Technical Assistance Consultant’s Report
Project Number: 38183 November 2006
Samoa: Preparing the Power Sector Expansion Program
Prepared by John Grimston and Study Team
Tonkin and Taylor International Ltd Auckland, New Zealand
For Ministry of Finance, Samoa
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. All the views expressed herein may not be incorporated into the proposed project’s design.
Abbreviations and Acronyms
ADB Asian Development Bank
CSO Community Service Obligation
EPC Electric Power Corporation of Samoa
GoS Government of Samoa
MoF Ministry of Finance
MNREM Ministry of Natural Resources, Environment and Meteorology
PIC Pacific Island Country
PUMA Planning and Urban Management Agency
SOEMD State Owned Enterprise Monitoring Division
SOPAC South Pacific Applied Geoscience Commission
SWA Samoa Water Authority
TA Technical Assistance
TOR Terms of Reference
USGIC US Geothermal Industries Corporation
Table of Contents
I. Introduction 1 A. Background – The Power Sector in Samoa 1 B. Goals and Objectives 2 C. Purpose and Contents of the Inception Report 2 D. Establishment 3 E. Work Undertaken to Date 3 II. Outcomes and Issues 5 A Outcomes to be Provided from the TA 5 B Regulatory Issues 7 C EPC Capacity for a New Regulatory Environment 9 D Corporate Governance and Institutional Development 10 E Power System Planning 13 F Renewable Energy 15 G Environmental Issues 17 H The Proposed Vaita’i Hydropower Project 18 III. Methodology 22 A. Regulatory, Governance and Institutional Development Aspects 22 B. Power System Planning 22 C. Renewable Energy 23 D. Financial Management Aspects 24 E. Economic Aspects 25 F. Hydropower (including engineering, environmental, etc) 25 IV. Organisation and Staffing 29 V. Work program 33
Appendix 1: Terms of Reference Appendix 2: List of Persons Met Appendix 3: Reference List Appendix 4: Format and Scope of a Resettlement Framework Appendix 5: Format and Scope of a Short Resettlement Plan Appendix 6: Figures F1 and F2 and Flow Duration Curves Appendix 7: Economic Background and Identification of New Major Electricity Loads Appendix 8: EPC Electricity Demand Forecasts Background Data Appendix 9: EPC Electricity System
1 I. Introduction
A. Background – The Power Sector in Samoa 1. Energy is a critical element underpinning the Government’s strategy for economic growth and social development. Throughout the 1990’s, Samoa went through a rapid transformation in its energy consumption pattern from heavy use of traditional indigenous biomass toward a more commercial energy supply. No hydrocarbon deposits have been found in Samoa. Solar energy usage is currently limited to water heating and some photovoltaic systems on the smaller islands. Biomass accounts for about 48% of the total primary energy supply in Samoa, with petroleum products at 39%. Electricity consumption from diesel and hydro accounts for about 13% of usage. Biomass, primarily from fuel wood and coconut residues, is the dominant cooking fuel. An undetermined amount (estimated 12 MW) of on-site unaccounted for standby diesel electricity generation is used by hotels, commerce and industry in the event of supply outages or to avoid high electricity costs. 2. Electric Power Corporation (EPC) is responsible for electricity generation and transmission in Samoa. Whereas Savai’i is exclusively served by diesel generation from some 4.5 MW of effective capacity, Upolu has 8 hydropower plants at 5 sites with a total installed capacity of 12.2 MW (including Afulilo) and 18.3 MW of diesel capacity. In the 2003/04 year, 44% of EPC’s generation was from hydro and 56% from diesel. Fuel accounted for 69% of the total generation cost and 43% of EPC’s overall costs. By 2005-06 the cost of fuel had increased to 77% of the total generation cost and 53% of EPC’s overall costs. This leaves EPC and its customers exposed to fluctuations in world oil prices. EPC, as a corporate entity, has autonomy of its daily operations (except for tariff setting and staff employment conditions) and is governed by the Electric Power Corporation Act (1980). In 2005, an ADB consultant’s assessment of EPC’s financial management performance found that it has struggled, primarily due to an inability to set tariffs appropriately, inadequate cost recovery and poor revenue collections. Consequently, EPC’s ability to operate as an autonomous company with full accountability for its actions need strengthening to enhance transparency and cost-efficiency. The financial situation has deteriorated further in 2006/07 with further increases in diesel prices but no increase in tariffs. 3. Despite an automatic tariff adjustment mechanism being agreed for EPC in 2001, it has not been applied. The 15% tariff increase in May 2005 was the first explicit increase since November 2001, although modest effective increases were implemented by phasing out the previous prompt payment discount. By contrast, over the period, the cost of fuel, expressed in local currency, increased by a factor of about two. This problem is exacerbated by the fact that EPC does not systematically forecast demand or prepare power system plans. Any power planning undertaken does not take into account the availability of a substantial amount of private diesel generation. EPC proposed a further 15% tariff increase in May 2006 and the introduction of an Automatic Fuel Adjustment Clause (AFAC) The Board decided to introduce an AFAC rather than seek a further tariff increase in 2006. However, the AFAC has yet to be introduced. 4. Because of its structure EPC has little capacity to focus on customers, manage demand or increase revenue from sales. The Board and management have little ability to manage for financial viability when they do not have the appropriate staff, tools and information necessary to ensure that revenue is appropriate for the financial needs of the company. 5. EPC undertakes significant Community Service Obligations for Government but these are generally not explicit and often not financed. 6. Reforming and strengthening institutional and regulatory changes to be instigated under the TA, in conjunction with development of a professional electricity demand/supply forecasting and subsequent investment planning and tariff setting regime will set an underpinning base on which investment in new generation will be able to be made. Provision needs also to be made for increased private sector involvement in the electricity supply sector. 7. While it has done so occasionally in the past, EPC currently does not have the capability to purchase electricity generated by existing private owned generators, nor to control multi-source generation. This capability including purchase of equipment which will allow remote monitoring and control of the system needs to be instituted before the full value of private generation in Samoa can be utilised. 8. The current flat tariff structure provides no incentive for peak electricity avoidance by electricity users by load shifting (freezers) or use of on-site diesel generation. The result is that new peak generation capacity will soon be avoidably required and existing private sector investment in on-site generation is poorly utilized. Improvements in these areas are constrained by current tariff structure and the need for legislative changes.
2 9. As part of power planning there is a need to confirm the viability of new hydro generation in Savai’i and for renewable energy projects in general. These opportunities along with the use of existing private owned generation need to be integrated into a 10 year generation investment plan for EPC. 10. With the provision of full autonomy for EPC there will need to be set in place a regulatory environment for the components of the business that are a natural monopoly (distribution and retail) that ensures that reliable electricity supply is occurring at the least cost. The Ministry of Finance has established an SOE Monitoring Division with which the Bank is separately working to enhance its capabilities - this unit could take on a slightly widened role with regard to monitoring of EPC. Alternatively the Ministry has also proposed in its draft energy policy establishment of an Energy Board, while a regulator has been established for the telecommunications sector that could be enhanced to also cover electricity. 11. The reforms of EPC and the SOE sector that have been taking place over the last decade have established a sound base but further legislative changes are needed before EPC can involve the private sector, take over full autonomy for its operations and be held accountable. Savai’i 12. Savai’i is mountainous, with the population totalling 45,000 concentrated in the coastal strip. Electricity is generated by EPC’s diesel powerstation at Saleloga, the main town. The island is served by a 22 kV transmission system running around the coast, with allied sections of 6.6 kV line. The total installed capacity at Saleloga is of the order of 5.5 MW (the actual figure depends on the degree of engine de-rating applied), comprising 3 Cummins engines and 3 larger Caterpillar engines. The daily load curve is characterized by a steady load for most of the day (at about 40 - 50% of the peak), with the peak reaching 4 MW occurring over the period 6 – 10 pm when lighting is the main use. Annual demand growth is estimated to be about 6% (Source: Nippon Koei report, 2003), putting added pressure on the generation system. However, more recent information on past load growth 2001 to 2006 has shown only a 1.5% per annum load growth. Therefore in the absence of any major new loads, plus rising tariffs, load growth is only likely to be of the order of 2.0% per annum at most from the existing customer base. Notwithstanding this there is an urgent need to develop a new diesel power station. EPC are currently trying to purchase a second hand engine from Korea for Savaii.
B. Goals and Objectives 13. The Terms of Reference (TOR) are provided in Appendix 1. The objectives of this TA will: (i) develop a comprehensive reform program, including enhanced governance, more effective management structures and a regulatory framework, that would enable private sector participation and enhance the efficiency in the sector; (ii) develop a program to reform the Electric Power Corporation’s (EPC) internal business and management procedures to operational effectiveness and cost efficiency; and (iii) prepare an investment road map to diversify the country’s energy resources, meet future load growth, and eventually reduce the burden of diesel imports. The goal of the TA is to achieve efficient and reliable electricity services to end consumers and to an ensuing loan that would support the power system expansion program. The power system expansion program will help the country and EPC, and ultimately end consumers, to reduce exposure to global fuel prices by promoting indigenous and renewable energy resources.
C. Purpose and Contents of the Inception Report 14. The TOR for the TA requires the submission of an inception report by 17th November 2006. The purpose of this Inception Report is to: • confirm the rationale and support for the TA, based on the findings of the in-country meetings, research and document review undertaken to date • review or confirm work plans for the TA • establish procedures and a work programme for implementing the TA
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15. The contents of this Inception Report covers: • outcomes of study to date and issues • methodology to undertake the TA • consultants organisation and staffing • the work program.
D. Establishment 16. Tonkin & Taylor International Ltd (T&TI) received the Notice to Proceed letter on 11th October 2006 and immediately commenced mobilisation activities with the Team Leader commencing in-country on 13th October 2006. During this initial visit the TA Project office was set up on the second floor in the Engineering Department of EPC in Apia, while the Regulatory and Governance Experts operated from offices in the Ministry of Finance. 17. To date all International team members have visited and worked in country to confirm the scope of work prior to preparation of this report and the core project site on Savai’i has been visited by the Team Leader/Hydropower Engineers (International and Domestic) the Environmental Specialists (International and Domestic), and the Domestic Resettlement Specialist, and an Engineering Geologist from T&TI. All site visits have been under the control of EPC and Sili River Basin Committee guides.
E. Work Undertaken to Date 18. The work undertaken to date includes the following: • in-country visits by all team members (two by the Team Leader) • in-country meetings with EPC, GoS ministries, SWA, PUMA, Sili River Basin Committee, local businesses and the private sector and others • international and home country meetings and discussions including ADB Project Officer and counterparts and other individuals with specific and related Samoan experience • confirmation or revision of specific scopes and programmes of work for individual international team members • researching, sourcing and review of relevant data and information • core subproject site visits on Savai’i Island 19. A list of Samoa visits undertaken to date (or proposed) follows: • Brian Cox, Regulation 29/9/06 to 8/10/06 • John Grimston, Team Leader and Hydro 13/10/06 to 22/10/06 • James Muir, Renewable Energy 23/10/06 to 1/11/06 • Murray Ellis, Governance and Institutional Development 24/10/06 to 1/11/06 • Nick Rogers, Environmental 29/10/06 to 12/11/06 • Ian Walker, Power Economist 31/10/06 to 8/11/06 • John Grimston , Team Leader and Hydro 5/11/06 – 11/11/06 (2nd visit) • Jayath Atukorala, Financial Management 6/11/06 – 21/11/06 • Angelito Corpuz, Resettlement 16/11/06 – 29/11/06 • Barrie Gadsden, Power Planning Engineer 16/11/06 – 30/11/06 20. A list of persons met by the Consultants is included in Appendix 2. Several of the persons were met by more than one of the Consultant team at separate times. 21. The team sourced various data, information and reports with a list of references in Appendix 3. Data included flow records for the period November 2004 to June 2005 and two flow gaugings in that period.
4 22. The core subproject (termed Vaita’i Hydro Scheme) was visited by the Consultant team as follows: • 17-19th October by Hydro Engineers (International and Domestic – part) • 17-20th October by T&TI Engineering Geologist • 5-9th November by Environmental Specialists (International and Domestic) • 8-9th November by Resettlement Specialist (Domestic) 23. Each visit was hosted by EPC staff and counterparts and meetings were convened with the Sili River Basin Committee. Guides for the site visits were provided by the Committee.
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II. Outcomes and Issues
A Outcomes to be Provided from the TA 24. A range of factors will define the “success” of the TA work. The T&TI approach to the TA focuses on achieving the following outcomes (revised from original after in-country visits), within the context of preparing the power sector expansion plan: • General: - commitment to an approach that delivers a “no surprises” outcome - involvement of a wide range of private and public sector stakeholders in consideration of options for moving forward - ADB is satisfied with the standard of the TA reports and the work that has gone into them - blueprint established to develop and support EPC’s ability to implement the recommended plan - domestic project team members and EPC counterparts up-skilled - establishment of a Samoa designed electricity sector based on the strengths and attributes of EPC as a natural transmission and electricity retail monopoly but integrated and supported by EPC and private sector investment in generation facilities where appropriate • Regulatory Framework: - appropriate legal and regulatory frameworks established for the electricity sector - review and recommend regulatory environment that ensures “reliable and affordable electricity for Samoa including position of a Regulator where appropriate - tariff-setting mechanisms set-up that assist EPC manage peak electricity supply - private sector participation objectives met to the greatest practicable degree - establishment of an electricity system that recognises and includes the substantial existing and possible future private sector investment in generation plant - supporting institutional arrangements formulated and accepted - achievement of an electricity sector that enhances local communities - ensure capability of EPC to joint venture with private investors in new generation - establishment of requirements for monitoring and reporting electricity supply reliability and quality of supply - work with TA 4513 SAM: Strengthening State-Owned Enterprise Corporate Governance, that is addressing SOE governance and its application to EPC - cost of energy that enhances achievement of local community economic growth - review and advise changes to EPC Act to ensure it supports the agreed regulatory framework and makes EPC fully accountable for all its activities. - an electricity sector that contributes to the Government ‘2005-2007 Strategy for the Development of Samoa’ and works within the draft ‘Samoa National Energy Policy 2006’. - Review EPC non commercial activities such as electrician licensing to ensure that the most appropriate arm of government is handling them. • Strengthening EPC: - set firm foundations for improvement to EPC’s governance, structure, management, planning, budgeting and procurement systems - review the adequacy and appropriateness of EPC’s financial reporting procedures to the SOE Monitoring Division of the Ministry of Finance - assist EPC establish clear debt collection and disconnection policies that are transparent and fair to all. - reform of EPC decision making and management that meets both the Government’s and ADB’s objectives and is fully supported by EPC - reform of tariff structures so as to support private sector participation in electricity supply, and encourage efficient use of electricity, so reducing demand for new generation capacity - identify metering and internal process requirements for supporting reformed tariff structures - assist EPC establish zone based systems for monitoring electricity supply reliability and quality of supply
6 - review EPC generation control capability to handle scheduling and control of injection of electricity from private owned generation - identify financial management requirements for EPC to establish a capability to purchase generation from private sector generation - identify safety, contractual and control requirements that ensure the integrity of the EPC electricity network is maintained when injection of electricity to the system from private sector generation occurs. - separation of EPC commercial and non commercial activities (including community service obligations) so that there are clear management accountabilities and financial viability for each - separation of management and accounting of transmission, generation and electricity retail activities so that purchase of generation from private owned generators is on a fair and equitable basis - establish an achievable implementation program, with appropriate milestones and cost estimates - assist EPC establish a soundly-based demand/supply forecasting and planning capability set up that is relatively easy-to-use - economic/financial management systems set-in-place that will match the reform program for EPC • Renewable Energy Sources: - identify feasible projects to be included under EPC’s Least Cost Investment Plan - provide recommendations for implementation and maintenance of the projects - assess the projects’ feasibility for the Clean Development Mechanism (CDM) - develop CDM documentation to support these projects - prepare a Project Design Document (PDD) for the Vaita’i hydro scheme - assist EPC to prepare a strategy to market credits including in-house CDM capabilities - provide information on the market for emission reductions • Power System Planning: - identify power planning tools and electricity demand information requirements so that EPC can establish sound capability for future power planning. - establish simple computer based model of the Samoa power system so that power planning for the project can be undertaken and subsequent use by EPC for future power planning - resolving losses and energy efficiency aspects, to the ADB’s satisfaction - establish an inventory of private owned diesel generation that could be integrated into Samoa’s electricity system - identify those private owned generators that could contract to EPC for the supply of schedulable generation - identify the requirements and cost of modifying private owned plant so that they can be synchronised with the EPC system - prepare a realistic least-cost 10 year power system expansion plan (including firm costs) for both Savai’i and Upolo, including buy-in by EPC - prepare 10 year electricity demand scenarios for Samoa (taking into account private generation, energy efficiency achievements, system load management and economic growth) - plans developed for EPC to implement the first batch of prioritised subprojects (including the Vaitai hydropower project, if applicable) - sound energy supply management plan developed, based on reliability and cost of supply • Vaita’i Hydropower Scheme: - confirm the viability of the Vaita’i scheme compared to other options available. - preliminary design that applies technology that is directly appropriate, with areas of uncertainties resolved - scheme optimized and with its environmental impacts mitigated - feasible land acquisition arrangements identified (and resettlement, if applicable) - evaluation of possibilities for community and land owner financial involvement in the project - benefits understood by local communities - costs estimated to a high level of confidence
7 - acceptance achieved with local stakeholders (if at all possible) • Economic/Financial Aspects: - financial management systems set-in-place that will match the reform program for EPC - analyses presented to provide a definite conclusion as to the least cost and viability of the Vaita’i hydropower project in any system expansion plan - preparation of priority project economic analysis and justification - prepare cost projections for the management / institutional changes recommended from this TA - analyse effects of the recommendations of this TA on financial viability of EPC over the next 10 years - prepare model restructured financial report showing the result of implementation of the recommendations of this TA including sensitivities/variations associated with options eg tariffs
B Regulatory Issues EPC Transparency 25. There is suspicion by the community that EPC is charging unnecessary high tariffs and doing little to improve reliability of electricity supply. 26. There are a number of initiatives that could be instituted that could improve the relationship between EPC and the community. Instituting these initiatives may reduce some of the need for regulation. Some of these initiatives to be considered through the project include: • appointment of Directors in the manner specified by the Public Bodies Act (2001). No appointment of ex-officio Directors • appointment of independent Directors to the EPC Board. Currently the three community directors are chosen and appointed by the Government. The Act specifies a Chamber of Commerce representative but the Chamber is not invited to nominate their representative – this is done by the Government. This gives the impression that there is something to hide. Community organisations such as the Chamber of Commerce, Manufacturers and Importers Association, Hotel Association and an organisation representing residential electricity users could have the opportunity to propose their representatives. • the Corporate Plan could include graphs and trend data that shows the improvement in the reliability of electricity supply to various districts of each island. • establishment of annual meetings between EPC and community organisations where the intentions and performance of EPC can be discussed. • public availability of EPC Capital Investment Plan (including for generation and system operation and maintenance improvements) so that electricity customers can see improvements in reliability of supply, and private investors can see how they may be able to integrate their own intentions eg new resort with electricity supply investment opportunities resulting in EPC being able to reduce investment by itself. • the EPC Capital Investment Plan to include the publicly known intentions of private investors so that the Plan represents a total Samoa Electricity Plan. Regulator 27. If as a result of this project EPC becomes more fully autonomous there are elements of natural monopoly in the EPC electricity distribution and retail activities that may require regulation. The degree of regulation will depend on how open the Samoa electricity market can be made. 28. There are possibly three forms that the regulator could take: • extension of SOE Monitoring Division • included as an extension of the responsibilities of the Telecommunications Regulator • under the proposed Energy Board.
