below VRA cost of supply, imply subsidization.

64 VOLTA RIVER AUTHORITY FINANCIAL SUMMARY: KEY STATISTICS r 1999 2000 2001 2002 2003 2004 DESCRIPTION ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL BUDGET Power Sales ($ Bn) 620 877 1,393 2,029 2,710 2,908 Operating Cost ($ Bn) 554 1,198 1,697 2,694 2,987 2,660 Operating Income/(Loss) (# Bn) 79 (258) (220) (596) 391 597 Net Income/(Loss) (# Bn) (33) 379 Operating Ratio (%) 89% 137% 122% 133% 110% 91% CasWCash Equivalents at Year End (# 117 111 196 316 124 172

Sales Debtors (Months) 7 7 5 6 7 5 Sales Dehtors Overdue (# Bn) 245 343 391 749 1,219 621 TrJde CrediLors (Months) 9 11 6 6 3 3 lrade Creditors Overdue (# Bn) (213) (501) (435) (742) (321) (101) Return on Average Net Fixed Assets (%) 1.8% -3.3% -2.0% -4.6% 2.3% 2.8% Return on Average Net Fixed Assets (%) 2.0% -3.8% -2.5% -5.9% 2.8% 3.0%

Avcragc Net Fixed Asset ($Bn) 4,450 7,83 1 10,985 13,000 16,769 21,548 3.1% 2.9% 3.2% 4.4% 5.0% 3.0%

Projected MU Financial Performance (2005-2014)

25. VU'Sfinancial performance has been analyzed through 2014. A summary ofits projected finailcia1 perfoimance for the period 2004 through 2014 is provided below. There is a lot ofuncertainty around the VALCO load which represented almost one-third of the total VRA sales through 2002. They hsve been nff-line for almost two years now and GoG has now.zcquired a majority stake in VALCO. There are on-going discussions with regards to the potential re-slart ofVt\LCO and thus three VRA supplyl-deniand scenarios were developed for the financial analysis based on the VALCO timing.

26. The base case assumes VALCO to re-start on January 1,2008. VRA's profitability improves bemuse \"XO, a large consumer that was receiving power at piices lower than VRA's average cost has beeti delayed till Janusrry 1,2008 and there is approximately 6% increase in sales growth per year. VRA has net losses in certain years but is able to generate sufficient level of cash every year. As mentioned eai 1mone ofthe reasons for net losses are increasing depreciation expenses due to revaluation of assets. Tl~cproje2tt.d financial performance ofVRA is acceptable except that the Pre-tax working ratio is less than 1.3 hi ycars 1005 and 2006. It is important to note that in the scenarios where VAI,CO comes on- line in 2003 (one pot-line), the pre-tax working ratio worsens 2005 and 2006 compared to the base case and ii!:sO fa*the thirdqscenario that assume VALCO off-line in 2005 and 2006. The earlier start-up for VALCO causes much higher thermal generation dispatch, wliicli results in higher fuel expenses for VRA particularly until the arrival ofNigeria gas. The tariff assumed for VALCO currently is 2.7 c/kwh, which must be reviewed as part of on-going negotiations with VALCO. It is important to consider a higher tariff for VALCO to improve VU'Sfinancial health.

65 27. The main assumptions underlying the financial forecast (2005-2014) are as follows:

Inflation and Exchange Rates Average Inflation Exchange Rate ($/US$) Year Foreign Local Year End Average 2003 2.3% 26.7% 8,806 8,645 2004 2.7% 12.6% 9,030 8,921 2005 2.5% 15.0% 9,40 1 9,219 2006 2.5% 12.0% 9,7 14 9,557 2007 2.5% 10.0% 10,07 1 9,892 2008 2.5% 10.0% 10,424 10,247 2009 2.4% 10.0% 10,789 10,606 2010 2.4% 10.0% 11,167 10,978 201 1 2.4% 10.0% 11,558 11,362 2012 2.4% 10.0% 11,963 11,760 2013 2.0% 8.0% 12,382 12,172 2014 2.0% 8.0% 13,110 12,746 Sources:Projectionsby VRA; CPIpublished by the Ghana Statistical Service

Fuel Prices Year Market Price Premium Total (US$/bbl) (US$/bbl) (US$/bbl) 2003 30.0 2.3 32.3 2004 39.7 2.0 40.1 2005 48.0 2.0 50.0 2006 48.0 2.0 50.0 2007-2014 48.0 2.0 50.0

WAGP Gas Prices Year Price (US$/mmBtu) 2007 4.27 2008 4.3 1 2009 4.34 2010 4.38 201 1 4.06 2012 4.06 2013 4.04 2014 4.00

No major tariff adjustment is anticipated for regulated customers in 2005; Tariffs forecast for 2006 have been set based on the PURC Automatic Adjustment Formula; Tariffs are expected to reduce by about 10% in 2007 when gas from the West African Gas Pipeline (WAGP) becomes available; Tariffs for direct supply to customers are maintained at current levels throughout the planning period;

66 0 The tariff for VALCO is now being negotiated and has been assumed at 2.7 US centskWh for the forecast period.

Other Operatinv Expenses Most ofthe other operating expenses for transmission, distribution and support services have been kept at the expected 2004 levels in real terms, as part ofthe ongoing expenditure control measures.

Debt Service It is assumed that the arrangement for debt relief granted by the Government of Ghana would continue through 2008.

Takoradi International Companv Ltd. Operations The Authority is currently working with its TICO joint-venture partner to source for debt capital to refinance and expand the plant to 330 MW combined cycle in order to reduce the cost of electricity generation. Installation of the steam portion of the plant will increase the efficiency of the plant and reduce energy costs by US$3 1 million per annum from 2007 onwards.

Energy Generation 0 Average hydro generation of about 5,270 GWh for the next six years and 4,800 GWh thereafter. 0 TTPS is to operate at 80% availability in 2005 and 85% thereafter; 0 TICO expansion operational by mid-2007; 0 Guaranteed imports of up to 1,456 GWh required in 2008 and 2009; 0 OECF Barge operational from 20 10; 0 300 MW Tema Thermal operational from 2010.

Enervv Sales 0 Forecast demand isbased on 2005-2014 Load Forecast Study; 0 Valco will resume 3-potline operations in 2008; 0 Demand by the Mines is expected to increase significantly between 2004 and 2007 due to expanded operations of existing mines and commencement of operations by new mines; 0 ECG and NED loads will grow by an average of about 6% and 7% respectively.

Domestic Demand Proiection and Generation Expansion Plan

Domestic Demand: The projected total domestic energy demand for 2005 is 6,607 GWh, a 10% growth over the 2004 consumption of 6,004 GWh. The major domestic customers are ECG and the Mines. ECG is expected to grow by 6.3% in 2005. The projected increase in demand for 2005 is driven largely by the following mines: 0 AngloGold Ashanti Limited is expected to increase their current average power demand by about 2 MW (an increase of about 4%) from February 2005.