8 Generation Transparency 29. For a market for the purchase of electricity generation to evolve the potential market participants will need to have full information on the market price for generation. It will likely be desirable for this to be more sophisticated than the current flat rate buy-in tariff. This could be achieved if EPC were to establish the cost of generation from each of its own plant and make this available in advance for each operational period. The desirable length of this period will need to be established through experience but could initially be one week. EPC could publish its contracts for purchase of generation from its own plant. Separate costs and supply capacity at that cost would be published for each station. For diesel generation this might be a single rate initially, but subsequently refined by level of output. Not only would this provide information to the market but it would give confidence to investors that EPC is not unfairly favouring its own generation. 30. To give confidence to the market that generation is being scheduled according to lowest cost EPC would need to consider how to make the information available. This could be done by EPC providing the weekly weighted average cost of generation and a schedule of plant operation. Tariff Setting 31. Currently the Electric Power Corporation Act 1980 prescribes how tariffs are to be set by regulation. In 2001 an automatic adjustment mechanism for fuel prices and exchange rate changes was agreed by Cabinet but this has not been implemented. EPC should be fully responsible for setting the tariffs and explaining these to the community. This should be done in conjunction with consultation to the community with the EPC Board being bound to take representations from the consultation into account before finally setting the tariff. A transparent method of defining generation costs would provide an important input to the tariff setting process. Price Signals 32. The current flat tariff does nothing to encourage electricity users to change behaviour and reduce peak demand. This can be undertaken by either load shifting or on-site generation of electricity. If Time of Use tariffs are employed, a number of people would immediately move load from the more expensive peak periods. Charging for reactive power consumption would similarly influence consumers to improve the power factor of their loads, enabling a reduction in line losses. Split Lines and Energy Costs 33. The current flat single figure tariff penalises EPC if onsite generation were undertaken. If a site used extensive on-site generation then EPC could be left with stranded assets. Separating lines and energy components means that the insurance of being connected to the network system can be provided but energy users are given an incentive to move load away from the peaks. Mixed Commercial and Non Commercial CSO Activities 34. A current difficulty in holding the Board and Management accountable for the commercial activities of EPC are that a number of non-commercial CSO activities are mixed in with the commercial CSO activities. The Corporate Plan and annual accounts do not separately identify non commercial CSO activities. Reimbursement for CSO Activities 35. At present some CSO type functions carried out by EPC have some or all of their costs reimbursed. There are others, such as the operation of the licensing system for electricians and generating plant operators, which are not. Other functions, such as the provision of street lighting, are reimbursed in some years but not others for no obvious reason. There is a need for a clearer definition of what CSO activities EPC is to carry out and a clear policy for the reimbursement of the costs involved. In the longer term some non-commercial CSO activities should be shifted out of EPC and taken over by a suitable government department. Private Sector Involvement in the Electricity Market 36. The Samoa electricity sector already has extensive involvement of the private sector in generation. It is not generally recognised as being involved but an estimated 30% of generation capacity is privately owned. The project needs to arrive at a market that unleashes the value of this under utilised generation. 37. EPC has in the past purchased generation from privately owned generating plant. This could be extended so that EPC even-handedly purchases electricity from both its own plant and private owned plant.
9 EPC Clarity of Management 38. There is a need to establish a possible structure for the Samoa electricity market which provides transparency but encourages private sector involvement. A key aspect is that EPC would need to post the cost of generation for each of its plant units. This would provide a target for private owners to aim for. Revised Electricity Market Structure 39. The involvement of private sector generators selling generation to EPC indicates that there will need to be a refinement of the electricity market structure. This would need to link to revision of the EPC management structure. This change is likely to only be a refinement as the size of the Samoa market does not justify significant change. 40. Management of EPC’s distribution network is a natural monopoly as is the retail business. Competition in generation however can be opened to the private sector. 41. In a revised electricity market the EPC retail activities will need to be enhanced with full accountability for purchase of generation from either EPC’s own plant or private sector generation. Regulator 42. With the opening of the electricity market and introduction of greater transparency in EPC commercial operations there will be a minimal requirement for regulation. This is likely to be needed to provide assurance that the process of electricity purchase is operating as intended and that appropriate levels of cost recovery are being applied to the distribution network and the retail business. Such regulation could be undertaken by extension of the responsibilities of the telecommunications regulator or extension of the monitoring undertaken by SOEMD. In either case the technical advice of international consultants will be needed to establish benchmarks for Samoa.
C EPC Capacity for a New Regulatory Environment 43. The pivotal role of EPC is in the transmission and retail components of the electricity markets rather than in the power generation sector. EPC currently undertakes some broader energy issues such as electricity licensing that should be the prerogative of other agencies. 44. Energy Planning is a Samoa wide concern and broader than just the interests of EPC. In this context, it will be important that studies to establish the potential of renewable energy sources proceed in parallel with the power system planning studies, in order to establish a least-cost and diversified power expansion plan. It also must allow for the investment of private sector parties. 45. The TA will need to establish a firmer foundation for EPC so that it is able to manage the implementation of the power sector expansion program to be developed under the TA. This needs to overcome the lack of a regulatory and appropriate pricing framework that hampers the power sector’s capacity. A regulatory environment conducive to private sector participation is seen as essential to enhance the capacity to meet future demand and improve sector efficiency. While EPC’s annual Corporate Plans indicate a list of investment projects planned for the near future, investment needs are not accompanied by financing plans. Given rising oil prices and growing power demand, there is an urgent need to develop a strategic and long-term approach to diversify power-generation sources, reduce system losses, and improve reliability. Key aspects to be addressed in order to reach consensus as to the reform agenda include: • assessing EPC’s key strengths and weaknesses (at governance, management/operations and financial levels) and the corresponding institutional development needs • financial performance evaluations (including tariff policies) • drawing-out the findings from the power system planning and hydropower scheme feasibility studies • practical constraints to the implementation of the reforms (including risk assessment) 46. This work will involve close consultation with EPC’s Board and management, including a series of carefully structured workshops to build consensus on the reform agenda. Critical to this process will be a sound understanding of the underlying human resource issues, including key sensitivities, so that the consensus- building follows a non-threatening pathway.
10 D Corporate Governance and Institutional Development 47. The Electric Power Corporation (EPC) was established in 1972. Prior to that the Public Works Department supplied electricity, mostly to the Apia area. At that time the system had just 1 MW of hydro with some diesel back-up. Since then EPC has greatly expanded both the quantity of electricity supplied and the geographical area served. Nevertheless many aspects of its structure and governance remain little changed. Governance 48. The fundamental governance issue is the composition of the Board of Directors. The present Board is highly political and contrary to the requirements of the Public Bodies (Performance and Accountability) Act 2001. The Board’s composition is specified in the Electric Power Corporation Act 1980, but is little changed from the time of EPC’s formation in 1972. The Minister of Works, Transport and Infrastructure is ex-officio the Chairman and appointee of three other members, nominally representing interest groups, while three other members are ex-officio departmental heads. It is clear that there is a history over many years of the Board making decisions that were not in the best interests of EPC, and which have led to poor financial and technical outcomes. 49. This structure gives a very high weighting to ex-officio appointments of government officials, and some to consumers, but there is very little emphasis on business acumen. A consequence is that government political objectives must weigh heavily on the Board’s decisions. Inevitably this must come at some cost to EPC’s operation as a successful business. It will also act to discourage potential private investors in generation. 50. A separate specification of the process for board member selection and appointment is provided by the Public Bodies (Performance and Accountability) Act 2001. Schedule 1 of the Act names Electric Power Corporation as one of the public trading bodies to which the Act applies. Schedule 3 specifies the criteria for selection of directors of public trading bodies. This makes clear that no-one should be appointed a director ex- officio, and that Members of Parliament and public servants should be on SOE boards only in exceptional circumstances. It also specifies that when this does occur, the persons concerned shall not receive any remuneration. 51. The provisions of the Public Bodies Act have not been put into effect, so that the EPC Act is still being followed. There are numerous other public bodies in a comparable position, and the general issue is being addressed by the State Owned Enterprises Monitoring Division (SOEMD) of the Ministry of Finance, with support from an ADB funded consultancy (TA4513 SAM: Strengthening State-Owned Enterprise Corporate Governance). This project has presented a number of recommendations for improving and implementing director selection and appointment procedures. A crucial issue for this project is whether to await the outcome of the SOEMD initiative, or proceed in parallel with it. Financial Management Assessment 52. The scope of this work is required to be grounded on the findings and proposals made in the financial management assessment of the EPC in 2005 by Sierra West Consulting Group1. This report made a number of major recommendations relevant to the present study. 1. Automatic Tariff Adjustment Mechanism.
53. This mechanism has not been implemented as intended in 2001, and those increases that have been made have not been automatic. The report recommends that not only should adjustments be made but that this should occur monthly as proposed by EPC Board based on fuel prices gazetted by the government. The purpose of the automatic tariff adjustment mechanism is to provide immediate relief (pass through) of cost items outside the control of EPC (subject to efficiency norms).
1 Financial Management Assessment of the Electric Power Corporation, Sierra West Consulting Group, Nov 2005
11 2. Annual Tariff Reviews.
54. The report recommends a review of tariff requirements, which appears desirable and needs to be consistent with electricity market regulatory changes necessary to facilitate private sector entry into the market. The process for setting tariffs needs to be established as an EPC Board function in order to ensure Board accountability for successful financial performance of EPC. 3. VAGST.
55. The report recommends that EPC be VAGST registered, or that GOS repay to EPC the full amount that EPC pays. It is anomalous that EPC is not registered for VAGST. However, a change has significant political and distributional implications as different types of customer would be differently impacted. 56. However, the Samoa Water Authority is “zero rated” for VAGST which means that it can recover its input VAGST. There is no reason why EPC should be treated any differently from the water utility. This option has been raised with the MoF. It would remove the need for the present $1 million per annum “fuel VAGST subsidy” which partially achieves the same effect. 4. Disconnection Policy.
57. EPC’s disconnection policy has been selective. This is a serious issue of Board partiality that needs to be comprehensively addressed. 5. Government Arrears.
58. The introduction of prepay metering for Government accounts in arrears has been recommended by the MOF. This does not seem a practicable or reasonable policy, and does not address the underlying issue that EPC’s Board has not been willing to take measures to enforce payment. Finance could pay EPC directly for the electricity consumed by government departments as part of their annual budget allocation. 6. Rechargeable Works.
59. Requiring full upfront payment by all customers, (including Government), for all works undertaken by EPC. This appears unduly severe, and to miss the point of the selective unwillingness of the EPC Board to enforce payment. 7. Management of Other Debtors Account.
60. Useful improvements in the control and management of the other debtors account are recommended. This requires that the EPC Board desist from influencing the treatment of specific cases. 8. Write-off Policy.
61. Existing policies for the writing-off of arrears are unclear. An effective policy requires that the practice of the Board exercising its discretionary authority in specific cases does not continue. 9. Financial Covenants.
62. EPC is not in compliance with some of its covenants with ADB. Several recommendations are made for the refinement of the financial covenants between EPC and ADB. 10. Financial Management.
63. Strengthened financial management capabilities are recommended in several areas of management and reporting. 11. Private Sector Participation.
64. Suggestions are made for further outsourcing of functions. These fall into two very different categories: - minor functions that could be outsourced to local contractors, and - contracting for the supply of electricity into the EPC system.
12 65. The former can be implemented without serious difficulty or impact with suitable clarity. The latter requires much more serious thought and preparation, even if the quantity of electricity to be supplied is modest. Full scale IPP operation will of course require a significant involvement of international expertise on both sides. However, smaller scale supply, such as by utilising existing standby gensets, should require only some initial international assistance and could provide significant value to investors of such plant. The use of contracted supply from gensets, could also provide EPC with a valuable peak electricity demand management tool. 66. It is notable that a basic issue underlying many of the problems noted in the Sierra West Report is the present structure of the EPC Board, and the opportunities for interests to be presented and to influence board decisions which are not in EPC’s best interest as a business. Institutional Structure 67. EPC is presently structured into six primary divisions. In addition, three other personnel report to the General Manager. There is no deputy General Manager. 68. The six divisions are: • Generation • Distribution & Utilization • Engineering • Savai’i • Corporate Services • Human Resources Management 69. The three additional reports are: • Transport pool • Legal Advisor • Chief Internal Auditor 70. There is no division specifically focused on the consumers. The potential to create a retail division (which might be named “Customer Service”) to incorporate all functions relating to consumers will be investigated. Such a division would be responsible for electricity sale contracts, meter reading, billing and revenue collection. Other functions that would reside there would include generation scheduling and purchase, marketing, customer advice services, the promotion of efficient appliances and energy use, and negotiating Community Service Obligations and their reimbursement (the customer then being the GOS). 71. A significant problem area at present is the creation and resolution of difficulties in the customer relationship. EPC is dealing with complaints with a frequency that strongly suggests that it has operational problems in metering and billing. In addition many of these complaints are being dealt with at an unduly high level, diverting senior managers from their normal tasks. This suggests an inadequate capacity among operational staff to assess complaints and take needed remedial actions within Board guidelines. The retail division would be responsible for handling and promptly resolving all customer complaints. Senior managers should not need to become involved except in unusual circumstances. 72. The Savai’i division is something of an anomaly. It is a “mini-EPC” in Savai’i. Given the short distance between the islands this would appear to be a duplication of resources. The Division is understood to have been created in response to difficulties being experienced by customers in Savai’i in getting complaints satisfactorily dealt with. With the establishment of a fully accountable Retail Division this should no longer be a serious problem. 73. There are other inconsistencies that need to be considered. In most cases these appear to be arrangements that have been carried over from earlier structures. For example, the divisions reflect a distinction between generation and network (the latter being in Distribution and Utilization) functions. However the station operators in the control room for Tanugamanono Power Station also provide the control function for the distribution system. Situations like this need to be either modified or more explicit lines of responsibility established. The Savai’i division could be integrated into primary EPC divisions.
13
Performance Management 74. A quite detailed set of performance measures are published in the Corporate Plan. At present these are primarily measures of the performance of EPC as a whole, and that is possibly as much as needs to be published in the Plan. However the measures need to be allocated to specific managers and used to provide a basis for performance assessment and management. 75. The development needed can be illustrated in relation to one of them: "By June 2007 reduce system losses to 13%". Responsibility is allocated to All Managers for implementing this. There is an old and true saying that divided responsibility is no responsibility. Hence to make it possible to hold specific managers to account for progress on this measure it is essential to subdivide the losses by source and allocate each to the specific manager who is in a position to influence it. Only if targets are set for the components of system losses can effective progress be expected. In addition, more is often needed than the will of the manager. For example, one of the means to reduce resistive losses in distribution lines is to upgrade line capacities. This requires investment which is feasible only if financial authority is granted and funding available. Another is to change the tariff to encourage customers with low power factor loads to improve these. This requires the changed tariff to be devised and approved by the Board. 76. Other improvements needed to enable the measures to become a basis for performance management would seem to be: - to establish a baseline for comparisons. - separate progress indicators from completion dates - reassign some responsibilities in relation to the present allocation of responsibilities 77. The development of the measures and a performance management system that uses them, will be progressed during the study. Incentives 78. At present the only incentive offered to staff is the payment of a reward for detecting meter tampering. To date the Board has rejected the payment of incentives to managers, apparently from concern for possible flow-on into the public service. The implementation of an incentive scheme may in any case not be desirable until an effective performance measurement system is functioning.
E Power System Planning 79. The power system on Upolu is supplied from one main diesel power station at Tanugamanono with an installed capacity of 18,300 kW on the outskirts of Apia, the capital and main load centre, and from five small hydro plants located on the north side of the island with a maximum combined capacity of over 12,000 kW. 80. Power is distributed across the island from the power stations via a number of 33 kV and 22 kV radial feeder circuits with distribution transformers stepping the voltage down to 415 V located at various points along the length of the feeders to supply the local demand. In Apia, underground cables carry the power to the customer and the distribution system, whilst operated as a radial network, has a re-supply capability that can be utilised to restore supplies to customers in the event of a fault. The rest of Upolu is supplied via overhead lines with the main feeders being routed around the coast where the rest of the island’s population is mainly based, although there are circuits that run north to south along the route of the three cross-island roads. Figure 1 shows a simplified layout of the Upolu power system. 81. On Savaii, power is supplied from a diesel power station at Salelologa with a combined capacity of over 5.000 kW. A 22 kV radial overhead distribution system is routed around the perimeter of the island to supply the demand with an open point near the mid-point, to essentially create two feeders around the island, one running clockwise (i.e. Asau feeder) into which the electrical output from the proposed Vaitai hydro scheme will be fed, and the anticlockwise (i.e. Puapua feeder). As on Upolu distribution transformers located at various points along the length of the feeders step the voltage down to 415 V to supply the local demand. Figure 2 shows a simplified layout of the Savaii power system.