0 Goldfields Ghana Limited is expected to increase production resulting in an increase in power requirement from the current level of about 7.5 MWto about 25 MW (an increase of about 230%) from January 2005

0 Bogosu Goldfields Limited is expected to increase production by December 2005 with corresponding power increase in demand of about 3 MW (an increase of about 27%)

0 Wexford Goldfields Limited, a new mining company is to start operations from March 2005 with power requirement of about 5 MW (35 GWh).

67 0 Newmont Goldfields Limited, a new mining company is to start operations November 2005 with a demand of about 9 MW (3 1 GWh).

In addition, WorldCool, a paper factory located at Akosombo was expected to commence production by January 2005. The projected load is about 2 MVA with a total energy consumption of about 9 GWh.

Over the period 2005 - 2014, total domestic demand is expected to grow by 5.8%. ECG is expected to grow on average by 5.5%, whilst the Mines and other VRA Direct Customers are also expected to grow by 8.1% and 2.1% respectively.

Generation Expansion Plan

The Generation Expansion Plan included the following generation additions:

0 Expansion of the 220 MW T2 plant to combined cycle operation (330 MW) in mid 2007. 0 125 MW Osagyefo Barge to be operational from 2010 with availability of 85%. 0 300 MW Tema Thermal to be operational from 2010 with availability of 85%. 0 Guaranteed Imports of 800 GWh for VRA.

In addition, the West African Gas Pipeline Project (WAGP) is expected to be operational in 2007 and the thermal plants are expected to switch from operating on Light Crude Oil (LCO) to natural gas.

In addition due to the uncertainty surrounding the VALCO load three demand-supply scenarios were developed. The three scenarios are as follows:

1.. Case A - VALCO Demand consistent with one pot-line coming on-line in July 1,2005 and the remaining two pot-lines coming on-line from January 1, 2006; 2. Case B - VALCO doesn’t come on-line through 2014; and 3. Case C - VALCO comes on-line at three pot-lines from January 1,2008 (Base Case).

The following tables present the demand - supply balances for the three scenarios:

68 0 m 2

VI 2 oc-

I 3z Y

3-4

2 D Y

3 -D Y

3 D Y

as r4

0 0 N

t- 0 0 N

ro 0 0 N

tn 0 0 ca 0f n N

2 D N -1 ra 3 0 N N

3 3 3 N N

2 3 ra -1

08 N r4

P 0 r'lc:

N

0CI 0 N N

v) C 0 N N

v1 0 u N m

n +0 W5: v1& s a u2 3 t= Annex 10: Safeguard Policy Issues

AFRICA: West Africa Power Pool (APL) Program

1. The WAPP APLl triggered two safeguards policies - OP4.01 (Environmental Assessment) and OP4.12 (Involuntary Resettlement).

Environmental Assessment (OP4.01)

2. This APLl for the WAPP project has been categorized as “B” under OP4.01 since it is a transmission line through already developed areas of Ghana with little to no environmental sensitivity, and through which an existing line already runs. In many places, the new line will parallel the existing line. Subsequent APLs under WAPP will be independently categorized under OP4.01.

3. VRA conducted an EA ofthe Aboadze-Volta transmission line project in March 2003. The EA was reviewed and approved by the Ghanaian EPA who issued an Environmental Pmitfor the project on 27 February 2004. The Bank reviewed the EA in January 2005 and requested an addendum to clarify the status of route realignments recommended in the EA to avoid environmentally and socially sensitive sites including 11 sacred groveshhrines, delicate habitats that may harbor rare and endemic species, and community properties. An EA addendum was received and reviewed on 17 February 2005, and was found to be acceptable. The concems about sacred groveshhrines and community properties would be managed through the Resettlement Action Plan (see below). The concem for the few delicate habitats would be addressed, to the extent practicable, during final route alignment. The current alignment has already been selected to avoid village and other developed and sensitive areas, and to run beside the existing transmission line right-of-way, as much as possible.

4. Land owners/users, as well other stakeholders such as District Assemblies, other government agencies and NGOs, were consulted during the EA and RAP studies, and during preparation of the EA addendum. They will be consulted again when the final alignment is set and other preparations for construction get under way. Local concems were generally about the loss of crops and land use, and some sacred groves/shrines.

5. The EA contains an acceptable Environmental Management Plan (EMP) that describes the environmental management structure of the VRA; the qualifications and functions of the project environmental team (including a coordinator and two assistants); general health, safety, pollution prevention, and waste disposal procedures; and a training program for project management and contractor personnel. The EMP specifies mitigation measures for various potential adverse impacts in the pre- construction, construction and operation phases of the project. Funds for implementing the EMP are included in the project cost estimates.

6. The VRA and the Ghanaian EPA have more than adequate capacity to satisfactorily manage the environmental dimensions of transmission line projects, through EA and more generally. The project raises no environmental policy, regulatory and institutional issues, and will not compromise people’s health from environmental risks and pollution. Project environmental concems are not significant, and normal environmental management procedures and practices will suffice to avoid or minimize any such concerns during final route alignment, construction and operation. These concems largely encompass final route alignment and tower placement to avoid disturbing locally sensitive areas (e.g. wet or poorly drained areas, erodible slopes, and delicate habitats).

72 Resettlement (OP4.12)

7. The WBG OD 4.12 on Involuntary Resettlement is applicable to the Aboadze-Volta transmission line components ofthe WAPP APL 1 project.

8. All viable alternative project designs have been explored by VRA to avoid or minimize the need for resettlement and where this cannot be avoided, to minimize the scale and impacts ofresettlement; resettlement measures are to be conceived and executed as development activities providing sufficient resources to give the persons displaced the opportunity to share in the project benefits. VRA’s policy requires that displaced persons should be: (i)assisted in relocation; and (ii)assisted and supported during the transition period. Furthermore, communities should be given opportunities to participate in planning, implementation and monitoring their resettlement; due to the linear nature of the project, in question and the fact that selection ofthe line route was carefully done, taking into consideration the impact on the community the scale of involuntary resettlement would be largely minimal.

9. The following is an excerpt of the Executive Summary ofthe “Resettlement Action Plan” that was disclosed at the InfoShop (in Washington DC) and also in Accra, Ghana on March 1 2005.

APPLICABLE GHANAIAN LAWS

The 1992 Constitution Of Ghana The Constitution gives maximum protection to individual property rights. Where it becomes very necessary for the state to take private lands, the affected individuals are not to be made worse off, The state has therefore been enjoined to safeguard the interest of the affected people appropriately.

Section 19 of the constitution states, among other things, that “Compulsory acquisition of property by the State shall only be made under a law which makes provision for (a) the prompt payment of fair and adequate compensation; and (b) a right of access to the High Court by any person who has an interest in or right over the property. Further, “where a compulsory acquisition or possession of land effected by the State in accordance with clause (1) of this article involves displacement of any inhabitants, the State shall resettle the displaced inhabitants on suitable alternative land with due regard for their economic well-being and social and cultural values” (Clause 3).

The Volta River Development Act, 1961(Act 46) The Act establishes the Volta hver Authority (VRA) and defines its functions and responsibilities. Part 4, Section 17 (2) (d) ofthe Act authorizes the VRA to acquire land necessary “for the proper discharge of the Authority’s functions.” Provision has, also, been made in the Act for the payment of compensation or resettlement of affected people as may be applicable.

Volta River Authoritv (Transmission Line Protection) Repulations. 1967 (LI 542), The Volta River Authority (Transmission Line Protection) (Amendment) Regulations, LI 542 of 1967 as amended by LI 1737 of 2004, defines “transmission line right-of-way” for the 330 KV line to be 40 m. Once the route of the transmission line has been established, the land lying within the ROW will be subject to the provisions of the law. Currently, the regulations prohibit a number of activities within the ROW, including mining, construction of buildings and cultivation or farming without the permission of the Authority. This is to ensure that, human activity does not adversely affect the transmission system.

The State Lands Act, 1962 (Act 125)

73 This Act vests in the President the authority to acquire land for the public good. It states therein that The President “may, by executive instrument, declare any land specified in the instrument ... to be land required in the public interest” (Sect. 1-1). The State Lands Act 1962 places responsibility for registering a claim on the affected party, for it recognises that, it is the affected claimants who can best establish the nature of hisher interest, among others.

The Lands fstatutorv Wavleaves) Act. 1963(Act 186) The Act provides for entry on any land for the purpose of the construction, installation and maintenance of works ofpublic utility, and for the creation ofrights of way for such works. Where a right of way must be established in the public interest, the President may declare the land to be subject to such statutory wayleave. On publication of a wayleave instrument specifying the area required, and without fwther assurance, the land shall be deemed to be subject to wayleave. Like other Laws, this Act also makes provision for compensation payment.

The Lands (Statutow Wavleaves) Regulations, 1964fLI334) The Legislative Instrument restates the principles of the Lands (Statutory Wayleaves) Act of 1963, and establishes provisions for Wayleave Selection Committees to determine the optimal routing and to ensure that the selected wayleaves are consistent with town and country planning.

The Ghana Land Policv, 1999 Provides guidelines and policy actions for land use (e.g., agriculture, forestry, extractive industry, settlement, infrastructure). These guidelines are aimed at enhancing conservation and environmental quality, thus preserving options for present and future generations. Forestrv Comwiission Act (1999) Confirms the constitutional position of the Forestry Commission and reaffirms it as sole implementing agency of government policy in the forestry sector.

The Environmental Assessment Regulations. 1999 Clearly spells out undertakings requiring registration and issue ofenvironmental permit. This includes the Construction of dams and associated reservoirs, Inter-or intra-basin water transfers, Construction of hydroelectric power developments.

THE AFFECTED AREA

Land Ownership and Use

In theory, the total land area to be taken up by the ROWwill be approximately 8.6 km’ (40 m x 215 km) that is a 40 m wide strip running along the entire proposed 215 km route. Investigations carried out and corroborated by the Govemment Agencies indicated that, most of the affected lands are communal lands. Access to lands is either by virtue of membership or by grants from the head of the community.

The general land use pattem along the proposed line route was established during the site visits conducted as part of the consultation process. The two primary land uses identified were secondary vegetation and apculture. The land use along the proposed route is mainly agricultural. The principal potential impacts on both soils and land use arise from the direct loss ofuse of land associated with constructional activities The affected communities are those whose lands and properties fall within the right-of-way (ROW) of the proposed transmission line. In all 38 communities are to be affected. Within these communities, the affected persons are those who claimed ownership of the farms/structures that may fall within the ROW. The surveys have so far identified and interviewed 387 persons who may be directly affected by the project.

74 The amount of land taken in any area is at most a 40-meter wide strip, so that the project would affect relatively few people in any locality and most affected people would lose only a portion of their agricultural lands. Loss of crops with its attendant loss of income is the main impact that would arise during construction. As only a ROWis taken title to the land therefore remains the property of the owners. Cultivation or other uses of land may continue provided the owners and occupants of the land strictly adhere to regulations about the use of the comdor.

The impacts arising from the route survey and related activities are those resulting from the partial clearing of vegetation including some food and cash crops within a pathhe of about 1 m wide. This results in loss of income for the affected farmers. However, the right of way clearance is expected to have potential impacts on land use. The land taken for the tower base and access roads will be permanent, whereas the land taken for the ROWwill be temporary. Under this measure, all annual crops and any low tree crops may be cultivated within the ROW once the line has been erected. Effectively, this measure means that only tree crops of substantial height of above 1.5 meters (e.g. cocoa, oil palm, coconut, rubber, etc) must be removed from the ROW.

As is typical of coastal areas, the cash crops likely to be affected are mainly coconut (8.6%) and oil palm (10.8%); the food crops will be mostly plantain, cassava and maize.

Forest Reserves

A. The route passes through the Yenku block B forest reserve (at Onyadze) and the proposed Apra Hill forest reserves (near Awutu Breku) in the SM zone. Both reserves were visited in the company of officials from the Winneba District office ofthe Forest Services Division who assisted in locating the route survey pegs. The ROWtraverses mangrove vegetation at the Pra River estuary in Shama.

B. The proposed Apra Hill forest is a relatively small forest with a perimeter of 9.59 km (Forest Service Division, Winneba District) that is yet to be designated a reserve by the Government. It is a relatively undisturbed secondary forest with trees reaching up to 30 m in height. About 1.96 km of the reserve is directly affected by the route (equivalent to 0.08 km2 offorest).

Sacred GrovesIShrines Sacred

During a follow up visit was undertaken in February 2005 The following cultural / community properties were identified as affected: 1. The Bobobgema Sacred Grove at Nyankrom 2. Nana Abeka Shneat Nkotrodo 3. Abeka Mpow at Edukrom 4. Nana Obokyam at Ekurabandze. 5. Nana Obusiwa Shrines at Ekurabandze. 6. Guako Shrine at Pokuase

Water Resources

The water resources in the project areas include available surface and ground water resources. Some of the people in the settlements were noted to be using both surface and ground water as drinking water sources.