14 82. The TA is designed to address a number of important power system planning issues, not least of which is the need to strengthen the capability of EPC to plan the power system in an effective manner. The responsibility for power system planning is with EPC’s Engineering Section who report direct to the General Manager. The personnel involved in the system planning function are the Engineering Manager and two Electrical Engineers, with a combined EPC experience of more than 35 years, though the planning function appears to be a part-time requirement mixed with other duties. 83. Initial discussions with EPC system planners have confirmed that system planning is focused on the short-term and that unless a major development is proposed then EPC tend not to focus long-term2. EPC system planners have indicated that there is no formal documentation available that outlines the future long- term development of the power system, nor are there any formal documented procedures for system planning or demand forecasting. 84. At the beginning of 2006 EPC purchased power system analysis software for load flow, fault level and protection studies from Datashare Power Engineering Software. A training course was attended in February by eight EPC staff, including the GM, the three power system planners, and four other engineers from the Upolu Control Centre and Savaii. However, the software key has been in the possession of the General Manager since the course and the Engineering Section have been unable to develop their skills in system modelling and analysis which are the key to improving the capabilities and efficiency of the system planners. 85. The inherent shortcomings of the present system design and design practices leads to poor voltage conditions at remote locations and contributes to increased system technical losses that cannot be addressed by a continuance of planning for the short-term. 86. Energy efficiency is a key requirement of the future development of Samoa’s electricity system. The reduction of system losses to an acceptable target level is a major requirement of any energy efficient power system. However, before loss reduction measures can be identified it is first necessary to identify the system losses and the split between technical and non-technical. For the technical losses the important aspect is to determine the losses at each voltage level and to identify the circuits which generate the most losses, so that these may be targeted for application of the most cost-effective loss reduction measures. Load flow analysis will provide this information, as well as information on voltages and circuit loadings, which is another reason why the software should be located with the system planning engineers and not the General Manager. 87. A review of metering, billing practices and the scope for theft will identify possible sources of non- technical losses that may be addressed most cost-effectively. 88. Another element of an energy efficient power system is the need to reduce fuel costs by the introduction of renewable generation, including hydro schemes, wind turbines and other lower cost generators through the introduction of new private scheduled generation. To facilitate the introduction of new private generation on the network it will be necessary to compile an inventory of privately owned generation that could be contracted to supply schedulable generation to the power system. The requirements and cost of modifying the plant so that it can be synchronised to the EPC system will have to be taken into account. 89. The demand forecast is fundamental to any power system expansion programme. The development of a 10-year least-cost power system expansion programme for both Upolu and Savaii requires the demand forecast for each island to be established for the period 2007 to 2016. The peak demand in 2005 on Upolu was 16.8 MW. The average annual growth rate on Upolu over the period 2000 to 2005 was 3.0 percent, but on Upolu there are some major hotel and other relatively large commercial developments planned for opening in 2007 and 2008, which could increase the connected load by 2,700 kW in 2007 and by a further 800 kW in 2008. The impact of these new loads will be to produce a step change in the peak demand in these years. It is arguable whether the South Pacific Games that are scheduled for Apia in 2007 will have sustainable long-term economic benefits that result in increased levels of tourism or investment. To cover this uncertainty and the effects of future growth in other sectors on electricity demand a high and low forecast scenario may need to be considered. 90. The peak demand in 2005 on Savaii was 2.7 MW with the annual average growth rate of only 0.3 percent over the same period reflecting the population trend on Savaii, which has shown a reduction in the
2 In 2003 a 66 kV ring around the island was proposed to transmit the power from Afulilo Hydro Station. However, the hydro project was abandoned for economic reasons and the proposed 66 kV ring was not pursued.
15 population in recent years. There is only a minor development of 100 kW in 2008 associated with the Samoa Land Development Building of any magnitude that appears to be committed, although there are tentative proposals for a small township development and a hotel, though there are no details available regarding the likely demand or the date when this will be required. With the demand on Savaii relatively low and likely to remain so over the next ten years, unless some significant development decisions are made to change the current trend, then the major issue with respect to system planning is likely to involve the introduction of new hydro schemes, like Vaitai, to supplement and then eventually replace the ageing diesel plant. 91. The development of a 10-year least-cost power system expansion programme for Upolu is designed to minimise the long-term cost of supply to customers. It will provide the opportunity to look at longer term development of the power system, particularly the introduction of new primary substations supplied at 66 kV or 33 kV via clean connectors from the power stations. This is seen as an important factor in improving voltage conditions, reducing system technical losses and increasing system reliability. 92. The recent increases in raw material costs has had a dramatic impact on the cost of major electrical equipment with large price increases in the cost of transformers, cables and switchgear having occurred in the last 12 to 18 months. In developing the least cost plan the unit prices used by EPC will be reviewed in relation to international market prices in order to establish realistic unit prices upon which the budget price for the various scenarios associated with the development plan are based. 93. The TA will also provide the opportunity to identify an initial batch of prioritised sub-projects which are designed to produce an immediate benefit to electricity consumers. A process to identify those schemes that need to be prioritised will need to be established so that an objective and uniform approach is developed which EPC engineers can follow in the longer term to evaluate future projects long after this TA is completed.
F Renewable Energy Main Findings 94. Consistent with the draft National Energy Policy and the ADB’s Country Strategy and Programme Update 2005-2006: Samoa, the review of the Electric Power Corporation Act (1972 and amendments) is clearly important for influencing the future uptake of renewable energy use in Samoa. 95. Even during the recent period of very high diesel costs, there has been limited strong direction within Samoa towards reducing fuel imports. This suggests that there are substantive barriers to renewables which are well documented by previous studies. This also suggests that there are substantial barriers to reducing the current level of diesel imports which are less well-understood. Closer examination of the incentives to reduce current levels of fuel imports may be warranted in subsequent phases of the ADB study. 96. There appears to be limited use of Least Cost Investment Planning techniques within EPC. It appears that investments in generation plant are considered feasible if electricity can be generated below the existing tariff rates. There are a number of fundamental issues associated with such an approach not least that it is short-term, does not consider future fuel pricing, does not consider wider economic benefits of reducing fuel imports or adopting alternative generation technologies. As such, subsequent phases of the ADB study need to promote established, appropriate Least Cost Investment Planning techniques. 97. There is no Designated National Authority within the GoS for carbon trading – this means that low- carbon projects (e.g. renewables, energy efficiency) cannot obtain carbon revenues via the Clean Development Mechanism (CDM). Whilst carbon credits under the CDM will not by themselves lead to greater renewables uptake, they could form part of an overall incentives package for investors in renewables. However, the Ministries of Finance, Foreign Affairs and Trade and Natural Resources, Environment and Meteorology are actively working on establishment of the Designated National Authority and regard the ADB study as extremely supportive of their efforts. It is suggested that the Draft Project Design Document for the Vaita’i Hydro Scheme be developed during Phase 2 and provided to the Ministries named above to provide a real case study for the Government of Samoa to consider. 98. Under the revised EPC Act, it is proposed that clearer guidelines will be established for the participation of Independent Power Producers in power generation. This is likely to mean that in the short term commercial and government organisations with excess capacity standby diesel generators will sell electricity to EPC. As a result, the revised EPC Act may result in greater consumption of imported diesel and imported / locally produced coconut oil (and other biofuels) but reduced uptake of other renewables. As such, it is recommended that the
16 ADB study identifies appropriate measures (in addition to carbon credits) to promote non-biofuel renewables in the revised EPC Act. Opportunities for ADB Renewable Energy Projects 99. There have been a large number of in depth renewable energy studies by a wide range of development agencies over the course of a number of years. Although many of these have assessed the technical potential for renewable energy and some have identified new projects, the number of new renewable energy projects that have generated power is extremely limited because of cost and institutional reasons. 100. The following sections focus on renewables that could become real projects within the next ten years and as such, should be considered for inclusion in the main output of the study, the Ten Year Road Map for the Power Sector in Samoa. Coconut Oil 101. Whilst locally produced coconut oil is likely to have economic benefits, the viability of locally produced coconut oil will be sensitive to international fuel prices, e.g. a fall in oil prices towards historic averages may make coconut oil more expensive than diesel; coconut oil (and other substitutes) from countries with large-scale, established operations may undercut local prices. 102. Furthermore, the use of coconut oil is likely to encourage greater fuel imports in the short term if growing demand is met with expanded diesel generation as appears likely under current investment plans. Beyond that fuel from coconut oil could be more effective. 103. The efficiency of some of EPC’s current diesel plants is likely to be low. A programme to replace inefficient diesel plants with new diesel generation would reduce fuel imports and would allow any local coconut oil industry to be sized appropriately. 104. There is real interest in the local business community to provide a reliable, cost-effective supply of coconut oil. A company, established by Mr Isikuki and others in 2006, raised ST500,000 to provide a supply of coconut oil but closed after six months due to lack of market demand. The local business community is concerned with EPC’s plans to establish Government-owned and operated coconut plantations and coconut oil processing facilities. These concerns seem well founded and consistent with one of the drivers for the ADB project which is to establish a more market-based electricity sector and to put EPC on a more commercial basis and be consistent with the Target Outcomes described in ADB’s Country Strategy and Programme Update 2005-2006: Samoa. EPC however could be a substantial purchaser of coconut oil if available. 105. It is to be noted that coconut oil is the subject of an ongoing SOPAC / EPC study and there is a GEF Medium Size Project Concept Paper for a 3MW biofuel plant on Upolu presented in ADB’s Pacific Subregional: Renewable Energy and Efficiency Programme (REEP). Wind 106. Two wind monitoring stations will be established on Upolu by the end of 2006. The collection of two years of data will lead to the development of a wind resource map for Upolu and Savaii during 2009. It is recommended that a commercial wind power developer be involved at an early stage of data collection to review the suitability of monitoring arrangements and so reduce potential delays to future investments in this area. It is also recommended that Digicell and SamoaTel be approached to determine whether data might be obtained from their existing cell sites. 107. There may be opportunities for future ADB projects to support the above wind resource assessment through installation of an additional monitoring station (e.g. on Savai’i) and to develop micro-wind projects across the islands, particularly in poorer areas (e.g. northwest Savai’i). Geothermal 108. The geothermal potential on Savai’i is poorly understood. In 2001, Layman, an American company, applied for a geothermal development licence in Savai’i - the application suggesting that there may be sufficient resource for a 4-5 MW power plant. However, this does not provide an indication of the magnitude of Savai’i’s geothermal potential. Whilst geothermal power provides an opportunity for firm cost effective baseload, the risks (e.g. exploration / drilling costs, volcanism, development of in country expertise) need to be well- understood.
17 109. There may be opportunities for ADB projects to support detailed surface and sub-surface resource assessments and project development.
Solar 110. The solar photovoltaic mini-grid will be operational on the island of Apolima by the end 2006 and will provide an excellent case study for potential wider uptake. An assessment needs to be made on how much electricity heated water could be replaced by solar thermal. 111. The use of solar thermal hot water systems supplied by a local business on commercial and government buildings provides a model of how the private sector could be involved in solar photovoltaic uptake. 112. There may be opportunities for future ADB projects to support solar photovoltaic initiatives for selected locations and applications, for example, in areas where the transmission / distribution infrastructure is weak or where major new loads (e.g. resorts) are planned. The reform of the ability of EPC to purchase electricity from private investors needs to take this into account. Hydro 113. Given the study’s focus on the Vaita’i hydro scheme, the current study will review the potential for hydro projects but it is likely that the focus of the renewable energy programme will be on the development of non- hydro renewable projects. With the possible introduction of other non-firm electricity generating sources such as wind the value of hydro storage will increase and needs to be assessed. 114. Some resorts have indicated an interest in micro hydro which could improve their own reliability of electricity supply and provide an opportunity for sale of surplus generation to EPC. The ability of EPC to purchase such generation needs to be taken into account when EPC purchase capability and criteria are considered. Other Renewables
115. The current study will review the potential for projects utilising other renewables (e.g. palm oil, wave, tidal, ocean thermal) but at this stage, it is considered unlikely that these will become real projects within the next ten years either due to technology and/or resource constraints.
G Environmental Issues 116. Environmental issues continue to beset the power sector in Samoa. Noise and fumes from the diesel power stations are reported concerns from surrounding villages. The government has set land aside for new power stations on both Savai’i and Upolu, which include large buffer areas for possible plantations. 117. Villagers near hydro stations also report adverse effects, from lack of water (the village of Magiagi receives free water and power as part of compensation, but claims for further compensation are continuing) to flooding (Lalomauga). However, of greatest concern are the adverse environmental effects arising from the Afulilo hydropower project, where not only was a wetland forest of regional significance destroyed as part of the reservoir inundation, but water quality issues downstream appear to be having major adverse effects in Fagaloa Bay. We understand that legal action has been initiated against EPC. 118. The environmental assessments undertaken on potential hydropower projects in the Sili River Basin to date appear to have misinterpreted both the environmental and socio-cultural significance of the area. This is not to say that the effects of any particular project are necessarily likely to be more than minor. Rather, the investigations undertaken in the area to date appear to have been limited to superficial and very intermittent visual appraisals, seemingly mostly by unqualified people, and this has resulted in “findings”, or expressed opinions, which are based on ignorance rather than any substantive information on which the local community, funding agencies and project implementing agency are able to rely. 119. The previously expressed opinions that there are no valuable or unique species of terrestrial fauna and flora, or aquatic fauna, which are likely to be adversely affected by the project, are not supported by any reliable data.
18 120. The opinions on social and cultural impacts are even less reliable. The general hydropower project location (Vaita’i Stream) appears to have been determined to a large degree by misconceptions and politics and not through an inclusive consultative process. This non-inclusive decision making process has caused divisions within the local community. The wider community has not been part of the EIA process to date. Indeed, even key stakeholders are only now in the process of being identified. The previous finding that the land owners of the project site and access road are supportive of the project ignores the fact that there are other sections of the community who are strongly opposed to the project. 121. A local environmental NGO, the Le Siosiomaga Society Inc, is also reportedly opposed to the project, and very critical of the lack of a consultative process to date. There is therefore a very real possibility that those sections of the community that are currently alienated from the process could seriously compromise the projects viability, irrespective of any environmental and social impacts and/or benefits that may be realised. Other Savai’i based environmental groups are also reportedly opposed to any hydropower project in the Sili River Basin. 122. The location of the access road that was constructed just prior to the recent election does not appear to have any technical basis, and once past the proposed power station site does not provide any benefit to the proposed hydropower project. The general road location appears to be that which was shown by Fichtner as an access track on a figure within the prefeasibility study report. This access track now terminates at a precipitously steep slope, and is a major scar on the landscape. 123. The access road was constructed in the absence of any consultation or environmental impact assessment. Seen as a project undertaken for the benefit of the village of Puleia, the road evidently caused severe resentment within the Sili village community. Immediately after the election this year the Puleia secondary school, constructed with EU funding in 2002 was burned to the ground. This was reportedly done in retaliation for the road construction. The road to nowhere and the burned out school should serve as clear indicators of potential problems ahead for the proposed Vaita’i hydropower project. 124. Comprehensive environmental and social impact assessments are therefore key requirements if the Vaita’i hydropower project is to proceed further. A properly managed community consultative process, involving well prepared briefings and workshops, is considered essential.
125. The in-stream ecology of the Asaasa River and Vaita’i Stream need to be determined as part of environmental baseline studies, as does the water quality. This work will need to be undertaken prior to construction so that the effects can be quantified.