75 CONSULTATION WITH STAKEHOLDERS AND PAPS

To ensure an adequate flow of information on projects requiring EIS, public consultation has been made an integral part of the EM. This includes consultations during the scoping exercise and the preparation of the EIA report. As part of the RAP, community durbars and stakeholders consultations have been held. All the relevant bodies have been adequately informed of the Project and on the process leading from census to construction. Concems of the communities and some details of consultations have been provided as Appendix in the main document The following stakeholders and affected group were consulted during the scoping exercise;

Local Communities Public Consultations Regional Councils District Assemblies Forestry Commission Town and Country Planning Department Land Valuation Board Lands Commission Survey Department Department ofRoads and Highways

SOCIO-ECONOMIC SURVEY

General Land Use

The land uses along the proposed route include agriculture, gathering, hunting, urban development, quarrying, sand winning, grazing and fishing. Agriculture is the major category of land use along the right-of-way. Agriculture land use types include cultivated annual crops, bush fallow and associated gathering, cultivation of tree crops and unimproved pastures. The major annual crops are cereals, root crops, the pulses and vegetables. In all 38 communities in three regions (Westem, Central, Greater Accra) indicated that the project along the coastline would directly affect persons and properties, with the ages of the affected persons ranging from 17 years to 86 years. The majority of the affected persons are in their productive (economic, social and biological) years ofbetween 17 years and 56 years, accounting for 72.61% (334). This implies that a significant proportion of the affected population has financial and economic responsibilities. Thus, if the sources of livelihood of these people are to be adversely affected by the project, there have to be mitigation measures to ameliorate any economic and social implications before the implementation ofthe groject. In a cultural matrix where males are assigned leading roles and responsibilities in the family system, it is essential that appropriate measures be put in place to mitigate the potential impacts of the project on the affected persons before implementation. Household SizeDependants Although some of the affected person could not provide details of their households, majority (307) gave numbers of persons in their households. The household sizes range from two (2) to thirty-one (3 1) giving a mean household size range in the various districts ofbetween 5.1 persons to 8.6 persons. As most ofthe affected communities are rural in outlook occupancy rate is quite high. However, most of the occupants engage in some form ofeconomic activity to earn a living.

76 Occupation of Affected Persons Adverse impact on farming activities and farmlands tend to have far reaching Socio-economic consequences not only for the population of the affected communities, but also for the surrounding communities. Properties that are likely to be affected by the project more significantly are, farm crops, (food crops and cash crops), buildings, undeveloped land (both farmlands and residential land) etc. The land tenure systems in the communities were determined by questioning the wider community. A number of conditions were given by the respondents to illustrate how land is given out to people for use in the communities. According to the interviewees there are no specific general arrangements and terms by which land is given for use. Three types of terminal arrangements were identified in almost all the affected communities. These are membership of a family/lineage, tenants paying for use of land for a period and tenants sharing proceeds or produce with land owners. Within the Ga District, however, outright sale ofland is particularly popular.

SIGNIFICANT ENVIRONMENTAL IMPACTS AND PROPOSED MITIGATION

The methods adopted in identifying the impacts to be associated with the proposed project, and its assessment were based on information gathered during community durbars, surveys, analysis and results of the biological, physical and socio-economic and cultural data and consultations with stakeholders. The project is expected to have diverse social impacts as it traverses many settlements. Some of the affected persons have been identified during the study and interviewed on various relevant issues. Below are some of the impacts ofthe project in the catchments area;

Land Ownership

As only Right Of Way is acquired for the project, title to the land is not affected. Thus the owners will continue to retain their ownership of their various parcels. The ROWwould only serve as an encumbrance on land ownership.

Land Use

Various land use activities would not be permitted during the construction stage. This is to make way for scheduled constructional activities to be carried out expeditiously. Restriction on land use is however temporal, as cultivation and other uses of the land may continue after the completion ofthe project provided the owners of the land strictly adheres to regulations about the use of the ROW corridor.

Crops

During the construction stage, farms within the Right Of Way corridor would be affected. Thus portions of the farm holdings (not more than five meters width) would be destroyed. This would result in loss of crops.

Buildings

Building and other structures within the ROW would be removed. This is to make way for construction to be carried out. In heavily built-up areas where a number of properties have been affected by the proposed route, however, the VRA has taken steps to mitigate the expected impact on the communities. The required ROWfor these areas, especially Asafora, Mankessim, Ayensudo and Ankamu would be reduced from the required width of 55 meters from the centre of the existing line to 35 meters. This

77 measure would reduce the impact substantially.

Planning Schemes

The project passes through areas that have been zoned for various uses. Accordingly these schemes would be distorted by the implementation ofthe project. The impact ofthis would be greatly felt in the Greater Accra region. The District Town and Country Planning Offices have been notified and various amendments and alterations are being worked on.

Lands to be Affected

The following are the lands, which are to be affected.

Tower Sites

Areas where the towers will be sited will be permanent loss.

Undeveloped Accommodation Land

These are parcels of lands which are covered by planning schemes. As generally planning regulations do not allow building under the transmission lines, these plots are rendered undevelopable by the project. During the initial inventorisation, ninety-six (96) parcel owners in the Central and Western regions indicated that their lands were to be affected. In the Greater Accra Region, the project is going to affect planning schemes prepared for the peri-urban communities. Consultations with the Town and Country planning Department revealed that the impact on these schemes will be quite high. An estimate ofthe value of the affected lands has however been carried out and stated in the budget in the main text (page 49).

Beneficiaries for Compensation

By constitution ofthe country, any person who could establish that hisher interests or a right to any land is affected by a state project is to be paid.

PROPOSEDMITIGATION MEASURES

The project is expected to have diverse socio-economic impacts as it traverses many settlements. To ensure that, the impacts are minimized VR4 instituted several measures to address the extent ofthe effect ofthe project on the communities. Among these are the following:

Re-Routing of the Line

Re-routing the new line away from the existing line to avoid residence and other factors. The re-routing ofthe Accra portion for example has saved a lot of properties from been demolished with its attendant challenges.

The path ofaccess roads shall be selected so as to avoid crossing streams and other water bodies.

Minimization of Constructional Damages

78 Conscious efforts are made by VRA to minimize constructional damages. Prior to construction farmers are informed about the time schedule and the expanse of land to be affected. They are also advised to harvest all crops that could be of benefit to them although compensation would be paid for all crops within the forty-meter corridor. To this end only about up to five meters of the Row would be cleared for use as access tracks during construction. This strip would subsequently be maintained and used for maintenance. Owners of structures would be paid fully prior to construction, and are permitted to salvage any materials for re-use if they so wish.

Use of Existing Access Tracts

Also, existing and available farm tracts and footpaths shall be used to provide access for the surveyors and the construction team. From Yamoransa to Winneba stretch where the proposed line runs close to the existing line, existing maintenance access routes shall be cleared and used, thus minimizing constructional damages.

Payment of Compensation

In line with the legal regime in the Country all properties such as buildings, lands, and crops shall be duly compensated for, in accordance with the provisions of the law, at the appropriate replacement values in line with VWLand Valuation Board procedures. To this end, a Property Impact Report, which identifies all affected properties, owners and estimated prevailing market replacement values, has been prepared and shall be updated to meet current market values prior to project implementation period. Payment would be in line with W’Spolicy on Land Acquisition and Compensation.

Referencing of all properties, both crops and buildings is to be conducted by officers of the Land Valuation Board (LVB) to be monitored by Estate Surveyors from VRA. Assessment of the values would be done by the LVB and the valuation advice forwarded to VRA. The VRA also carries its own internal assessment of the fair amounts to be paid to each of the affected owners. The PAPs also have the right, at the cost of the acquiring agency to engage private valuation consultants to advise on the values of their affected properties

Full payments are made for residential plots or developable parcels of land. For areas encumbered by the towers spots full payments is for those portions. Farmlands are also paid for in so long as the owners can justify that they qualified for compensation.

GRIEVANCE PROCEDURE

The Volta Rwer Authority, in consultation with the chiefs and elders of all the affected communities, has taken the necessary steps to minimize the potential for disputes. PAPs may raise issues formally when informal mechanisms fail to address their concern. Some of the mechanisms put in place during the project implementation period are; Inclusion of community opinion leaders in the survey and valuation stages to serve as witnesses in terms of disputes on plot limits, ownership and tree counts/measurements b A project officer is always at hand to take note of all disputes b Petitioning the company in charge of the project for redress b The Ghana constitution allows for the right of access to the court of law by any person who has an interest or right over an affected property b Formations of grievance committees by the PAPs in each of the affected communities to receive, conduct an investigation and notify the project implementation unit for early resolution.

79 ASSISTANCE TO THE VULNERABLE

Vulnerable people may be classified as PAPs who, prior to the compensation process, because of a disability or disadvantage, may be made more vulnerable as a result of the acquisition and compensation process. These include Disabled people or people suffering from severe diseases (physically challenged), those PAPs who have a substantial part of their properties affected but no other source of livelihood VUcollects complete information for the physical asset inventory and assesses the level of vulnerability through interactions with community elders, physical observations and through the administered questionnaires, in some cases. Thus, the full complementary socio-economic information on each affected family is captured and assessed to arrive at the proportion of vulnerable families among the affected PAPs.

LEVEL OF ASSISTANCE

Assistance to the vulnerable may include the following: 0 Identification of persons and cause of vulnerability (information to be gathered directly from the communities) 0 Assessment of impact suffered in relation to the whole 0 Implementation of assistance 0 Monitoring

PROVISIONAL ENVIRONMENTAL MANAGEMENT AND MONITORING

Arrangements for monitoring implementation of resettlement and evaluating its use should be developed during project preparation and used during supervision. Projects with relatively limited resettlement impacts commonly institute an in-house monitoring system within the project agency. Both VRA representatives hear complaints on an informal basis and report administratively on project progress. The monitoring criteria are outlined under the following headings: (i)Construction Phase; (ii)Waste management; and (iii)Socio-economic/cultal issues.

80 Annex 11: Project Preparation and Supervision

AFRICA: West Africa Power Pool (APL) Program

Planned Actual PCN review 10/04/0 1 07/29/02 Initial PID to PIC 07/29/02 07/29/02 Initial ISDS to PIC 03/08/05 0411 1/05 Appraisal 04/04/05 04/04/05 Negotiations 04/25/05 05112/05 BoardRVP approval 0612 8/05 Planned date of effectiveness 09/01/05 Planned date of mid-term review 0 113 1/07 Planned closing date 06/30/08

Key institutions responsible for preparation of the project:

0 ECOWAS/WAPP - The WAPP PIC and the ECOWAS Secretariat

e Ghana" investments - VU, the Ministry of Energy and Energy Commission

Bank funds expended to date on project preparation:

1. Bank resources (excluding PPF): $825,000 (FY05 - $225,000)

2. Trust funds: $0

3. Total: $ 825,000

Estimated Approval and Supervision costs:

(a) Remaining costs to approval: $50,000

(b) Estimated annual supervision cost: $100,000

81 Bank staff and consultants who worked on the project included:

Name Title Unit Amarquaye Annar Lead Energy Specialist - WAPP Team Leader EWDEN Fanny Missfeldt-Ringius Energy Economist AFTEG Karen Hudes Sr. Counsel LEGAF Aman Sachdeva Consultant - Financial Analyst AFTEG John Boyle Sr. Environmental Specialist AFTS 1 Dan Aronson Consultant - Social Scientist AFTTR R. Gopalkrishnan Consultant - Procurement Specialist EAPCO Said Mikhail Consultant - Power Engineer AFTEG Charles Di Leva Chief Counsel, International Law LEGEN Mangesh Hoskote Sr. Power Specialist AFTEG Fred Yankey . Sr. Financial Management Specialist AFTFM Kofi Awanyo Sr. Procurement Specialist AFTPC Mohammed Khatouri Sr. Monitoring and Evaluation Specialist AFTKL Rita Ahiboh Program Assistant AFTEG Lily Wong Chun Sen Program Assistant AFTEG Salli Cudjoe Program Assistant AFC10

Quality Enhancement /Assurance Team, Peer Reviewers Cecile Ramsay Operations Adviser AFTOS Kari Nyman Lead Specialist ECSIE Luis Maurer Sr. Energy Specialist EWDEN Ioannis Kessides Lead Economist DECRG

82 Annex 12: Documents in the Project File

AFRICA: West Africa Power Pool (APL) Program

1. ECOWAS Secretariat

ECOWAS/CEDEAO (1975). Trait6 Rtvist. Publie par le secrttariat extcutif de la CEDEAO. Abuja - Nigeria.28 mai 1975, rtvist le 24 juillet 1993. http://www.sec.ecowas.int

ECOWAS/ CEDEAO (1999). Vingt Deuxibme Session de la Conftrence des Chefs d’Etat et de Gouvemement. Lomt, 9 - 10 dtcembre 1999. Dtcision A/DEC.5/12/99 relative a la mise en place d’un systbme d’tchanges d’hergie Clectrique ouest africains (EEEOA).

ECOWAS/ CEDEAO (2000). Accord Relatif au Systbme d’Echanges d’Energie Electrique Ouest Africain (EEEOA).

ECOWAS/ CEDEAO (2000). West African Power Pool (WAPP). Inter Utility Memorandum of Understanding.November 2000. Draft - not adopted.

ECOWAS/ CEDEAO (2001). 25th Session of the Authority of Heads of State and Government. Decisions A/Dec.8/12/01 Relating to the Establishment of a Mechanism of the West African Power Pool (WAPP). Dakar, 20 - 21 December 2001.