H The Proposed Vaita’i Hydropower Project 126. Studies of the hydropower potential of Savai’i, concentrating on the Sili catchment, date back to 1985 (Bechtel), with further studies by HEC (1995), EPDC (1996) and Nippon Koei (2003). The project concept to be refined under this TA arises from the 2005 work by Fichtner under TA 3985 which concentrated on the Vaita’i scheme – prospects on other tributaries of the Sili River were abandoned due to their rejection by villagers. As conceived by Fichtner, the Vaita’i scheme is a run-of-river system, with a net generation head of 130 m and a design discharge of 2 m3/s, giving an output of 2 MW. As an add-on to the hydropower facility, the Fichtner study identified the potential for a water supply scheme taking water from the tailrace of the hydropower scheme. 127. The main components of the scheme, as set out by Fichtner, comprise an intake weir (RL 272 m), a single penstock (2.1 km - 2,100 mm diameter pipe), powerhouse (housing twin 1 MW Pelton turbines at RL 136 m) and switchyard and transmission system (4 km to Sili village at 22 kV). 128. The key technical issues to be evaluated by this TA in order to firm-up the feasibility of the hydropower scheme include: • Geology: includes intake (foundation conditions and water-tightness) and penstock (stability) • Hydrology: the Fichtner estimates were recognized as tentative and require firming-up, based on records from the water level gauge installed at the intake site in late 2004 • Environmental: refining the Fichtner IEE, accounting for lessons from the Afulilo hydropower project (eg as cited in National Report to the Convention on Biodiversity, Government of Samoa, 1998)
19 • Land acquisition: issues with the customary land affected by the scheme works will need to be worked-through with villagers – this is recognized as requiring high priority from the outset of the TA work • Social and community benefits: to be identified and developed as an integral part of project planning 129. The TA team recognizes that here is a history of proposed development projects in Samoa running into problems because of the inability to adequately engage local villages and forge their acceptance of the benefits. This can be from a mixture of the apparent intransigence of the villages (in turn, often rooted in fear that they are not being told the truth about the project and its physical and socio-economic impacts) and/or a poorly designed and executed public consultation program (eg by project proponents who do not fully appreciate the importance of close adherence to the formalities of local custom and protocols). 130. In relation to the environmental impact, it is noted that Samoa’s natural resources are fragile and scarce, and require careful management. Environmental impact assessment legislation has been drafted but not passed. The Government has made substantial gains in environmental management, including designating national parks and preparing a coastal infrastructure management plan in consultation with the village communities. Environmental Mitigation Measures 131. Given the extremely sensitive nature of the proposed Vaita’i hydropower project, a preliminary project design has been developed which appears to be both technically and economically feasible, and which should have a very low to negligible environmental impact. The specific environmental mitigation measures are: • a site for a low weir has been generally identified on a section of the Asaasa River that has a very short remaining length before going underground, thereby minimising the extent of surface stream dewatering • the weir site has been specifically located so that there is no storage (i.e. truly run of river) and no weir induced flooding of vegetation upstream of the weir under normal flows • a single all purpose access road has been generally located which utilises the natural contour of the land, thereby minimising the need for earthworks, in particular cutting. The same track will be used for project construction, and the pipeline (penstock) will follow the access road from the intake to the power station site • following construction, the access road upstream of the Asaasa Falls will revert to become a pedestrian access track only to discourage exploitation of land upstream of the weir and water intake, thereby assisting with catchment conservation • the precise location of the road has been located to avoid the removal of any large indigenous vegetation, or the removal of any planted crops (mainly taro), or affect any areas that could be of archaeological significance 132. The western branch of the upper Vaita’i Stream system, the Laupa River, will not be utilised to augment the flow of the Asaasa River (as was shown on the Fichtner scheme). Accordingly, the hydrology and instream ecology of the Vaita’i Stream below the confluence of the Asaasa and Laupa Rivers should not be significantly affected by the proposed project. 133. The transmission line will follow the existing road from the power station site to the main road. Accordingly, no vegetation will be affected. 134. The main impact of the proposed project will be the removal, at least for some of the time, of the visual and recreational amenity of the Asaasa Falls. The visual amenity of the Asaasa Falls will be adversely affected by the project. Low flows will largely be captured and diverted by the intake, and hence the falls will have little if any water for 90% of the time. Flood flows will not be affected, with all the flow going over the falls. 135. Due to the compressed programme and need for core subproject concept details to be produced by mid December 2006 (to allow the ADB loan application process to proceed) we include the results of our initial investigations in this Inception report including draft scheme layouts for comment and discussion. Preliminary Draft Figures F1 and F2 are included in Appendix 6. Intake Works:
20 - diversion weir may be resited to the next pond upstream from the Fichtner (weir and Gauge Pond) to gain extra head and allow better flushing potential and layout advances for the settling basin as well as raising such structures clear of stream flood flows - both weir sites need to be verified in terms of flow losses through rock strata - initial barometric and then GPS levels indicate the pond may be 20 m or so lower than Fichtner assumptions(likely that mapping inaccurate due to canopy tree cover).Intake water level appears to be about RL 250 m. Topographical survey is needed to confirm this - availability of surveyors and timing may be an issue - the Fichtner report identified the potential for diversion of an upstream stream to the intake but no details were supplied. A brief site reconnaissance has shown this to be likely impractical due to very difficult access and unsuitable topography, and this stream is best left to maintain flow in the Vaita’i. Pipeline and Road Route: - the access road route shown in the Fichtner report is very difficult in that a steep ridge needs to be traversed - the previous Fichtner pipeline route similarly needed to traverse the ridge apparently sidling a very steep slope – when viewed in longitudinal profile the route appears satisfactory. However, if cross sections are introduced then the practicality of the Fichtner route becomes very questionable. Consequently, the access road and pipeline routes followed different paths. Current site inspection with indicative GPS has identified a much more practical alignment for a combined access road and pipeline route adjacent from the end of the existing access road to the base of the falls near the intake. The main issues relate to ridge slope stability adjacent to the pipeline / road route. Power Station - the power station has been sited initially on the Vaita’i stream side of the existing road and at a lower level to regain some of the lost head from the intake. This siting is very preliminary and may need relocation based on surveyed ground levels and flood level estimates. A key issue to be addressed is ensuring that the station is above cyclonic flood flows in the adjacent stream. The tailrace alignment back to the river and need for an outlet pond need to be assessed further. Hydrology 136. In response to a recommendation in the Fichtner TA a flow gauge installation was sited in the then intake pond during the latter Part of 2004 to allow collection of the fundamental and crucial flow data for the project. Data was continuously collected from November 2004 to June 2005 until the batteries required for the installation expired. To date no replacement batteries have been sourced and thus no data since June 2005 has been obtained. Further, following recent heavy rain and high flows in the stream the staff gauge was washed away sometime between late October and early November 2006. Further, it was recently discovered that a fundamental change was made to the gauge in May 2005 whereby the sensor was physically lifted to the zero mark on the staff gauge. The difference was some 670 mm (not measured accurately to date) and this clearly affected all prior flow readings when compared to the three gaugings that had been made. An adjustment has been made based on transducer readings immediately before and after the physical lift and this is the source of the 670 mm adjustment. A verification of this is now impractical due to the staff gauge recently being washed away. 137. However, based on this data an indicative (albeit short record) flow duration curve has been produced which indicates that flows appear less than previously estimated. The attached Figure in Appendix 6 shows a rough comparison of the current flow duration curve and that of previous Water Supply 138. The potential for conflicting uses of the water resources of the Vaita’i River needs to be addressed as part of the Vaita’i hydro project feasibility studies.
21 139. The perennial water resources in the Sili River Basin have long been recognised for their potential to provide the whole of Savai’i with a reliable water supply, and many studies have recommended setting these water resources aside for this purpose (domestic potable water). 140. Indeed, the Fichtner study initially concentrated on the Vaiola and Lata Rivers as they understood that the Vaita’i Stream was set aside for water supply and was therefore unavailable for hydropower. However, objections to a hydropower scheme in the Vaiola and Lata River catchments by the Sili village community led the Fichtner team to divert their attentions to the Vaita’i Stream catchment. 141. The scheme they finally developed to a pre-feasibility level incorporated a water supply component at the end of the power station tailrace, in a similar manner to that at Alaoa where water from the Fale-o-le-fee and Alaoa Hydropower stations is collected in ponds, treated, and reticulated to provide water to Apia. With a power station elevation at 136 m RL, this was thought to provide sufficient elevation to gravity feed to potential users. 142. Given the indicative level of the power station tailrace a water supply offtake appears feasible to gravitate to a storage tank and hence pipe the water down the access road to the village. However, issues related to water supply include: • target demand area(s) • SWA level of involvement and contribution • size of storage(s) and delivery pipeline capacity • operational rules in terms of hydro generation and water supply • the role of the Canada spring water supply 143. Sili and adjacent villages have their own water supply, sourced from a spring to the east of, and outside, the Vaita’i Stream catchment. Accordingly, Sili and adjacent villages do not need a treated water supply, nor do villages currently supplied by Samoa Water in the Saleloga and east coast area. The main need for water is in the west and north of Savai’i, and it is not possible to gravity feed the water from the Vaita’i power station to the west or north of the island. Samoa Water is not interested in pumping this water to those locations. 144. From discussions with the EU projects advisor to the Ministry of Finance (Nigel Wormsley), there does not appear to be any interest in using the water from the Vaita’i power station unless it could be pumped free of charge. Accordingly, only if EPC had to consume the water (e.g. if the villagers did not want it returned to the river) would there be any justification for pumping the water away. 145. A possible driver for just such a scenario was reported opposition by the Sili River Basin Committee to returning the water to the river for fears that the water would be contaminated. These fears arose from a visit by the Sili villagers to the Afulilo hydropower station site where the water was seen to be dirty and the villagers downstream (Taelefaga) reported adverse effects arising from the contaminated fresh water discharges from the hydropower station to the lagoon (Fagaloa Bay). 146. As part of the current consultative process a meeting was held with the village committee and EPC representatives to discuss with them the main components of the currently developed Vaita’i hydropower scheme and the environmental considerations that had been incorporated into the design, to discuss the environmental issues identified to date, and to obtain their feedback and answer any questions. 147. This meeting, held above the library in Saleloga on 9 November 2006, was seen by EPC as a major turning point for the project in that up until that time all but 3 of the village chiefs reportedly opposed the project. Following the meeting all the attending committee members reportedly supported the project, including returning the water to the Vaita’i Stream after passing through the power station. Transmission 148. Logically the transmission route from the power station will follow the access road to the main road and hence will connect to the existing system as envisaged in the Fichtner study.
22 III. Methodology
A. Regulatory, Governance and Institutional Development Aspects 149. With the background given in Sections I and II, with specific emphasis on the outcomes listed in Section 1A, the methodology to set the framework for the regulatory and institutional reforms are closely linked and will be treated together. A close working relationship will also be had with TA4513 SAM: Strengthening State- Owned Enterprise Corporate Governance. 150. Research/consultation to gain a definitive picture of the sector, including reviews of previous experience within Samoa and elsewhere in the Pacific of similar reforms has already commenced with the initial fact-finding visits. Aspects requiring special attention include: • identification and clear separation of CSO non commercial and commercial activities within EPC • identifying options for enhanced governance • establishing scenarios of regulatory options for regulation of the electricity market • identifying market risk profile and likely investor risk profiles (including prospective private sector participants) and establishing political/community risk profile for reform • establishing electricity market pricing and scheduling model • identifying a feasible tariff structure reflecting a market pricing model • identification of economic growth opportunities from reliable, cost-effective energy • preparing the implementation plan, in the form of a 10-year “road map” for the power sector in Samoa 151. With the completion of research and consultation the governance, regulatory and institutional structure team will workshop options with key stakeholders, to develop in more detail preferred options (ie for detailed development and workshopping. Two workshops will be held; an initial one to explore options and second workshop to present refined proposals. 152. The team will work with EPC management and MOF to prepare an implementation plan. 153. A regulatory and institutional restructuring report will be produced suitable for implementation. This will include recommended new EPC management structures, amendment of the EPC legislation, electricity tariff structure, procedures and draft contracts for purchase of private sector generation.
B. Power System Planning 154. The tasks identified in the Terms of Reference for the Power System Planner require close co-operation to be established from the outset with EPC, so that a good understanding of the strengths and weaknesses of the EPC planning capabilities is obtained. This will provide a sound basis for identifying areas where improvements can be made and what additional resources should be provided to EPC under the TA to ensure that the system planning capabilities of EPC are enhanced. Progress is already being made in this respect and recommendations will be made with regard to the use of planning software, planning for the long term, the disciplined processing and storage of data for system planning purposes and staff training. 155. A comprehensive questionnaire and data request was issued to EPC during the initial visit of the project team and a set of various study and annual reports was provided by EPC in response to the data request. These have been reviewed and relevant data and other information duly noted. 156. During the course of the first in-country visit of the Power System Planner a series of meetings with EPC management and engineering staff were held to obtain the documentation and data requested. This information was sought in order to establish system losses and other important performance indicators as well as to provide background information on the power systems of Upolu and Savaii. 157. Power system data is being compiled into a database which will be used to establish a simplified computer model of the power systems on the two main islands, which will be used in the project to examine the various energy supply/demand scenarios. Validation of the computer model will be based on a comparison with actual system performance. The computer model will also be used to identify where technical loss reduction measures should be focused to get the best return for investment.
23 158. Data has been collected on the accuracy of energy metering used for billing purposes when recalled for re-certification. Analysis of the results in comparison with the desired +/- 2% tolerance level will show whether metering is a major contribution to non-technical losses. In discussions with EPC the numbers for lost meters and cases of meter tampering have been established and based on average customer usage for domestic and commercial customers the extent of lost sales will be estimated to get some indication as to whether the lost or tampered meters are significant in contributing to non-technical losses. 159. The demand forecast will be developed on the basis of historic data and identifiable new development projects, with high and low forecasts to cover possible future growth scenarios beyond 2008. The growth associated with the various sectors, i.e. domestic, commercial, industrial etc, will be examined for validation purposes so as to give some confidence that the developed forecast is a reasonable indication of future demand. 160. The least cost 10-year Development Plan will be established for the two main islands to meet the demand forecast, based on an agreed set of security criteria, voltage regulation tolerances, and standard equipment types and ratings. In establishing the least cost development plan the most viable options for generation and the distribution system will be presented as alternative scenarios for more detailed analysis. In the timescale allotted for this TA, it is envisaged at this stage that the number of scenarios considered in detail shall be limited to the three most viable options. 161. The assessment of each scenario will be based on both technical and economic analysis so that providing each scenario meets the desired technical standards then the choice of scheme will be based on costs, which includes the initial capital investment and the operation and maintenance costs. 162. The least cost development plan will be presented in terms of achievable timescales, and be fully budgeted, based on a combination of current international market prices, where appropriate, and the latest unit costs used by EPC for the supply and installation of electrical plant and equipment. At an early stage in the programme EPC unit costs will be compared with international market prices to get an indication of how they correlate. Other costs for transportation, engineering and contingency, insurance costs etc will be included in the cost analysis. The sensitivity of the Plan to the effects of possible variations in the demand forecast which could effectively delay or advance the implementation of the plan will be assessed. 163. Discussions with EPC and with other specialists in the TA team will help to establish the selection criteria used to prioritise individual sub-projects in the least cost development plan. For those sub-projects that satisfy the criteria a more detailed presentation of the projects and the scheme costs will be provided. 164. Templates that are to be used for the sub-project engineering analysis will be developed and EPC staff will be instructed in their usage. 165. The Terms of Reference and Implementation Schedule will be prepared for the Consultants that wish to bid for implementation of the sub-projects and for the power sector expansion plan.
C. Renewable Energy 166. The background given in II E indicates the broad potential for renewable energy sources in Samoa. These will be evaluated as indicated in the TOR, involving coordination with the likes of: • Energy Unit of the Ministry of Finance’s Economic Planning and Policy Division • Pacific Islands Energy Policy and Strategic Action Planning (PIEPSAP) • UNDP project on the use of coconut oil for power generation • Recent SOPAC study on the use of wave power off the coast of Savai’i • Lessons from recent UNDP TA projects elsewhere in the Pacific Islands, eg: - Increasing the Utilization of Renewable Energy Technologies in the Cook Islands Energy Supply - Grid-connected Photovoltaic Electricity Supply on Tokelau
24 167. Once the sources are evaluated, the focus will move to cover: • evaluation of resource supply certainty and assessment of the costs of energy development options • identifying priority options for investment taking into account likely long term cost/benefits, maintenance requirements, potential environmental impacts, future capital cost reductions, etc • operating and maintenance skill requirements (ie recognizing that the investment in renewable energy sources has a consequential requirement for ensuring that adequate skills are developed) • assessing the potential impacts on the proposals of forecast climate change • addressing the clean development mechanism issues set out in the TOR • evaluating and reporting on the emission reduction market issues and options set out in the TOR, including prospects for an emission reduction credit market • formulating feasible subprojects into the least-cost expansion program, with close attention to all of the foregoing factors and buy-in by EPC and Government
D. Financial Management Aspects 168. The ToR calls for two major tasks being the financial analysis of EPC’s proposed investment plan and the assessment of EPC’s financial performance. 169. The objective of the financial analysis of the proposed investment plan is to ensure that the subprojects that have been identified as technically feasible are also financially feasible. Clearly, the major project that has been identified by EPC is the Vaita’i Hydropower Project, although any other projects identified in generation or transmission / distribution areas will also be subject to financial analysis. 170. The financial analysis of the subprojects, in the event they reflect an improvement to the existing system, will present a “with” and “without project” analysis of projected cashflows. 171. Where the subproject is entirely new (such as the Vaita’i project) or an addition to the system only the “with project” scenario will be relevant. This analysis will be carried out in accordance with the ADB Guidelines, Financial Management and Analysis of Projects and Guidelines for the Financial Governance and Management of Investment Projects. All assumptions relating to the preparation of projected cashflows will be clearly set out. 172. A project cost estimate will be prepared using COSTAB software depicting all project components and subcomponents, separating foreign exchange and local currency costs, including physical and price contingencies, interest during construction and other financing charges, if any. A financing plan will also be prepared setting out ADB funding, GoS funding and other sources of funding. A financial internal rate of return (FIRR) will be presented for each subproject and the project as whole. Sensitivity analysis will be carried out on key variables. Based on the terms and conditions of the sources of funding a weighted average cost of capital (WACC) for the project will also be computed. 173. The second major task is the assessment of the financial management capacity and sustainability of the EPC. To this end the most recent financial statements of EPC will be examined as to suitability of accounting policies adopted vis a vis Generally Accepted Accounting Practice (GAAP) and International Accounting Standards (IAS). Given that a financial management assessment has been carried out for the Bank in 2005, this assessment will draw from the above mentioned study and update its conclusions based on the most recent financial statements of EPC. The ADB Financial Management Assessment Questionnaire (FMAQ) will be used during interviews with key finance staff on accounting, financial and internal control aspects. Reports of the external auditor will be examined for any deficiencies highlighted in financial reporting and internal control. Based on this examination the Consultant will propose measures to strengthen financial management together with a time bound action plan. 174. In concurrence with the assessment of the financial statements and the financial management function, the consultant will also review the power tariff structure to determine whether the true cost of supply is being adequately recovered or subsidised in a transparent manner. The viability of the tariff structure will be tested by preparing projected financial statements over a 10 year period for EPC, taking into account the costs and benefits of the proposed subprojects.
25 E. Economic Aspects 175. In conjunction with the system planner load forecasts would be prepared for both Savai’i and Upolo islands taking into account renewable energy options including Vaita’i hydro on Savai’i. Appendix 7 discusses recent economic developments and expected growth in GDP up to 2010 and identifies major new loads as a result of hotel developments, new government buildings and the South Pacific Games facilities. Appendix 8 summarises EPC’s recent electricity sales and notes that growth over the period 2001 to 2006 for the two systems of 2.6% per annum (Upolo 2.7% and Savai’i (1.1%) is much lower than the forecast being adopted by EPC based on Nippon Koei in 2003 for Upolo of 6.5% and Savai’i of 6.0% per annum from 2003 to 2010. As well as a median forecast, a high and a low forecast will also be developed. 176. This exercise has also highlighted the lack of statistical information prepared on a routine basis by EPC for planning purposes. It is recommended that annual data be maintained for sales, customer numbers, revenues by customer category for each island together with information on losses, peak demand and load factors and that 10 year series be published in EPC’s annual report. A least cost power system plan will be developed for each island, and the AIEC calculated. On both islands marginal generation capacity is likely to be additional diesel. Economic analysis, distribution analysis, and risk sensitivity will then be prepared for the priority projects. 177. The analysis will be carried out in economic prices, with the application of SCF (Standard Conversion factor) (or SERF- Shadow Exchange Rate Factor) and SWRF (Shadow Wage Rate Factor). The value of these will be agreed with the Bank and Government officials. It is assumed that the discount rate (EOCC) to be adopted in the economic analysis would be 12%. ADB/World Bank price projections for oil will be adopted for the economic analyses. 178. A least cost power system plan will be developed for each island, and the AIEC calculated. On both islands marginal generation capacity is likely to be additional diesel. Economic analysis, distribution analysis, and risk sensitivity will then be prepared for the priority projects. 179. The least cost analysis of technical options will be carried out in economic prices using a 12% discount rate and the average incremental economic costs, (AIEC) WS$/kWh used as the basis of comparison (as well as NPV at 12% of each option) 180. Based on the least cost investment plan, the long-run marginal cost would be calculated to assess cost recovery of power tariffs and cross-subsidies. The level of economic subsidies will be estimated by comparing the LRMC estimate of the project with the existing and proposed financial tariffs. 181. The economic benefits in calculation of the EIRR attributable to the overall project, given the high level of electrification on both islands, are likely to be restricted to diesel costs savings ( both avoidance of fuel and O&M and possibly capital costs) and reduction in system losses and improved operational efficiencies. CDM benefits would also be included with the renewable energy components. 182. A sensitivity analysis will be undertaken to assess the impact of adverse changes in key project variables on the economic viability of the project. The analysis will examine adverse changes such as increases in capital costs, operating and maintenance costs, reduction in revenues and benefits, delays in the Project implementation, and any specific project risks identified that may adversely impact on the project. Through the sensitivity analyses, risks, which have the greatest potential for negatively impacting upon the viability of the Project, will be identified so that appropriate measures can be introduced into the Project design to mitigate these risks.