ECOWAS/CEDEAO (200 1). Systbme d’Echanges d’Energie Electrique Ouest Africain (EEEOA). Accord de Cooptration entre les Socittts d’ElectricitC des Etats Membres. 23/03/2001

ECOWAS/CEDEOA (2002). Commercial Capacity Building Study for the West Africa Power Pool Project. Prepared by PA Consulting. September 2002.

ECOWAS/CEDEAO (2002). Capacity Building for the West Africa Power Pool Implementation Committee Process: Needs Assessment and Training Plan. Prepared by PA Consulting. September 2002.

ECOWAS/P A Consulting (2002). Vision Statement and Action Plan for West Africa Power Pool Project. January 2002.

ECOWASI CEDEAO (2002). Energy Ministers adopt resolution on WAPP’s regulatory body. Press release. 10 April 2002.

ECOWAS/ CEDEAO (2002). Projet de Creation d’un Observatoire de I’EEEOA. Proposition de Termes de References. Abuja, octobre 2002.

ECOWASI CEDEAO (2003). ECOWAS Energy Protocol. A/P4/1/03

ECOWASI CEDEAO (2004). Rural Electrification in West Africa. State of Progress and Regional Strategy. Draft Worlung Document. September 2004.

ECOWASI CEDEAO (2004). Performance Indicators 2003 for West Africa Power Pool (WAPP). WAPP Working Groups Meetings. Presentation, Dakar, 30 September 2004.

83 ECOWAS ICEDEAO (2004). Elaboration of Operational Activities for the Energy Observatory 2005. Dakar, 30 September 2004. Draft 1.

ECOWAS /CEDEAO (2004). Elaboration of Operational Activities for the Energy Observatory 2005. Dakar, 30 September 2004. Draft 2.

ECOWASI CEDEAO (2004). Echange d’Energie Electrique Ouest Afncain. West African Power Pool. Reunion des Experts des Groupes de Travail Technique et Institutionnel PrCparatoire a la 6eme Reunion des Ministres en Charge de 1’Energie de la CEDEAO. Allocution de bienvenue par le SecrCtariat exkcutif de la CEDEAO. Dakar, 27 Septembre - le‘Octobre 2004.

ECOWASI CEDEAO (2004). ECOWAS Energy Division Activities in the period ofNovember 2003 to August 2004. Interim Report. Abuja, September 2004.

ECOWASI CEDEAO (2004). Systbme d’Echange d’Energie Electrique Ouest Africaid West Afr-ican Power Pool. Revue de Presse. September 2004.

2. USAID Technical Assistance to ECOWAS Secretariat

Nexant (2004). West Africa Regional Transmission Study. Final Report - Conclusions and Recommendations. April 2004. Presentation for USAID, and ECOWAS Secretariat.

Nexant (2004). Final Report. West Afnca Regional Transmissions Stability Study. Project Inception Report. Prepared for USAID, and the ECOWAS Secretariat, Washington.

Nexant (2004). Final Report. West Africa Regional Transmissions Stability Study. Volume 2: Master Plan. Prepared for USAID, and the ECOWAS Secretariat, Washington.

Nexant (2004). Final Report. West Africa Regional Transmissions Stability Study. Volume 3: Stability Study and Operational Analysis. Prepared for USAID, and the ECOWAS Secretariat, Washington.

Nexant (2004). Final Report. West Afnca Regional Transmissions Stability Study. Volume 4: Implementation Strategy. Prepared for USAID, and the ECOWAS Secretariat, Washington.

Nexant (2004). Final Report. West Africa Regional Transmission Study. Project Summary Report. Prepared for USAID, and the ECOWAS Secretariat, Washington.

P.A. Consulting (2002). West Africa Power Pool. Issues for Pool Operational Implementation: Choices Participants Must Make. Commissioned by USAID. http://www2.eps,gov/spg/AID/OM/MAL/688%2DP%2D04%2D026%2DOO/Attachments.html

84 Annex 13: Statement of Loans and Credits AFRICA: West Africa Power Pool (APL) Program

Difference between expected and actual Original Amount in US$ Millions disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d PO74525 2004 2[3W] WAEMU: Capital Markets 0.00 96.39 0.00 0.00 0.00 97.02 4.87 0.00 Development PO74850 2004 3A-HIV/AIDS for Abidjan Lagos Transport 0.00 0.00 0.00 0.00 0.00 16.25 -1.57 0.00 PO69258 2004 [3S] Southem Africa Power Market (APLI) 0.00 178.60 0.00 0.00 0.00 190.04 -0.75 0.00 PO64573 2004 Senegal River Basin GEF Project 0.00 0.00 0.00 5.26 0.00 4.98 0.30 0.00 PO82613 2004 Regional HIVAIDS Treatment Project 0.00 0.00 0.00 0.00 0.00 61.18 0.00 0.00 PO72881 2003 [3T] BEAC Regional Payment System 0.00 14.50 0.00 0.00 0.00 15.82 2.93 0.00 PO70252 2003 Lake Chad Basin GEF Project 0.00 0.00 0.00 2.90 0.00 2.90 1.45 0.13 PO70073 2003 2Nile Transboundary Environmental Action 0.00 0.00 0.00 8.00 0.00 7.65 0.65 0.00 PO63683 2001 [3E] Regional Trade 0.00 5.00 0.00 0.00 0.00 0.47 0.17 0.00 Facilitation Project Total: 0.00 294.49 0.00 16.16 0.00 396.31 8.05 0.13

AFRICA STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions ofUS Dollars

~~ Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1999 AIF 0.00 72.50 0.00 0.00 0.00 39.16 0.00 0.00 1999 AIF (Mgmt) 0.00 0.20 0.00 0.00 0.00 0.10 0.00 0.00 2003 AIFH 0.00 20.00 0.00 0.00 0.00 0.88 0.00 0.00 200 1 AfrbnkCorp 0.00 0.00 3.00 0.00 0.00 0.00 3 .OO 0.00 2002 Africap 0.00 2.00 0.00 0.00 0.00 0.77 0.00 0.00 2000/01 Celtel 0.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 1999 ET1 0.00 0.00 0.09 0.00 0.00 0.00 0.09 0.00 Energy Afr Ltd 0.00 38.02 0.00 0.00 0.00 38.02 0.00 0.00 2002 MTNN 85.00 15.00 0.00 0.00 35.00 14.56 0.00 0.00 2002 Osprey 0.00 0.25 0.00 0.00 0.00 0.25 0.00 0.00 2001 PAIP 0.00 15.00 0.00 0.00 0.00 0.00 0.00 0.00 2002 SABCO 22.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00 Total portfolio: 107.00 172.97 13.09 0.00 35.00 103.74 13.09 0.00

85 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2003 African Lakes 0.00 0.01 0.00 0.00 2004 BAPTFF 0.06 0.00 0.00 0.00 2004 Buspartners 0.00 0.00 0.00 0.00 2001 MACS 0.00 0.00 0.00 0.04 2001 PAIP 0.00 0.04 0.00 0.00 1999 AIF 0.00 0.03 0.00 0.00 Total pending commitment: 0.06 0.08 0.00 0.04

86 Annex 14: Country at a Glance AFRICA: West Africa Power Pool (APL) Program

sub- 8asMan h Gkwa Mica i- 20.4 m 2310 320 490 r150 85 347 1,M8

ZB 23 1.8 22 24 2.3

40 45 a0 30 55 45 58 I Bo IM 82 25 44 73 58 75 28 35 38 ai 87 82 &5 94 @a 78 80 E5

$993 2oQ2 2Qo3 Ewnasllc rafl" 80 8.2 77 222 22.3 lQ.4 Trade 203 425 372 8.0 10.3 5.6 128 22.8 189 -61 -Q"4 0.5 -05 1.1 14 1.2 1.4 41.1 81 a ff8.1 1055 311.4 24 d 7.3 231 83.4 $47.5 2Mn 2003 2"

45 5.2 4.Q 1.Q 25 26 -1 7 27 42

a03 79.5 78.3 E29 a1 59 114.4 11.4 11.5 I I I

dB 48 5.3 0.7 4 39 40 00 -1.4 P 78 45 44 6.9 44 46 91 4.3 1 -=o I

87 mo2 I 14.8 228

x.2 0.2 -5.D

m2

2681 483 182

4.w ni

81 96 85

2oQ2

2813 3.m -542 -128 931 30 $21 -1s

651 T,Q&?.7

2002

7.339 5 3.471 $93 2 30

328 (75 -23 50 0 C 453

0 98 12 88 2a B7

88 ° ° ° ° ° 5 0 20 15 10 MARCH 2005 IBRD 33825 CENTRAL REPUBLIC AFRICAN ° ° 15 15 CONGO CHAD te Maiduguri Maiduguri Askira Askira New Marte New Mar Mubi Mubi Damboa Damboa ola Yola Y Numan Numan Ganye Sugu Ganye Sugu Damaturu Damaturu Biu Biu Bali Bali Lekitaba Lekitaba Gembu Gembu Bojoga Bojoga Mayo Belwa Mayo Belwa Gombe Gombe GABON Potiskum Potiskum Jalingo Jalingo CAMEROON Mambila Mambila ° Hadejia Hadejia ° ukari Azare Azare 10 Dutse Dutse 10 Wukari W Nigui Nigui Shendam Shendam Pankshin Pankshin Lafia Lafia Bauchi Bauchi Makari Makari Zinder Zinder ande Ika andev Vande Ika Vande V Jos Jos Yandev Ogoja Y Ogoja NIGER Ikom Ikom Akwanga Akwanga Gagarawa Gagarawa y Kano Kano Calabar Calabar Makurdi Makurdi Oron Oron fi Abakaliki Abakaliki Agadez Agadez Keffi Kef Eket Oji Oji Zaria Zaria Ngalagu Ngalagu Itu Itu Katsina Katsina Ikoti Abasi Kaduna Kaduna Anov-Araren Anov-Araren Uyo Uyo Afam Afam ABUJA Funtua Funtua Arlit Arlit Oturkpo Oturkpo yangba Garky Garky Kaduna Refinery Kaduna Refiner Akwa Akwa Ayangba A t Orlu Orlu Gazoua Gazoua Onne Onne Sarkin Sarkin Kankiya Aba Aba Enugu Enugu Geregu Geregu Maradi Maradi Gusau Gusau Ajaokuta Ajaokuta Nsukka Nsukka Minna Minna Lokoja Lokoja t Harcour Shiroro Shiroro Owerri Owerri Itakpe Itakpe nin Irrua Irrua Por Port Harcourt GUINEA Ahoada Ahoada NIGERIA Bida Bida Bir Birnin Onitsha Onitsha Gwari Gwari Ughelli Ughelli Zungeru Zungeru Benin City Benin City Okene Okene Malbaza Malbaza Isanlu Isanlu egina T Tegina Kabba Kabba EQUATORIAL Imiringi Imiringi Sokoto Sokoto Kontagora Kontagora Okpella Okpella enagoa Illela Illela Akure Akure elwa Yenagoa Y Omuaran Omuaran Y Yelwa ° ° Ilesha Ilesha 5 5 Sapele Sapele fa Kainji Kainji Jebba Jebba Aladja Offa Of Akitipupa Akitipupa Ife Ife Effurun nin Kebbi Iwopin Iwopin Iwo Iwo Birnin Kebbi Bir Ondo Ondo Ilorin Ilorin Ijebu-Ode Ijebu-Ode Ekpan Refinery SÃO TOMÉ Epe Epe Oshogbo Oshogbo Abeokuta Abeokuta Kaiama Kaiama Shagamu Shagamu Lagos ALGERIA Ibadan Ibadan AND PRÍNCIPE Dosso Dosso Ogbomosho Ogbomosho Kandi Kandi Iseyin Iseyin é t Aiyetoro Aiyetoro é Bembereke Bembereke Otta Otta Parakou Parakou Gambou Gambou Papa Papa Sakété Sak Guene Guene NIAMEY PORTO- NOVO y Save Save vakpa Dydyonga Dydyonga Onigbolo Onigbolo A Avakpa Djougou Djougou é Bohicon Bohicon Beterou Beterou

Cotonou Cotonou illaber Banikoara Banikoara

Tillabery T BENIN Natitingou Natitingou TOGO LOMÉ Sokodé Sokod Kandadji Kandadji é Mome Mome Hagou Hagou

For detail, see IBRD 33827 Adjarala Adjarala Ouake Ouake Kara Kara Kompienga Kompienga Ho Ho Asiekpe Asiekpe Nangbeto Nangbeto Sogakope Sogakope Dapaong Dapaong Atakpamé Atakpam Tema ° ° é 0 0 Kpong Kpong ACCRA POWER GENERATION PLANT THERMAL HYDRO SUB-STATION NATIONAL CAPITAL INTERNATIONAL BOUNDARY Juale Juale enkodogo Kpeve Kpeve Tenkodogo T endi Bawku Bawku Bagr Bagré Kpandu Kpandu Yendi Y Winneba Akossombo Akossombo Pwalugu Pwalugu Bolgatanga Bolgatanga afo Akwatia Akwatia Tafo T amale Tamale T EXISTING Cape Coast Konongo Konongo OUAGADOUGOU Kojokrom Kojokrom Aboadze Daboya Daboya Kitampo Kitampo Obuasi Obuasi Nkawkaw Nkawkaw Takoradi Gulf of Guinea Sekondi FUTURE echiman New Obuasi New Obuasi Techiman T Navrongo Navrongo Sekondi