F. Hydropower (including engineering, environmental, etc) 183. Matching the TOR requirements, the methodology to be applied in firming-up the feasibility of the Vaita’i scheme will cover the following – the key issues for attention are drawn out, reflecting our in-depth appreciation of the specific needs of the Project (including ADB’s imperatives): • Stakeholder consultation: to be set-up to identify all stakeholders and facilitate their effective participation - the Sili Catchment Committee is the key • Topographical survey: to be scoped by T&TI and to be let as a sub-contract – quotations are currently being sought based on the preliminary route shown on Figures F1 and F2 (Appendix 6) • Geology/geotechnical
26 • a field reconnaissance to map the local geology and scope the site investigation (SI) has been undertaken • based on this initial work no SI is considered warranted at this time • undertake 2 sets of intake gaugings over 2 days - each set to comprise a gauging in the Fichtner (gauge) pad and another in the proposed new intake pond initially upstream to assess any losses across the two ponds and hence rock openings. • Hydrology: - the records from the water level gauge installed at the intake site in December 2004 have been reviewed. Data record from November 2004 to June 2005 together with 3 gaugings in 2005 (2 of which are within the data period) - an indicative flow duration curve has been produced and compared to the Fichtner curve (see figure in Appendix 6) - conduct the requisite hydrological analyses to establish energy output, firm power, etc • Environmental: - refine the IEE prepared under TA3985, with additional fieldwork and work with the Hydropower Engineers to mitigate impacts - prepare sector impact assessment and EARP (not related to Vaita’i scheme) • Refinement of conceptual design: identify areas where the Fichtner layout warrants more detailed work and firm-up the conceptual layout (ie with inputs from the work listed above) - initial work done per Figures F1 and F2 and as discussed in II F • Physical scale model: to be scoped by T&TI and let as a sub-contract (with prior ADB approval) – most likely constructed offshore and air-freighted to Samoa • Optimization of installed capacity and firm power: - quantify energy outputs and project costs for a range of capacities, to optimize the capacity - no opportunity to provide storage at the intake site appears to be possible - integrate with parallel work by Power System Planner • Preliminary engineering design – civil: - intake/forebay: explore a range of layouts to minimize both sedimentation problems and construction costs - penstock: optimize the economic diameter and assess material types - powerhouse: establish the optimum location (considering topography and river hydraulics and flood levels) and layout - resolve constructability and operation/maintenance aspects to optimize the design • Preliminary engineering design – electrical/mechanical: - turbines: select the appropriate type, matching the head, operation mode, efficiency, etc - generators and powerstation electrical equipment: refine the Fichtner report proposals - switchyard: sited to be safe from hazards, with provision to match the Savai’i system growth plans - transmission line: optimum route and cable/support system (risks from blow-down of trees minimized) - likely optimum is to follow the access road • Water supply scheme (as an add-on to the hydropower system): - quantify the demand and supply balance and the reservoir storage needed - optimize the route for the main delivery pipeline (likely along access road) - prepare preliminary engineering designs for the scheme components (eg tailrace offtake, storage, pipelines/valves, end point connection - identify the end users • Social Analysis - The Consultant will validate the Initial Poverty and Social Analysis (IPSA) report prepared by ADB Staff following the TA Fact-Finding Mission on March 6 – 10, 2006. It will use secondary data and conduct social surveys of sample population in the immediate vicinity. The Consultant will use the Bank’s Handbook on Poverty and Social
27 Analysis (December 2001) and the Handbook for Incorporation of Social Dimension in Projects (May 1994) for its references. • Land Acquisition and Resettlement - Given the Project concept, lands will be acquired for the following components of the core subproject, such as, (a) power generation scheme including new access road, (b) substations, (c) poles for the transmission system, (d) rights-of-way (ROWs) for transmission system, and (e) temporary work stations. The land for the power generation scheme and for the poles that will be located in built-up areas shall be acquired permanently, while those for the transmission system and temporary work stations shall be arranged with the owners for temporary use. However, the total land requirements will be known only after the sites for power generation facilities and new access road, poles and temporary work stations have been firmed up and the ROWs for the transmission system have been identified. - The Project will depend on waters from the Asaasa Stream which will be diverted into a pipeline that will transport it to a power station 2 km downstream. The weir is to be located immediately above the Asaasa falls. The Asaasa stream however does not flow through the village but goes underground at the Asaasa Falls. Only during heavy rainy seasons, when it overflows does excess water flow into the nearby Vaita’i Stream. Otherwise, most of the water disappears into an underground cave and does not re- emerge until it reaches the sea. The extent of usage of the Asaasa stream by downstream communities is therefore insignificant, as a result of isolation and difficult access. Water from the power station however will be discharged into the Vaita’i Stream. There are some potential issues that need to be clarified with the village people, like the quality of the discharged water from the power station, noise, location of the pipeline and access road and their impacts on existing uses. In addressing these issues, systematic approaches on information dissemination and active community participation will be adopted in order to generate the village peoples’ support for the project, such as: (i) conduct of joint project disclosures and public consultations as well as distribution of Project Information Booklets to stakeholders; (ii) conduct focus group discussion to identify the community needs and aspirations; (iii) involve them in the planning process; (iv) present and discuss with them the technical plans and solicit their approval by signing the plans; (v) discuss the compensation and entitlement package incorporated in LARPs; and (vi) present the condensed LARPs for their review and solicit their signatures as seal of approval. - On the feasibility of acquiring lands customarily occupied by the village people in the Core Project area, the Consultant will prepare the social safeguard plans as among the key requirements in the TA. The safeguard plans are the Land Acquisition and Resettlement Framework (LARF) and the Resettlement Plans (RPs) for the core sub- project. The LARF will contain the procedural policies and guidelines in preparing the RPs while the RPs will provide site-specific plans for the core subproject. Both documents will comply with ADB’s involuntary resettlement policy3, and be consistent with the report outlines prescribed by ADB’s Regional and Sustainable Development Department (refer to Appendix 4 and 5). As they are critical for the approval of the Project loan(s), the LARF and the RPs will be presented in the proper venue prior to submission to ADB. The RPs shall be condensed and translated in a language largely understood by the stakeholders.
3 Policy on Involuntary Resettlement (August 1995), OM Section F2/ BP (September 25, 2006) and Involuntary Resettlement: A Guide to Good Practice (1998).
28
• Cost estimation: - prepare inventories of foreign and local cost components - coordinate with Financial Management Specialist and Power Economist to provide subproject cash flows • Bid documents: prepare design/build bid documents to implement the subproject • Economic and financial evaluation
29
IV. Organisation and Staffing
184. Figure 1 shows the Organisation Chart for the TA Figure 1. Organisation Chart
Government of Samoa Asian Development Bank
Consultant Team MoF Consultant Team
Team Leader MNREM Regulatory Expert Corporate Governance and Inst. Devel. Expert SWA Financial Management Specialist Power System Planner Hydropower Engineer Renewable Energy Expert EPC Power Economist
Environmental Specialist Resettlement Specialist Sili River Basin Villages Committee Local Business, Domestic Hydropower, Private Sector Resettlement, Environmental
30 185. Figure 2 shows details of the Consultant Team experts. Figure 2. Consultant Team Experts
Proposed Employment Position Status with No. of Family Name, for the International Nationality Firm Firm (full Education/Degree years of First Name Project or (acronym) time, (Year/Institution) relevant Domestic regular staff, project or other) experience Cox Brian E. Regulator Int'l. NZ E.H.M.S Ltd Full Time B.Eng Civil, 72/ 23 Expert Auckland University Dip Business Studies, 96/ Massey University Murray Ellis Corporate Int'l N.Z Dialogue Full Time B.Sc(hons), 66/ 33 Governance Consultants Victoria University, Institutional Ltd M.Phil, 82/ University Development of Auckland, BA Expert Victoria University Aukorala Jayath M. Financial Int'l Sri Lankan Associated Full Time MBA 94/ University of 17 Management Management Bradford, ACCA Specialist Services 93/UK, 92/ CIMA UK Gadsden James B. Power Int'l British SKM Full Time M.Sc. 72/Strathclyde 43 Systems University, B.Sc. Planner (hons) 69/ Sunderland Polytechnic Grimston John O. Hydropower Int'l Australian Tonkin & Full Time B.Eng Civil, 77 NSW 34 Engineer Taylor Institute of International Technology, MBA 94/ Ltd Deakin University Muir James A. C. Renewable Int'l British SKM Full Time M Eng Engineering 13 Energy Expert Services, 93 Oxford University, M Sc Ecosystem Analysis, 97 Warwick University Ian Walker D. Power Int'l NZ KCG Full Time M Sc Economics, 74/ 31 Economist Massey University B C A Accountancy and Finance, 76/ Victoria University Rogers Nicholos W. Environmental Int'l NZ Tonkin & Full Time MSc Earth Sciences, 27 Specialist Taylor 77/Waikato International University, B Sc, 73 Ltd Waikato University Corpuz Angelito N. Resettlement Int'l Filipino Edcop Consultant MA Urban Planning, 24 Specialist (Consultant) Self Employed 98 University of Philippines, MBA, 94 Ateneo de Manila University, BA Economics, 77 Luzon Colleges Tinai Tom Hydropower Domestic Samoan Tinnai Full Time B Eng Civil, 81/ 25 Engineer Gordon University of Technology, B Eng Civil, 85/ University NSW Sesega Sammelu Resettlement Domestic Samoan Pacific Full Time M. Sc Resource 19 Specialist Environment management, 90/ Consultants Canterbury University, B. Sc / Diploma Forestry, 85/ University of Philippines Schuster Cedric M. Environmental Domestic Samoan Pacific Full Time MA Sustainable 16 L. Specialist Environment International Consultants Development Brandeis University USA, BA Geography, Victoria University NZ
31
186. Figure 3 shows the revised staffing schedule proposed for the TA.
32 Staff Time and Visits 187. The Consultant team home office and field time allowances appear adequate to complete the scope of work defined for the TA. However, the team has reviewed the number and timing of visits to match the various scope requirements on the basis of the initial inception and scoping phase of the TA. The proposed timings are shown in Figure 3. The proposed visit changes are set out below.
Person / Role Changes Proposed Reason for change James Muir/ From 1 x two week field visit to 2 visits The in-field services will be better delivered Renewable Energy (the 1st of 12 days, the 2nd of 7 days) through two field visits, the first of which Specialist (i.e. extra 1 RT plus extra 4 days per commenced on 23rd October 2006. diem plus extra miscellaneous travel The second visit will commence at a later expenses, i.e. a total of US$2,000) date such that the Renewable Energy Specialist is in a position to deliver the dissemination workshop as stated in (xii) of the Outline Terms of Reference and to discuss with in-country stakeholders elements of the Renewable Energy Specialist’s scope which are likely to be clarified only after submission and agreement of the Inception Report. Brian Cox / From 4 to 5 field visits (i.e. extra 1 RT) Shorter duration visits to better match key Regulatory Expert role in Phases 1, 2 and 3 plus the two Regulatory workshops (particularly the Inception Tripartite Mission) Ian Walker / Power From one, two week field visit to two, Provides a better match to tasks and Economist one week field visits (i.e. extra 1 RT) outputs to follow an initial visit to deal with economic issues, load forecast etc with a visit in either late Phase 2 or early Phase 3 to discuss the least cost options and the proposed project and their evaluation Murray Ellis / From two and three week visits to 3, Shorter duration visits to better match key Corporate one week plus one, two week field visit role in Phases 1, 2 and 3 including the Governance and (i.e. extra 2 RT) workshops and EPC Board member Institutional individual meetings the week after the Development Tripartite. Expert
33 V. Work program
188. The work program is illustrated by a set of key dates which were incorporated into the negotiation discussions for the TA. The key dates are shown in Table 1 below.
Table 1 - Key Program Dates Phase Activity/Output Description Due Date 1 Commence TA - Notice to Process 11th October 2006 Inception Report 17th November 2006 ADB Inception Mission 27th November to 1st December 2006
2 Vaita’i Hydro Concept Document 15th December 2006
Interim Report 31st January 2007
ADB Review Mission – meetings and 5th to 9th February workshops 2007
3 Draft Final Report, LARP and IEE 31st March 2007
Loan Fact Finding Mission 16th April to 4th May 2007
Informal Comments to Consultant 21st May 2007
Final Report 30th June 2007
189. Figure 4 illustrates the task programme for the TA 190. The TA is to be executed in three phases to the Draft Final Report stage, due 31st March 2007. A further period of 3 months (Phase 4) is allowed for the processes resulting in the Final Report. Details of Phases 1 – 3 are as follows.
34
Figure 4. Task Program for the TA
35 191. Phase 1: Inception. The inception phase, culminating in this Inception Report that details the goal and scope of the power system expansion plan, will establish and agree on the TA work program and firm-up the process through which the TA will be undertaken. As well as mobilizing the core Project Team personnel according to the staffing schedule (Figure 3), it will be important to clarify the work programs for the specialist sub-consultants (eg covering geology/geotechnical and hydrology) and sub-contracts (eg covering topographic surveys and geotechnical site investigations). In parallel, we will identify stakeholders, clarify data and client expectations, and undertake initial consultations, revise work plans and identify key issues that may constrain the TA implementation. We will initiate stakeholder consultation at the various levels and schedule the proposed workshops set out in the TOR. 192. Phase 2: Preliminary work to the interim report stage (by 31/1/07) 193. Phase 2 involves executing the following key work tasks (refer also Table 1): • Initiating fieldwork associated with the Vaita’i hydropower investigations (eg topographical survey, geotechnical site investigations, environment surveys, hydrological evaluations) • Vital preparatory work in the areas of regulatory framework, governance and institutional development aspects, EPC financial management evaluations, renewable energy studies and power system planning • Documenting the findings in the Interim Report, designed to establish the foundation for EPC to implement the 10 year road map for the power sector in Samoa (ie to be developed in detail in Phase 3) • Quadripartite meeting with EPC, AusAID, ADB and the consultants; among the key issues to be addressed will be getting buy-in in principle by EPC to the reforms being promulgated 194. Phase 3: Developing the power system expansion plan (draft final reports by 31/3/07). Phase 3 involves completing the parallel work streams comprising the feasibility studies addressing the Vaita’i hydropower scheme and firming-up the power system expansion plan. This will draw together all of the inputs, including key implementation facets, leading to the documentation set out in Table 2 – it is envisaged that, as well as the Draft Final Report (covering the work done and rationale for the power system expansion plan), stand-alone reports would cover the feasibility study on the Vaita’i hydropower scheme and the power system expansion plan (ie comprising a 10-year Road Map for the power sector in Samoa, including investment plans and requirements, regulatory reforms and corporate governance reforms if EPC). Table 2. Key Deliverables by Phase
Phase 1 Phase 2 Phase 3 Main Reports Other
- Inception - Vaita’i Hydro Concept - RE Workshop #2 - Physical scale model Report Document - CGIDE Workshop #2 - Bid documents for procurement - Sub-contracts for fieldwork - Draft Final Report of core subproject - Amendments to legislation - Vaita’i Hydropower - EARP (RE) Feasibility Report - Regulatory requirements for (including IEE, - Consultancy TOR & tariff-setting (RE) resettlement framework implementation schedule for - RE workshop #1 & plan, EMDP) core subprojects & power - CGIDE workshop #1 expansion plan - CDM project design document - Power System (REE) Expansion Plan (“10 - Emission market report (REE) Year Road Map”) - Interim Report
RE: Regulatory Expert, CGIDE: Corporate Governance & Institutional Development Expert, REE: Renewable Energy Expert
Appendix 1: Terms of Reference
Terms of Reference
Appendix 2: List of Persons Met
Name Organisation Position Contact Details
Asenati Lesa- AusAID Senior Activity Tel 23411 ext 714 Tuiletufuga Manager, Development Asenati [email protected] Corporation
Phillip Allars Australian High High Commissioner Tel 23411 Commission [email protected]
Marty Maessen Beeper Electrical MD Tel 24261 [email protected]
Juliet McKee Broad Horizons Consultant Tel 04 4762900 Limited [email protected]
Mua’ausa Joseph Electric Power General Manager Tel 65401; 26286 Siegfried Walter Corporation [email protected]
Taulealeausumai A. Electric Power Manager Tel 24993; 65406 Tiotio Corporation Engineering [email protected]
Vui Tusa Lance Electric Power Manager Tel 65420 Lameko Corporation Corporate Services [email protected]
Galumalemana Tile Electric Power Manager Generation Tel 65601 Leia Corporation
Olioipola Pelenato Electric Power Chief Financial Tel 65422 Fuit Ioane Corporation Officer, Accounts, Revenue and [email protected] Expenditure
Luatuanuu Salafai Ah Electric Power Chief Financial Tel 65438 Tong Corporation Officer, Budget and Asset Management
Tia fau Tafu Salevao Electric Power Acting Manager Tel 51410 Corporation Savai’i
Oda Electric Power Civil Engineer Tel 65409 Corporation (Engineering Counterpart)
Sale Faletolu Electric Power Environmental Tel 65413 Corporation Coordinator (Environmental Counterpart)
Asi Tuuau Electric Power Gauging Person Tel 65419 Corporation
Name Organisation Position Contact Details
Alex Webster Electric Power AYAD GIS/MIS Tel 65423 Corporation
Faleoo Electric Power Financial Accountant Tel 65433 Corporation
John Pale Electric Power System Analyst Tel 65440, 777 4126 Corporation
Tolifau Afereti Electric Power Chief Internal Auditor Tel 65463 Corporation
Dorothy Povesi Electric Power Legal Advisor Tel 65462 Corporation
Noboru Iwano Electric Power JICA Secondee – Tel 51243 Corporation Advisor (Mechanical Engineer) at [email protected] Salelologa Diesel Generation Station
Tafua Tautau Electric Power Supervisor Debt and Tel 7784411 Corporation Collection
Faapisa Kato Electric Power Data Processing Tel 29053 Corporation Controller
Makerita Electric Power Supervisor Payments Tel 7773232 Corporation and Payroll
Oloipola Terrence Betham and Co. Partner Tel 24337 Betham Certified Public Accountants
Thomas Opperer European Union Attaché Head of Tel 20070 Delegation of the Technical Office European [email protected] Commission for the Pacific
Jane Huria HSR Governance Tel 03 343 6428 [email protected]
Mr Okada Japan International Programme Officer Tel 22572 Cooperation Agency
Leiataua Isikuki IPA Engineering and Managing Director [email protected] Punivalue Management Consultants
Hinauri Petana Ministry of Finance Chief Executive Tel 34332/22498 Officer [email protected]
Name Organisation Position Contact Details
Lusia Sefo Ministry of Finance Deputy Chief Tel 34332/22498 Executive Officer [email protected]
Sefuiva Muagututia Ministry of Finance Deputy Chief Tel 63600 Statistical Services Executive Officer Division
Iulai Lavea Ministry of Finance Deputy CEO Tel 34344 Economic policy & planning, budget & [email protected] Economic Aid
Heremoni Suapaia Ministry of Finance Research Officer – Tel 34333 Energy (Counterpart) [email protected]
Silia Kilepoa Ualesi Ministry of Finance Energy Coordinator Tel 34333 Energy Unit (Counterpart) [email protected]
Justina Sau Ministry of Finance Assistant CEO, SOE Tel 34325 Monitoring Division [email protected]
Desna Solofa Ministry of Foreign Principal Officer Tel 22200 Affairs and Trade [email protected]
Aliielua Salani Ministry of Finance Principal Statistical Tel 343333 Economic Policy & Officer Planning Division [email protected]
Sealiimalietoa Samoa Tourism Manager – Planning Tel 63 555 Melephone Isara Authority & Development [email protected]
Tu’u’u Luafatasag Dr. Ministry of Natural Chief Executive Tel 25670 Ietutaia Setu Resources, Officer Taule’alo Environment and [email protected] Meteorology
Tepa Suaesi Ministry of Natural Assistant Chief Resources, Executive Officer Environment and Meteorology
Anne Rasmussen Ministry of Natural Principal Climate [email protected] Resources, Change Officer Environment and Meteorology
Will McGoldrick Ministry of Natural Climate Change [email protected]
Name Organisation Position Contact Details Resources, Technical Officer Environment and Meteorology
Wairarapa J Young Ministry of Natural Senior Scientific Tel 20855/20856 Resources, Officer, Samoa Environment and Meteorology Division [email protected] Meteorology
John Adank NZ High Commission High Commissioner Tel 25016, 21711 – Apia [email protected]
Malcolm Millar New Zealand High Deputy High Tel 21711 Commission - Apia Commissioner [email protected]
John Morgan Office of the Regulator Tel 30282 Regulator [email protected]
John Boyle Pacific Corporate MD Tel 21237 Services [email protected]
Tagaloa Jude Planning and Urban Assistance Chief Tel 23986 Kolhase Management Agency Executive Officer (PUMA)
Fetoloai Yandell- Planning and Urban Principal Sustainable Tel 23986 Alama Management Agency Development Officer (PUMA)
Klaus Stunzer Samoa Chamber of President Tel 21527 Commerce [email protected]
Sose Annandale Samoa Hotel President Tel 25191 Association [email protected]
Nyette Sass Samoa Hotel CEO Tel 30160 Association [email protected]
Grant Percival Samoa Manufacturers Association
Christian Fruean Samoatel Chief Finance Officer
Moefaauo Taputoa Samoa Water Managing Director Tel 20409 Titimaea Authority [email protected]
Heseti u. Vaai Samoa Water Finance Manager Tel 20409 Authority [email protected]
Name Organisation Position Contact Details
Thomas Jensen United Nations Associate Tel 23670 Development Programme Programme Specialist, Asia [email protected] Pacific Regional Energy Programme for Poverty Reduction (REP-PoR)
Appendix 3: Reference List
Asian Development Bank, August 2004. Country Strategy and Programme Update 2005- 2006: Samoa.
Asian Development Bank, 2005. Independent State of Samoa: Power Sector Improvement Project - Financial Management Assessment of the Electric Power Corporation.
Asian Development Bank, 2006. Pacific Subregional: Renewable Energy and Efficiency Programme (REEP). Volume 1: Programme Activities.
Asian Development Bank, 2006. Pacific Subregional: Renewable Energy and Efficiency Programme (REEP). Volume 2: Proposed Technical Assistance for Renewable Energy and Energy Efficiency Projects Identified by the REEP.
Asian Development Bank, September 2006. Samoa Country Environmental Analysis. Mainstreaming Environmental Considerations in Economic and Development Planning Processes.
Asian Development Bank, 2004. Swimming Against the Tide? An Assessment of the Private sector in the Pacific. Asian Development Bank,. TA to the independent State of Samoa for Strengthening State- owned Enterprise Corporate Governance. Asian Development Bank, March 2006. TA5972 (REG): Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement (PREGA 2) Projects.
Asian Development Bank, 2004. TA3985-SAM Preparing the Savai’I Renewable Energy Project: Mission Report October 2004. HARD COPY ONLY
Bechtel – Civil & Minerals Inc. Oct. 1985. Savai’i Island, Sili Power Project. Prefeasibility Study. EPDC International Ltd. Nov. 1996. Study Report on Sili. No. 1. Hydropower Project in Western Samoa. Electric Power Corporation (EPC), Government of Samoa, United Nations Development Programme (UNDP) and Organisation for Sustainable Energy, Denmark, 2005. Access to Sustainable Power Services – Apolima Island.
Electric Power Corporation (EPC), June 2006. Corporate Plan July 2006 – June 2009.
EPC and Mander Raikes & Marshall. March 1976. Hydro Power Development, Proposals for Western Samoa – Salani Basin. . Fichtner, December 2004. TA3985 – SA, . Preparing the Savai’i Renewable Energy Project. Mission Report. October 2004. Fichtner, May 2005. TA3985 Report. Preparing the Savai’i Renewable Energy Project – Savai’i Hydropower Project Pre-feasibility Study. Fichtner, April 2005. Savaii Renewable Energy Project: Initial Environmental Examination.
Government of Samoa. January 2005. Strategy for the Development of Samoa, 2005-2007.
Government of Western Samoa, October 1980. Energy Policy and Planning for Western Samoa. HEC Enterprises Corp, October 1995. Sili River Hydropower Project. Pre Feasibility Study. International Monetary Fund, April 2006. Determinants of Public-Private Partnership in Infrastructure.
Japan International Cooperation Agency (JICA), 2003. Study on Electric Power Demand and Supply in the Independent State of Samoa. HARD COPY ONLY
Mander Raikes & Marshall, Oct 77. Engineering Report on Magiagi & Fale-ole-Fee Hydro Electric Projects. Mander Raikes and Marshall, 1982. Feasibility Study of Developing the Hydro Power Resources of the Vaipu and Afulilo Basins. Mander Raikes & Marshall, April 1977. Western Samoa Hydro Project Hydrological. Survey. (Upolu) Ministry of Finance, Samoa, 2005. National Accounts Report, Quarterly Economic Review. July 2006. Budget Speech 2006/07. Meredith G. M. & Associates. September 1981. Water Supply in Savai’i Western Samoa. Nippon Koei Co. Ltd. March 2003. JICA study on Electric Power Demand and Supply in Samoa. Final Report – Main Report. NO AUTHOR OR DATE. Samoan National Energy Policy Framework. Draft.
Pacific Islands Energy Policy and Strategic Action Planning (PIEPSAP), 2006. Request for Quotation: Establishment of a Management Information System at the Electric Power Corporation (EPC) of Samoa.
PIEPSAP Annual Report 2005.
PIEPSAP, 2005. Inception Report: National Energy Policy Framework - Samoa.
PIEPSAP, 2005. Project Report 32: Workshop Report - Samoa National Energy Policy Framework.
PIEPSAP, 2005. Project Report 25: Consultation Workshop on the Samoa National Energy Policy Framework.
PIEPSAP, 2004. Project Report 15: Mission Report to Tonga and Samoa.
Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement (PREGA), 2004. Samoa Country Report.
RISØ, April 2006. Final Wind Energy Capacity Building Mission and Workshop 12 – 21 November 2005 in Fiji, Samoa and American Samoa.
Rofe, Kernard & Lapworth in assn. with G. M. Meredith & Associates Ltd. National Water Resources Master Plan Study Vols. W. Samoa Water Authority – Vols. 1, 2 & 3. Samoa Meteorology Division, Ministry of Natural Resources, Environment and Meteorology (MNREM), Government of Samoa, Electric Power Corporation (EPC), Energy Unit, Ministry of Finance, Government of Samoa, South Pacific Applied Geoscience Commission (SOPAC), United Nations Development Programme (UNDP), 2005. Upolu Wind Resource Assessment Project.
Samoa Tourism Authority, August 2002. Samoa Tourism Development Plan, 2002-2006.
South Pacific Applied Geoscience Commission (SOPAC), 2005. Feasibility Study into the Use of Coconut Fuel Oil in EPC Power Generation.
South Pacific Applied Geoscience Commission (SOPAC), 2005. Demand Side Management in Samoa: SOPAC Preliminary Report 143.
The Secretariat of the Pacific Regional Environment Programme (SPREP), 2005. Pacific Regional Energy Assessment 2004 – Regional Overview Report Volume 1.
The Secretariat of the Pacific Regional Environment Programme (SPREP), 2005. Pacific Regional Energy Assessment 2004 – Samoa National Report Volume 11.
The Secretariat of the Pacific Regional Environment Programme (SPREP), 1997. Environmental Impact Assessment Report: Augmentation Phase of the Afulio Hydro Power Scheme, Samoa. HARD COPY ONLY
Tokyo Electric Power Co., Inc, July 2001. Report on Study of Possibility of Renewable Energy Introduction in Samoa. HARD COPY ONLY
Ulrich G. Powhtzki, Feb/March 1969. Final Report on the Development of Hydro Power in W. Samoa. UNDP Asia-Pacific Regional Energy Programme for Poverty Reduction (REP-POR), Draft Final Report 2005. Pacific Rapid Assessment and Gap Analysis.
UNDP, 2005. Human Development Report 2005.
UNDP, 2006. Overview of Ongoing UNDP Samoa Assistance to Sustainable Energy in the Pacific Island Countries at National and Regional Levels.
UNDP / UNESCO Samoa, 2003. Feasibility Study: Possible Future Power Supply Options for Apolima Tai, Samoa. HARD COPY ONLY
.
Appendix 4: Format and Scope of a Resettlement Framework
The Resettlement Framework (RF) sets out the resettlement policy, together with screening and planning procedures that will apply to subprojects, components or investments that are prepared and approved during loan implementation to ensure that they conform to ADB’s Involuntary Resettlement Policy. The RF contains the arrangements of preparing full or short RPs during implementation of the loan’s subprojects depending on the severity of the involuntary resettlement impacts. The RF includes: (i) loan or investment description, including the likely scope, extent and magnitude of the resettlement effects; (ii) screening procedures for pipeline investments or components; (iii) resettlement policy principles and eligibility criteria that are consistent with the Policy and cover all investments, subprojects, and components under the loan; (iv) resettlement entitlements; (v) resettlement design criteria; and (vi) administrative, resourcing, and financing arrangements for preparation, approval, implementation, and monitoring and evaluation of full or short RPs. It also sets out provisions for strengthening the capacity of the relevant EA, project sponsor, or financial intermediary if required to address resettlement issues.
Topic Contents
• Overall likely scope of land acquisition and resettlement; Objectives, policy • Eligibility criteria for defining various categories of displaced persons; framework, and • A review of the borrower’s policy and legal framework for resettlement with any gaps entitlements* in this framework as compared to ADB’s and borrower’s policies. • Methods to be employed for preparing a population record, conducting socioeconomic Socioeconomic survey, collection of gender’s socioeconomic data, asset inventory and valuation and information* land assessment. • Measures to ensure that socio-economic condition, needs, and priorities of women are Gender Impact and identified; Mitigative • Measures to ensure that process of land acquisition and resettlement does not Measures disadvantage women and that land/house titles should be in the name of both spouses.
Information Measures proposed to ensure the Dissemination, • Consultation, Identification of stakeholders; • Participatory Approaches Disclosure of information about the project; and Disclosure • Consultations for determining principles are conducted; Requirements • Mechanisms for stakeholder participation in planning, management, monitoring, and evaluation; • Disclosure of RP to people affected; • Involvement of local institutions or organizations to support people affected such as non-government organizations (NGOs), women’s groups and community-based organizations (CBOs).
Grievance Redress • Mechanisms for resolution of conflicts and appeals procedures. Mechanisms
• Methods proposed for valuing affected assets, and any necessary measures required to Compensation, ensure replacement costs for asset and income compensation; Relocation and Income • Measures proposed for income restoration and relocation, as required. Restoration
• Measures for proposed planning and budgeting for resettlement; Resettlement • Arrangements for approval for resettlement cost estimates; Budget and Financing • Flow of funds to reach people affected; • Contingency arrangements. • Timeframe and key steps to prepare implementation schedule for sub-projects. Implementation Schedule
Monitoring and • Steps to establish internal and independent monitoring and evaluation. Evaluation
Topic Contents
• Assessment of the institutional capacity, resource capability and procedures of each Implementation public or private sector sponsor, financial intermediary to conduct resettlement related Arrangements work; • Description of relative responsibilities of the public, private and financial intermediary for projects involving private sector intermediaries; • Provision of sufficient resources for resettlement screening, RP preparation and implementation, during the course of the loan implementation.
Formal Agreement by the EA
Covenant in RRP and Loan Agreements
Disclosure of Full RP on ADB website upon project approval
* The Resettlement Framework will, wherever feasible, identify the likely overall effects and costs of land acquisition and resettlement effects, but it does not need to include a detailed population record, land and asset data specific to a particular affected group.
Appendix 5: Format and Scope of a Short Resettlement Plan
Topic Contents
Executive Summary
• Alternative options, if any, considered to minimize land acquisition and its effects, and Scope of Land why the remaining effects are unavoidable; Acquisition and • Summary of key effects in terms of land acquired, assets lost, numbers of people Resettlement affected, and socio-economic data. • Borrower’s policy and legal framework for resettlement, with any gaps in this Objectives, Policy framework as compared to ADB policy; Framework, and • Measures proposed to bridge the gap between ADBs and borrower’s policies; Entitlements • Eligibility policy and entitlement matrix for all categories of loss, including compensation rates at replacement costs. • Identify socio-economic condition, needs, and priorities of women; Gender Impact and • Include measures to ensure that process of land acquisition and resettlement does not Mitigative Measures disadvantage women and that land/house titles should be in the name of both spouses. • Identification of project stakeholders; Information • Disclosure of project information; Dissemination, • Consultations for determining principles; Consultation, • Participatory Approaches Mechanisms for stakeholder participation in planning, management, monitoring and and Disclosure evaluation; • Requirements Disclosure of RP to people affected; • Local institutions or organizations to support people affected. Potential role of non- government organizations (NGOs), women’s groups and community-based organizations (CBOs).
Grievance Redress • Mechanisms for resolution of conflicts and appeals procedures. Mechanisms
• Arrangements for valuing and disbursing compensation; Compensation, • Arrangement for housing relocation, including transfer, reestablishment and Relocation and Income integration with host populations; Restoration • Income restoration measures; • Environmental risk identification and arrangement for environmental management monitoring. • Main tasks and responsibilities in planning, managing and monitoring land Institutional Framework acquisition and resettlement; • Ensure that (i) women’s groups are involved in resettlement planning, management and operations, job creation and income generation; and (ii) female staff should be hired by the resettlement agency to work with and assist women in all aspects of resettlement activities. • Land acquisition and resettlement costs and funding sources including arrangements Resettlement Budget and for timely disbursement to APs. Financing
• Time bound actions for projected activities to ensure that people affected are Implementation compensated and assisted before award of civil works contracts. Schedule
• Arrangements for M & E. Monitoring and • Impact on women monitored and evaluated separately. Evaluation
Arrangement for reviewing RP at detailed technical/engineering design if this is not yet complete.
Formal Agreement by the EA.
Covenant in RRP and Loan Agreements
Disclosure of full RP on ADB website upon project approval
Appendix 6: Figures F1 and F2 and Flow Duration Curves
Appendix 7: Economic Background and Identification of New Major Electricity Loads
Economic Background and Identification of New Major Electricity Loads A Economic Background and GDP Projections General
The 10 volcanic islands of Samoa lie south off the Equator and about half way between Hawaii and New Zealand. They are dominated by rugged mountain ranges and surrounded by coral reefs and lagoons. The two relatively large islands of Upolu and Savai’i account for approximately 96% of the country’s total land area of 2,934 sq. km. They are also home to the majority of the country’s 185,000 people. New Zealand occupied the German protectorate of Western Samoa in 1914 at the outbreak of World War I. It continued to govern the islands until 1962, when the islands became the first Polynesian nation to re- establish independence in the 20th century. The country dropped the "Western" from its name in 1997.