For detail, see IBRD 33826 umu GHANA Tumu T a Prestea Prestea PROJECTS FASO Lanka Lanka Kumasi Kumasi Tarkwa Wa W Han Han WEST AFRICA Sawla Sawla Jambitc Jambitc Dunkwa Dunkwa Bole Bole Bui Bui Asawinso Asawinso MALI Elubo Elubo Koulbi Koulbi BURKINA Mim Mim Sunyani Sunyani é Essiama Effasu yam Sodukrom Sodukrom Ntereso Ntereso Jomuro Jomuro A Ayamé Asuaso Asuaso Lawra Lawra kro bou é é Abengourou Abengourou r anda Koudougou Koudougou T Tanda é Grand Bassam Abobo Abobo S Sérébou HV TRANSMISSION NETWORKS Agnibil Agnibilékro Bobo Dioulasso Bobo Dioulasso Agboville Agboville Attakro Attakro é & PROSPECTIVE INTERCONNECTION dougou TRANSMISSION LINE: 700 kV 330 kV 225 kV 161 kV 150 kV 132 kV 110 kV 90 kV 66 kV é Abidjan Dimbokro Dimbokro ss aabo é Taabo T ° Bouaké Bouak ° 5 Dabou Dabou 5 Ferk Ferkéssédougou EXISTING Koutiala Koutiala Divo Divo WEST AFRICA POWER POOL APL PROGRAM Gagnoa Gagnoa é Korogho Korogho Kossou Kossou Segou Segou FUTURE Sikasso Sikasso Soubré Soubr Seguela Seguela Marabadiassa Marabadiassa Boundiali Boundiali San-Pedro YAMOUSSOUKRO Buyo Buyo Zouenola Zouenola Daloa Daloa CÔTE D'IVOIRE Laboa Laboa Faye Faye Bougouni Bougouni Man Man ulessedougou Wulessedougou W Odienne Odienne BAMAKO 200 Miles anfolila Yanfolila Y Danane Danane Selingue Selingue 150 Morisanan Ko Morisanan Ko 200 Kilometers Kita Kita Kankan Kankan 100 150 Nzerekore Nzerekore ° ° 100 Fomi Fomi 50 10 Gozoguezia Gozoguezia 10 For detail, see IBRD 33864 Diareguela Diareguela 50 Manantali Manantali LIBERIA amba 0 0 Gouina Gouina Dabola Dabola inkisso Felou Felou T Tinkisso ° ° Kenieba Kenieba 5 0 Kayes Kayes Koukou Tamba Koukou T Bumbuna Bumbuna Sadiola Sadiola MAURITANIA a GUINEA é ° ° ° MONROVIA Mamou Mamou 17 16 15 Mali Mali Labe Labe Pita Pita a/Ban Linsan Linsan é LEONE Norte SIERRA Sambangalou Sambangalou Donk Donkéa/Banéa Garafiri Garafiri ° ta Gaoual Gaoual é Grandes Chutes Grandes Chutes Souapiti Souapiti 23 Fello-Sounga Fello-Sounga Kal Kaléta ambacounda iopo Tambacounda T Kinkon Kinkon Tiopo T Distance to Dakar: 653 km (405 mi) Espargos elingara Fria Fria Velingara V Amaria Amaria Santa Cruz Boke Boke Ourossogui Ourossogui á FREETOWN Bafat Bafatá Bombadinca Bombadinca CONAKRY ° Kolda Kolda PRAIA ° Podor Podor ° ° CAPE VERDE 15 24 24 SENEGAL 15 Tarrafal Saltinho Saltinho Dagana Dagana Soma Soma Riberia Brava Mosteiros f NOUAKCHOTT ouba T Touba Kaolack Kaolack anaf T Tanaff Mansoa Mansoa Rosso Rosso Sakal Sakal BISSAU obene T Tobene

ATLANTIC OCEAN ATLANTIC ° ° Thies Thies Furna Vila das Pombas Vila Ziguinchor Ziguinchor Porto Novo 25 25 aiba T Taiba 40 Kilometers Saint-Louis Brikama 20 40 Miles Mindelo THE Mbour BANJUL OCEAN 20 BISSAU °

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, the part of The World Bank Group, any judgment on the legal status of territory, or endorsement or acceptance of such boundaries. 0 ATLANTIC 0 ° 10 ° ° ° GUINEA- 20 17 16 15 DAKAR

653 km (405 mi) GAMBIA Distance to Praia: IBRD 33827 ° 5 Shagamu Lagos Abeokuta Otta NIGERIA Aiyetoro Papa

under construction PORTO- NOVO Sakété Onigbolo

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, the part of The World Bank Group, any judgment on the legal status of territory, or endorsement or acceptance of such boundaries. Cotonou POWER GENERATION PLANT THERMAL HYDRO SUB-STATIONS PROJET SITES NATIONAL CAPITAL INTERNATIONAL BOUNDARY Avakpa BENIN EXISTING Bohicon

2d Tranche Mome FUTURE Hagou 50 Miles LOMÉ

Gulf of Guinea Adjarala 50 Kilometers WEST AFRICA Nangbeto TOGO 025 025 Atakpamé Sogakope Ho Asiekpe TRANSMISSION LINE: 700 kV 330 kV 225 kV 161 kV 132 kV 90 kV 66 kV Kpeve Kpandu EXISTING Tema (Volta) Tema ° 1st Tranche ° 0 0 WEST AFRICA POWER POOL APL PROGRAM FUTURE 330 kV COASTAL TRANSMISSION BACKBONE, APL 1 Lake Volta ACCRA Akossombo Tafo Winneba Akwatia Nkawkaw ° ° 10 20 ° C.A.R. CONGO Cape Coast 15 Kojokrom CHAD New Obuasi Konongo °

For Detail, see IBRD 33825 GABON 2d Tranche Obuasi Dunkwa 10 GHANA CAMEROON NIGER Aboadze Sekondi NIGERIA Takoradi Kumasi GUINEA For Detail, see map below. ALGERIA EQUATORIAL

SÃO TOMÉ TOGO BENIN AND PRÍNCIPE ° 0 Essiama Asawinso MALI Prestea GHANA FASO Tarkwa BURKINA

For Detail,

see IBRD 33826 Mim Effasu Elubo Jomuro Sunyani CÔTE D'IVOIRE

Gulf of Guinea Sodukrom ° ° 10 10 Asuaso LIBERIA GUINEA MAURITANIA Ayamé LEONE SIERRA SENEGAL

For Detail, see IBRD 33864

CÔTE BISSAU OCEAN Abobo To THE ATLANTIC ° ° ° GUINEA- 5 D'IVOIRE 20 10 GAMBIA MARCH 2005