Samoa’s economy is open but small; real growth of gross domestic product (GDP) averaged 3.3% over the past 5 years. The medium-term outlook is for 3– 4% economic growth. Governance standards are high, with a commitment to sound macroeconomic management and public sector reform. The economy continues to rely heavily on external assistance in the form of grants and soft loans, and is also helped by large remittances from Samoans living overseas, primarily in Australia, New Zealand and the United States. Migration for new employment amounts to 4,000–5,000 annually. The country has a clear vision for economic and social development in the medium term. The Strategy for the Development of Samoa (SDS) for 2005–2007 was completed in January 2005 and includes a commitment to restrain the annual overall budget deficit to no more than 3.5% of GDP and to annual inflation rates of less than 3.0%. Population At the 2001 Census Samoa had a population of 176,710 inhabitants, with 133,886 on Upolu and 42,824 on Savai’i. Over the last ten years, 1991 to 2001, the population of Upolu grew by 1.4% per annum while that of Savai’i declined by 0.5% per annum, resulting in an overall growth rate for Samoa of 0.9% per annum. Over the same period the Apia Urban Area grew by 1.3% and that of North West Upolu by 2.6% per annum. A Census is currently being undertaken in November 2007. In projecting future population growth for Samoa from 2001 to 2011 the average growth rate of the last ten years of 0.9% per annum was adopted, and results in a population of 193,584 in 2011. The Table below summarises past population and future population projections. In 2006 this results in a population for Savai’i of 44,822 and in 2011 46,915. However, if the trend of the past ten years continued for Savai’i the population maybe much less. Given the continuous trend of population outflow seeking higher education and employment opportunities in Apia and overseas this is likely to be the case. It is hoped that preliminary Census results maybe available to clarify the actual population in Savai’i in 2006 to allow the preparation of more current population forecasts.
Table : Samoa Population and Projections
Apia Urban Area Upolo Island Savai’i Samoa Census Year 1981 33,170 113,199 43,150 156,349 1991 34,126 116,248 45,050 161,298 2001 38,836 133,886 42,824 176,710
Growth rate 1981 -1991 0.30% 0.30% 0.40% 0.30% 1991-2001 1.30% 1.40% -0.50% 0.90% Projections (1) 2006 40,648 140,133 44,822 184,955 2011 42,544 146,669 46,915 193,584
Source : Ministry of Finance Statistical Services Division , Note 1 : Assuming Inter Census, 1991/2001 growth rate of 0.9%
Recent Economic Performance and Developments
The economy of Samoa is dependent on agriculture, fishing, family remittances from abroad, and development aid. Mixed subsistence agriculture, forestry, and fishing employs two-thirds of the labor force and furnishes 90% of exports. The manufacturing sector processes mainly agricultural products and produces garments, but one factory, Yazaki Samoa Limited, employs 3,000 making automobile electrical harnesses for export to Australia. Exports are otherwise heavily based on fish, garments, and coconut- and taro-based products. Between 1995 and 2002, Gross Domestic Product (GDP) per capita increased on average by 3.3% per year in real terms.
Tourism is an expanding sector, accounting for about 25% of gross domestic product. Tourist arrivals increased to 101,807 in 2005 and to an estimated 110,000 in 2006, pushing up total tourism revenues by some 4.4% from 2004. The economy is heavily dependent on private remittances to finance consumption, while investment needs are met primarily through official transfers. Private transfers from nationals living abroad, together with tourist receipts, are equivalent to about 75% of total imports. Tourism and remittances continue to be the major source of foreign exchange despite continuing speculation that the latter will level off in the future. The large Samoan community overseas and the 1,100 quota provided by the New Zealand Government every year ensures a steady inflow of remittances, averaging about WSD$90 million (about USD$31 million) per annum since 1993.
In 1996, Samoa launched a wide-ranging economic reform program that has transformed its economy into one of the best-managed in the Pacific islands. The Samoan Statement of Economic Strategy (SES) provides perhaps the most successful example of reform in the region, with the SES providing the overall macroeconomic framework for the development of separate strategies focusing on health, education, and rural development. Several major reforms of the civil service, financial sector, and tax and tariff systems have already been implemented. Since the strategy was launched, Samoa has achieved macroeconomic stabilization and enjoyed broad-based economic growth, resulting in improved social indicators. Large reductions in trade restrictions and financial liberalization have also enhanced the economy's competitiveness.
The challenge going forward is for Samoa to build on this success by implementing the "second-generation" reforms needed to support private sector- led growth. These reforms should focus in particular on further enhancing public sector efficiency (especially in state-owned enterprises), improving the quality of infrastructure, and increasing the availability of land for commercial development.
Macroeconomic and fiscal stability, liberalized financial markets, public service reforms, reduced government presence in commercial areas, and better infrastructure have resulted in significant improvement in the business environment. The availability of land for commercial development purposes remains low, however, due primarily to the communal ownership of land. Customary land covers roughly 80% of Samoa, and its sale is prohibited. Corruption has not been a significant problem in Samoa. The consensus is that civil servants are honest and that overall accountability and transparency in government is good and has improved.
To maintain macroeconomic stability, the government tabled a balanced budget for 2006/07. The government’s financial position with the banking system will again be strengthened as a result, and this will restore and strengthen liquidity in the banking system, allowing the banks to continue to finance private sector credit. On the external front, the overall balance of payments may come under pressure as a result of the widening merchandise trade deficit. This will be offset to some extent by the expected increase in remittances and tourism revenues. Foreign reserves in terms of import cover are expected to remain at above the minimum target level of 4 months imports coverage. The tightening of monetary policy is expected to exert some pressure on the demand for domestic credit in 2006 as well as money supply. Inflation is projected to be around 5% by end 2006 compared with 1.8% in 2005 ( and 16.3% in 2004). The major drivers for the high inflation rate are the expected continuing increase in oil prices and the VAGST increase. Following 2006, the long term rate is expected to be about 3% per annum.
Recent GDP Performance and Projections
Gross Domestic Product at current market prices for the year 2005 was estimated at $1.13 billion. This was equivalent to a per capita income of $6,143 or US$2,254. In constant 2002 prices, aggregated real GDP in 2005 was $999.15 million, an increase of 5.1% over 2004. This followed growth rates of 3.5% and 3.7% in 2003 and 2004 respectively. The economy is expected to consolidate in 2006 and into 2007 with real annual GDP growth estimated at 3- 4% percent. The dampening effect the VAGST increase from 12.5% to 15% is expected to have on consumer spending will be offset somewhat by the building activity and other benefits associated with hosting the 2007 South Pacific Games. GDP growth over these two years is expected to be 3.5% in 2006 and 4.5% in 2007 respectively. This maybe followed by a decline in GDP growth in 2008 following the South Pacific Games to 2.5% in 2008, before recovering in 2009 to 3.5%, or in line with a long term sustainable rate of around 3.5% per annum. This of course can be interrupted by natural disasters such as hurricanes which leads to a reduction in growth and then an increases in construction activity during the reconstruction stage.
Table : GDP- Actual 2001 to 2005 and Forecast to 2010
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Actual Forecast WS$ m WS$ m WS$ m WS$ m WS$ m WS$ m WS$ m WS$ m WS$ m WS$ m Current Prices 836.6 885.3 948.2 1047.5 1129.5 2002 Prices 876.6 885.3 916.0 950.3 999.2 1034.2 1080.7 1107.7 1146.5 1186.6 Real Annual Growth 6.9% 1.00% 3.50% 3.70% 5.10% 3.50% 4.50% 2.50% 3.50% 3.50%
Source : Ministry of Finance and Consultants estimates
Composition of GDP, 2001 to 2005
The Table below summarises the composition of GDP in 2002 prices and changes over the period 2001 to 2005. Recent performance of major sectors is discussed below.
The Agriculture industry, which represented 7.3% of GDP in 2005 recovered from the devastation caused by cyclone Heta and rebounded in 2005 with a 13.8% real increase. In real terms, agriculture production totalled WS$72.69 million. Production by the Fishing industry (5.1% of GDP in 2005), with a real value added of WS$50.70 million in 2005 had again declined by 3.9%. The continuous decline since 2001 in the industry was primarily a result of bad weather conditions affecting fish catches. Over fishing is also suspected to have had an impact on the decline in fish catches. The performance by the fishing industry is disappointing given its considerable role in economic development mainly in terms of foreign exchange earnings and rural development.
Table : GDP by Sector 2001 to 2005 (at 2002 prices)
Industry/Sector - Year 2001 2004 2005 2005 2005/2004 At Constant 2002 Prices WS$ m WS$ m WS$ m % % Change Agriculture 66.8 63.9 72.7 7.3% 13.8% Fishing 70.89 52.7 50.7 5.1% -3.8% Manufacturing Food 26.87 30.6 33.6 3.4% 9.8% Manufacturing Other 113.87 108.8 104.6 10.5% -3.9% Construction 54.7 74.3 82.2 8.2% 10.6% Electricity and Water 38.2 42.6 44.3 4.4% 4.0% Commerce 161.2 189.5 203.4 20.4% 7.3% Tourism 21.7 25.4 27.0 2.7% 6.3% Transport & Communications 110.1 119.5 123.3 12.3% 3.2% Public Administration 67.6 78.9 83.9 8.4% 6.3% Finance & Business Services 61.46 78.4 85.0 8.5% 8.4% Personal and Other 83.31 86.22 88.5 8.9% 2.6% Total 876.7 950.82 999.2 100.0% 5.1%
Source : Ministry of Finance
Value added generated by the Food and Beverage Manufacturing (3.4% of GDP) of $33.56 million in 2005 had increased by 9.8% compared to the 2004 level. The strong growth by the industry was primarily due to the remarkable performance by nonu juice whose exports registered an increase of 76.8% in 2005 and also contributions from beer production. Other Manufacturing (10.5% of GDP) in 2005 generated a total real value added of $104.59 million, a decline of 3.9% when compared to 2004. The poor performance by the industry
in 2005 followed a 7.8% decline in 2004. The decline in 2005 was again due to a slowdown in Yazaki’s operations. Yazaki exports recorded in 2005 had declined by 0.6% over 2004, which more than offset an increase of 6.9% in exports from other entities in the Other Manufacturing industry. It is expected that Yazaki exports will recover to past levels by 2007.
Construction (8.2% of GDP in 2005) industry continued to show remarkable strength up by 10.6% in 2005 albeit at a lower level than the growth in 2004 of 35.6%. This was expected with the completion of the Aggie Grey’s Lagoon, Beach Resort and Spa at Mulifanua, the LDS Temple and the Aquatic Centre for the South Pacific Games. The industry is projected to continue to grow strongly in 2006 and 2007 with the completion of all construction works for the 2007 South Pacific Games, the Development Bank of Samoa building, the JICA funded Samoa Polytechnic Campus and new fish market and wharf, further hotel construction, the ADB funded Sanitation and Drainage project which is expected to begin actual construction towards the end of 2006 as well as on-going road rehabilitation works. In addition further hotel projects may see continued expansion in the future. The projected continued growth in the construction industry is expected to filter through to other sectors of the economy.
In 2005, the Electricity and Water generated a value added of $44.26 million in real terms, an expansion of 4.4% over the 2004 level. The demand for electricity continued to grow in calendar year 2005. While the 15% increase in tariffs in March 2005, resulted in a 4.4% reduction in electricity consumption in EPCs financial year to 30 June 2006 compared with the previous year, this would be offset by the 15% rise in tariffs. However, if the increase in international diesel fuel costs had all been past through into tariffs the decline, especially in domestic consumption experienced in 2005 would likely have been greater. Increased accessibility to clean water as part of Government’s on-going EU- funded rural water supply project also had a positive impact on this industry. Government’s commitment to improving the Electricity and Water industry supports it’s vision to “improve the quality of life for all Samoans” as stated in the 2005 – 2007 Strategy for the Development of Samoa (SDS).
Commerce maintained its status as the largest industry accounting for $203.36 million (or 20.4%) of total real GDP in 2005. This was translated into an increase of 7.3% over the 2004 level. The strong growth in the commerce industry was boosted by the rebound in agriculture and increased construction and tourism activities during 2005. The increase was also financed largely by remittances (up 19.1%), and private sector credit up by 22.3% over the 2004 level. The surge in commerce activities was also in line with the increase of 18.3% in private sector imports.
Transport and Communication industry continued to play a major role in the Samoan economy and was the second largest industry accounting for 12.3% of total real GDP in 2005. Government’s on-going commitment to improving roads together with the increased demand for land transport utilities for construction and tourism related works in 2005 had boosted this industry. The increased utilization of modern telecommunication mediums such as cellular phones and the internet also culminated in the 3.1% increase in the industry in 2005. The awarding of a second GSM licence to Digicel in 2006 and their commencement of operations in October 2006, is expected to increase competition and enable the introduction of better and more efficient technologies into the economy. The increased efficiency/competition is expected to lower costs to the consumers and further boost growth in the industry.
Finance and Business Services industry also benefited from the increased activities within the economy in 2005 and as such grew by 8.5%. This was evidenced by increased banking and professional services such as legal, accountancy, business management, architectural, engineering and other services. The increased number of money transfers and other small financial services also assisted the industry’s performance. The continuous growth by the industry is indicative of the success of government’s financial sector reform programme implemented since 1998.
Personal and Other Services (and Ownership of Dwellings) industries grew by 8.9% in 2005, accounting for 2.6% of real GDP. Tourism (Hotels and Restaurants industry) continued to contribute positively to the economy growing by 6.5% in 2005 after strong growths of 14.2% and 7.5% in 2003 and 2004 respectively. The industry generated a total real value added of $27.04 million, equivalent to 2.7% of total GDP. The performance of this industry is viewed with keen interest considering its potential role in employment creation and foreign exchange earnings. Discussion of future hotel developments and tourism outlook is set out below.
Public Administration is the largest employer in Samoa and accounted for 8.4% of total real GDP in 2005. Value added generated by the industry was $83.91 million in constant 2002 prices, up by 6.3% over the 2004 level. This was expected with the implementation of the general increase in wages and salaries in the public sector in July 2005.
B Tourism and Hotel Developments Proposed/Potential Hotel Developments The tourism /hotel sector shows opportunity for further growth in Samoa. Hotel investors are being provided special incentives including tax holidays in an effort to increase the hotel stock in Samoa. Also the arrival of Pacific Blue Airline (which took over Polynesian Airlines) has increased the frequency of flights to Samoa from Australia and New Zealand with improved services. Proposed hotel developments advised by the Samoan Tourism Authority include three hotels on Upolo consisting of 350 rooms, a Warwick Hotel of 150 rooms at VauVau, a Tanoa Chain hotel at Matata of 100 rooms and a 100 room hotel and condominium complex at Tamaseina. Further possible hotel projects are proposed for Upolo at the airport by the Warwick group (150 rooms) while an investor is being sought for a hotel ( 100 rooms) at Sa Napu. On Savaii the customary landowners have agreed to make land available at PuaPua for a hotel and are seeking an investor for a hotel of up to 200 rooms. Table : Proposed/Potential Hotel Developments
2006 2007 2008 2009 Rooms Rooms Rooms Rooms Future Hotel Projects Warwick Hotel VauVau Apia Hotel (late 2007) 150 Tameasina Gordon Taylor Hotel plus Condominiums 100 (early Matata, Tanoa Chain Fiji Hotel 2007) 100 Total 250 100 0 Possible Hotel Projects Warwick Hotel Airport Location Hotel 150 Private Land seeking a Sa Napu Upolo US partner 100
2006 2007 2008 2009 Rooms Rooms Rooms Rooms
Land agreement secured, seeking US investor for Pua Pua Savai’i up to 200 room hotel 100 Total 150 200 Source : Samoa Tourism Authority Tourism Arrivals and Projections. The table below summarises past tourism arrivals and current stock of hotel rooms. In 2007 Samoa is hosting the South Pacific Games in August 2007 and in the same month its annual cultural festival – Tiwaluva. So far 5,400 athletes and officials have registered for the games (compared with 3,500 at the last Suva games). While the government is required to house these contestants, it is indicative of the increased level of interest that is expected to be generated by the games. Accordingly if a similar level of occupancy is achieved in 2007 as in 2005, then increase in arrivals in 2007, utilising the new accommodation maybe 17.6%. The extent to which this growth can be built upon after 2008 will depend on increased growth in hotel stock, government incentives, airline seat availability and Samoa’s attractiveness as an alternate holiday destination to Fiji. While the Samoa Tourism Authority believes annual growth in tourism arrivals of 10-15% per annum is achievable, this was only achieved in 2005 with holiday arrivals increasing by 13.4% albeit from a reduced base following hurricane Heta in 2004. Table : Past and Projected Hotel Rooms and Visitor arrivals
Accommodation Stock (Hotels) 2001 2002 2003 2004 2005 2006 2007 2008 Rooms Actual Planned Total 817 850 931 996 1,099 1,099 1,349 1,449 Increase 33 81 65 103 0 250 100
Samoa Visitor Arrivals 2001 2002 2003 2004 2005 2006 2007 2008 Actual Estimate Forecast Holiday 28,305 27,231 29,447 28,903 33,129 Increase % 2.1% -5.0% 3.5% -3.2% 13.4% VFR 33,279 34,997 34,594 35,203 36,970 Business 10,905 10,152 10,294 10,568 10,171 Other 15,774 16,591 18,151 23,481 21,537 Total 88,263 88,971 92,486 98,155 101,807 110,139 129,551 135,039 Increase % 0.7% 0.8% 4.0% 6.1% 3.7% 8.2% 17.6% 4.2%
Type of Accommodation 2001 2002 2003 2004 2005 2006 2007 2008 Actual Estimate Forecast Private (VFR) 53,633 56,076 56,862 60,486 59,840 62,832 72,257 74,063 Hotels 30,053 28,544 29,543 28,597 32,441 37,307 45,794 49,188 Other 4,577 4,351 6,081 8,941 9,526 10,000 11,500 11,788 Total 88,263 88,971 92,486 98,024 101,807 110,139 129,551 135,039 0.7% 0.8% 4.0% 6.0% 3.9% 8.2% 17.6% 4.2% Source : Samoa Tourism Authority and Consultants estimates.
C Summary of Projected Electricity Demand from Major Developments Upolo
The Table below summarises expected increase in electricity demand with major new and planned projects. EPC advised that developers often overstate their requirements. Accordingly the electricity demands for new projects have been reduced by 50% except in the case of the South Pacific Games Aquatic Centre where the transformers have already been installed. The three hotels may require an increase in capacity of 1.100 MW (plus losses)4. The South Pacific games facilities will increase demand by some 1.500 MW (plus losses). However, this load is only transient and for the Aquatic Centre will only be when the facilities are in use. Accordingly this has been excluded from the overall total. There are a number of major government development projects and buildings. However, the precise timing of these apart from the DBS building, new market (which should not require any increase in electricity demand), Samoa Land Corporation building and possible parliamentary building complex remain unknown. Accordingly 1.200 MW (plus losses) for Upolo is assumed. This results in an increase in demand of 2.300 MW (plus necessary allowance for losses) over the period 2007 and 2008. Any load forecast for Upolo would need to accommodate these loads, to the extent that they will obviously exceed any projected growth trend.
Table : Possible Major Electricity Loads 2007 to 2009
Electricity Requirements 2006 2007 2008 2009 kW kW kW kW 1. Hotel Electricity Demand Warwick 500 Tanoa 300 Tameasina 300 Total 800 300 2. South Pacific Games Facilities Aquatic Centre 2*750 kVa installed 1,000 Other Buildings 2*200 kVa 300 Stadium Lighting only 200 Total 1,500 3. Other Buildings/Projects DBS Building 500 New market building Samoa Land Corporation 100 Public Works and Utilities Building New Treasury Building New Police Building 100 Port Authority Development of Marina Nil Parliamentary complex 500 Total 700 500 4. Savaii Projects Upgrading wharf and dredging canal
Salelonga Township development infrastructure facilities Samoa Land Corporation building 100 Pua Pua Savaii Hotel Total 100
4 Only the three confirmed hotel developments are included.
Electricity Requirements 2006 2007 2008 2009 kW kW kW kW Overall Total 3,000 900 Overall Total ( excluding Aquatic complex and related loads of South Pacific games facilities) 1,500 900 Cumulative Total 1,500 2,400
Source : Government Agencies and Consultants Estimates
Savai’i
There are no confirmed projects that would support the expectation of higher load growth on Savai’i, except possibly the new township development plan at Salelologa. Given the continuous trend of population outflow seeking higher education and employment opportunities, development of the new township aims at boosting the island economy so as to retain/attract people back to Savai’i. Although land of 2,882 acres was acquired by the Government for future development, all but 150 acres has been handed back to customary land owners. The Cabinet Directive in September 2002 dictated that the new township begins with the area of 100 acres next to Salelologa East Drive, which will be divided into three zones: 20 acres for the Government zone, 30 acres for the commercial zone, and 50 acres for the industrial zone. The government has developed the roads for this area, however, its ability to attract development is limited. The island is still recovering from hurricanes in the early 1990s that lay waste to infrastructure. The saw mill that provided electricity to the grid has now closed. Some government corporations will develop offices at Salelologa such as the Samoa Land Corporation, but as yet there are no other likely developments, apart from perhaps existing timber interests locating to the industrial zone. GDP for Savai’i is much lower than Upolo and expected developments/lack thereof are not expected to make much difference to overall GDP growth of Samoa which will be very much dependent upon activities in Upolu, especially Apia Urban Area and the North West Upolo. However, a new hotel at Pua Pua of 100 to 200 rooms could help generate further economic activity on Savai’i, but until such a development is confirmed then any growth is likely to be based on past trends and modest increases in customer numbers. The high growth in electricity consumption observed in the mid-1990s was caused by the intensive rural electrification program implemented between 1992 and 1995, that electrified about 95% of the population, which was accessible to the grid. The Domestic class has been the dominant user followed by the Commercial class. Those two classes cover approximately 90% of the total sales. Past load growth for Savai’i is discussed in Appendix 8.
Appendix 8: EPC Electricity Demand Forecasts Background Data
A. Past EPC Sales 2000 to 2006 Past Electricity Sales for EPC Table 1 below summarises EPC sales (MWH) by customer category for the period 2000 to 2006. Overall Growth in 2000 and 2001 was 5.4% and 10.5% respectively. In November 2001 tariffs were increased by 15%5, which appeared to have limited impact on overall demand. In 2004 sales declined as a result of Cyclone Heta, but rebounded again in 2005. Despite strong GDP growth the May 2005 increase in tariffs of 15% appeared to have a pronounced impact on sales resulting in a 4.2% decrease in sales (MWH). This suggests that price elasticity of demand is quite an important factor in assessing future sales growth. Domestic, commercial, government and industrial categories all showed a decline in sales in 2006. The Hotel category, the only one to show significant growth of 36.6% with the opening of Aggie Greys new hotel and increasing growth in tourist arrivals (as discussed in Appendix 7).
Table 1 : EPC Electricity Sales, 2000 to 2006 (MWH)
Year Ended 30 June 2000 2001 2002 2003 2004 2005 2006 SAMOA - TOTAL MWH MWH MWH MWH MWH MWH MWH Domestic 26,760 23,581 21,859 22,089 21,725 27,179 23,181 Commercial 22,275 30,276 32,977 34,787 34,215 40,802 39,192 Govt Dept 9,155 9,637 9,759 9,855 9,538 8,701 9,030 Hotel 2,670 2,999 3,088 3,225 3,282 3,444 4,703 Industrial 5,190 5,913 5,852 6,300 5,857 5,477 5,298 Religion 2,512 3,516 5,352 6,131 5,424 4,997 5,195 School 2,788 2,935 2,650 2,676 2,699 2,821 2,867 Total MWH Sold 71,350 78,856 81,537 85,063 82,740 93,421 89,465 % Change per annum 5.4% 10.5% 3.4% 4.3% -2.7% 12.9% -4.2% GDP % Change per annum 6.10% 6.90% 1.00% 3.50% 3.70% 5.10% 3.50% Electricity Tariff Increases Date Nov-01 May-05 Electricity Tariff Increases % 15% 15% Table 2 sets out the percentage of sales by category. While in 2000 Domestic sales were the largest category, by 2002 Commercial was the largest category and remained that way and increased its proportion of the total so that by 2006 Commercial represented 44% of sales and Domestic 26% of sales. Next was Government at 10%, with Hotel (5%), Industry ( 6%) and Schools and Churches (9%)
Table 2 : EPC Electricity Sales, 2000 to 2006 (%)
Year Ended 30 June 2000 2001 2002 2003 2004 2005 2006 SAMOA - TOTAL MWH MWH MWH MWH MWH MWH MWH Domestic 38% 30% 27% 26% 26% 29% 26% Commercial 31% 38% 40% 41% 41% 44% 44% Govt Dept 13% 12% 12% 12% 12% 9% 10% Hotel 4% 4% 4% 4% 4% 4% 5% Industrial 7% 7% 7% 7% 7% 6% 6% Religion 4% 4% 7% 7% 7% 5% 6% School 4% 4% 3% 3% 3% 3% 3% Total MWH Sold 100% 100% 100% 100% 100% 100% 100%
5 The 10% discount on prompt payment was also phased out, following the tariff increase
AAGR of EPC Sales 2000 to 2006 The Table 3 below summarises compound growth rate over the period 2000 to 2006. At best overall sales increased at 4.3% per annum taking the 4 year period 2001 to 2005. This falls to 3.8% when 2006 is added, that is over six years with the 2006 decline in sales included. Any 5 or 6 year combination including 2006 results in lower compound growth. The period 2001 to 2006 results in 2.6% per annum and 2002 to 2006 in 2.3% per annum. With respect to domestic customers the period 2000 to 2006 results in a decline of -2.4% and the last five years 2001 to 2006 a decline of -0.3% per annum. Commercial exhibited strong growth over the six years of 9.9% per annum, and over the last five years 4.4% per annum. Similarly the Hotel category showed 6 year and 5 year growth rates of 9.9% and 9.4% per annum. Table 3 : EPC - Annual Compound Growth Rate by Consumer Category (%)
% Change - AAGR Period 2001/05 2000/06 2001/06 2002/06 Number of Years 4 6 5 4 Domestic 3.6% -2.4% -0.3% 1.5% Commercial 7.7% 9.9% 5.3% 4.4% Govt Dept -2.5% -0.2% -1.3% -1.9% Hotel 3.5% 9.9% 9.4% 11.1% Industrial -1.9% 0.3% -2.2% -2.5% Religion 9.2% 12.9% 8.1% -0.7% School -1.0% 0.5% -0.5% 2.0% Total 4.3% 3.8% 2.6% 2.3% Customer Numbers by Category Table 4 sets out customer numbers by category with the overall growth in Domestic customers increasing at 4.3% per annum, which suggests that connections are greater than household formation assuming an average population growth rate of 0.9% discussed in Appendix 7. Over the period there has been a decline in industrial customers. Commercial customers have increased by 4.1% per annum indicating the extremely buoyant sector, while increases in all other categories has been around 2%.
Table 4 : EPC – Customer Numbers by Category (%)
Year Ended 30 June 2001 2002 2003 2004 2005 2006 2001/06 % Change p.a Domestic 20,533 21,316 22,079 22,668 24,781 25,301 4.3% Industrial 144 45 52 54 62 63 -15.2% Commercial 2,074 2,175 2,287 2,271 2,494 2,540 4.1% Hotels 18 18 18 19 19 20 2.1% Government 178 178 178 186 189 193 1.6% Religious and Charitable Bodies 1,015 1,040 1,066 1,010 1,111 1,133 2.2% Schools 223 188 239 243 253 258 3.0% Grand Total 24,185 24,960 25,919 26,451 28,909 29,508 4.1% Customer Consumption (kWh/customer/month Table 5 sets out consumption by customer per month and highlights the fact that despite strong economic growth over the period and increases in GDP per capita Domestic, consumption has fallen from a high of 95.7 kWh per month in 2001 to 76.4 kWh per month in 2006, an annual reduction of -4.4%. In both 2002 and 2006 tariff increases may have been a factor. Overall average monthly consumption per customer declined by -1.4% over the period.
Table 5 : Customer Consumption (kWh/customer/month
Samoa 2001 2002 2003 2004 2005 2006 2001/06 kWh/customer/month % Change p.a Domestic 95.7 85.5 83.4 79.9 91.4 76.4 -4.4% Industrial 3421.9 10837.0 10096.2 9038.6 7361.6 7007.9 15.4% Commercial 1216.5 1263.5 1267.6 1255.5 1363.3 1285.8 1.1% Hotels 13884.3 14296.3 14930.6 14394.7 15105.3 19595.8 7.1% Government 4511.7 4568.8 4613.8 4273.3 3836.4 3899.0 -3.0% Religious and Charitable Bodies 288.7 428.8 479.3 447.5 374.8 382.1 6.0% Schools 1096.8 1174.6 933.1 925.6 929.2 926.0 -3.3% Average 271.7 272.2 273.5 260.7 269.3 252.7 -1.4% Split of Sales and Customers Between Upolu and Savai’i Table 6 below shows that some 90% of total sales (MWH) are in Upolu with about 10% in Savaii, with Commercial, Hotel and Industrial sales predominantly on Upolo. Table 7 sets out the split of customers between Upolo and Savai’i with the table showing the percentage in Upolo. While Upolo accounts for 82.6% of Domestic sales it only accounts for 76.1% of customers, and this appears to be the same in other categories suggesting that consumption per consumer is lower in Savaii. This is discussed further below. Table 6 : Percentage of Sales (MWH) on Upolo Island compared with Savai’i
Financial Year Ending 30 June 2001 2002 2003 2004 2005 2006 Domestic 83.1% 69.9% 94.8% 83.0% 85.6% 82.6% Commercial 96.3% 91.1% 84.5% 92.0% 93.1% 93.3% Govt Dept 78.8% 90.3% 90.3% 90.2% 90.6% 90.9% Hotel 97.9% 97.4% 97.3% 97.7% 97.4% 98.5% Industrial 99.0% 98.5% 96.2% 98.2% 99.5% 99.3% Religion 92.5% 93.7% 92.1% 90.0% 88.1% 90.0% School 90.4% 89.7% 89.8% 87.7% 87.7% 89.7% Total 90.1% 86.2% 89.9% 89.8% 90.8% 90.6%
71,048 70,304 76,484 74,311 84,826 81,057 Total MWH Table 7 : Percentage of Customers (Number) on Upolo Island compared with Savai’i
Financial Year Ending 30 June 2001 2002 2003 2004 2005 2006 Domestic 79.1% 79.1% 79.1% 74.4% 76.2% 76.1% Commercial 98.6% 95.6% 96.2% 94.6% 95.3% 94.3% Govt Dept 89.3% 89.3% 89.5% 86.7% 87.6% 86.8% Hotel 72.2% 72.2% 72.2% 65.8% 68.2% 72.4% Industrial 71.9% 71.9% 71.9% 66.2% 72.7% 70.4% Religion 80.4% 80.3% 80.4% 81.6% 75.9% 74.1% School 80.7% 76.1% 80.8% 76.4% 81.9% 80.7% Total MWH Sold 80.1% 80.0% 80.1% 75.5% 77.1% 77.0% B. Upolo Sales (MWH) and Customers, 2001 to 2006 EPC provided a breakdown of sales between Upolu and Savai’i. Table 8 sets out sales (MWH) for Upolo. From 2001 through to 2006 sales overall increased by 2.7% per annum over the 5 years. Domestic consumption declined by 0.5% per annum as a result of the decline in sales in 2002 and 2006. On the other hand the Commercial category showed strong growth over the period of 4.6% per annum. The other important category to show growth is the Hotel sector, increasing at 9.5% per annum albeit from a relatively low base.
Table 8 : EPC - Upolo Electricity Sales, 2001 to 2006 (MWH)
Financial Year Ending 30 June 2001 2002 2003 2004 2005 2006 2001/06 Upolo MWH MWH MWH MWH MWH MWH % Change pa Domestic 19,604 15,284 20,950 18,037 23,274 19,156 -0.5% Commercial 29,154 30,049 29,382 31,465 37,989 36,549 4.6% Govt Dept 7,598 8,809 8,902 8,606 7,880 8,212 1.6% Hotel 2,937 3,008 3,137 3,205 3,355 4,633 9.5% Industrial 5,851 5,763 6,060 5,749 5,450 5,260 -2.1% Religion 3,251 5,014 5,650 4,881 4,402 4,676 7.5% School 2,654 2,377 2,403 2,366 2,475 2,571 -0.6% Total MWH 71,048 70,304 76,484 74,311 84,826 81,057 2.7% Table 9 summarises number of customers by category for Upolo and shows that there has been some modest increases in the number of customers, averaging about 3.2% mainly as a result of increases in Domestic and Commercial categories.
Table 9 : EPC - Upolo Customer Numbers, 2001 to 2006
Financial Year Ending 30 June 2001 2002 2003 2004 2005 2006 2001/06 Upolo % Change pa Domestic 16,248 16,870 17,471 16,873 18,876 19,260 3.5% Industrial 142 43 50 51 59 59 -16.0% Commercial 1,853 1,943 2,047 1,969 2,186 2,205 3.5% Hotels 13 13 13 13 13 14 2.2% Government 128 128 128 123 137 136 1.2% Religious and Charitable Bodies 816 835 857 824 843 840 0.6% Schools 180 143 193 186 207 208 3.0% Upolu Total 19,380 19,975 20,759 19,963 22,297 22,722 3.2% Table 10 sets out consumption by Domestic customers per month for Upolo and Savai’i and shows that the fall in consumption has been greater in Savai’i than on Upolo, but that on Savai’i, possibly because consumption is nearer the lifeline level and represents basic usage there was no fall between 2005 and 2006 on Savai’i whereas the fall on Upolo was more pronounced, falling by around 20%. Table 10 : Domestic Customer Consumption (kWh/customer/month)
2001 2002 2003 2004 2005 2006 2001/06 kWh/customer/month % Change pa Samoa 95.7 85.5 83.4 79.9 91.4 76.4 -4.4% Upolo 100.5 75.5 99.9 89.1 102.8 82.9 -3.8% Savaii 77.3 78.1 66.5 53.0 55.1 55.7 -6.3%
Losses, Load Factor and Maximum Demand Table 11 sets out losses, load factor and maximum demand for EPC. (To be completed)
Table 11 : Sales, Losses, load factor and maximum demand ( Upolo)
Year Ended 30 June 2001 2002 2003 2004 2005 2006 Sales MWH 71,048 70,304 76,484 74,311 84,826 81,057 Losses MWH 14,152 21,196 Losses (%) % 16.6% 23.2% Generation MWH 85200 91500 Peak Demand MW 15.2 15.8 Annual Load Factor % 63.9% 66.0%
Past Load Forecasts for Upolo
In 2003 a load forecast was prepared for Upolo by Nippon Koei (NK). NK’s Median Scenario assumed an average growth rate of 6.5% per annum 2003 through to 2015. This would now appear optimistic where NK sales in 2005 and 2006 were 91.54 GWH and 97.57 GWH respectively. Actual sales in 2006 were only 83% of this figure. Even with the additional 2.3 MW of demand added in 2008 as discussed in Appendix 7, projections fall far short of the load growth in sales and maximum demand forecast by NK. In preparing load growth for power system planning purposes under the present project careful consideration will need to be given to the underlying growth rate of existing customers, new identified loads and the impact of further tariff increases, so as not to add excess capacity before it is required. This will be discussed further in the Interim Report and Demand Forecast prepared for Upolu. C. Savaii Sales (MWH) and Customers, 2001 to 2006 EPC provided a breakdown of sales between Upolu and Savai’i6. Table 12 sets out sales (MWH) for Savai’i. From 2001 through to 2006 sales overall increased by 1.1% per annum over the 5 years. Domestic consumption grew by 02.2% per annum from 2002 to 2006 and did not decline as in Upolo between 2005 and 2006. The Commercial category showed strong growth over the period of 6.8% per annum.
Table 12 : EPC – Savai’i Electricity Sales, 2001 to 2006 (MWH)
Financial Year Ending 30 June 2001 2002 2003 2004 2005 2006 2001/06 Savaii MWH MWH MWH MWH MWH MWH % Change pa Domestic 3,977 4,168 3,679 3,688 3,905 4,025 0.2% Commercial 1,900 2,893 2,866 2,750 2,813 2,643 6.8% Govt Dept 1,400 950 953 932 821 818 -10.2% Hotel 62 80 88 77 89 70 2.4% Industrial 62 89 240 108 27 38 -9.4% Religion 265 338 481 543 595 519 14.4% School 281 273 273 333 346 296 1.0% Total MWH Sold 7,947 8,791 8,580 8,429 8,595 8,409 1.1% While EPC have estimated customer numbers for Savai’i these are only prorated off early figures and suggest that customer numbers have been increasing at about 7% per annum in all categories. These numbers need confirmation and the actual numbers obtained for power planning purposes. Also as set out in Table
6 However, these were adjusted for anomalies where consumption appeared out of line when compared with data obtained by Fichtner in 2005 from Savai’i power station records
10 domestic consumption on Savai’i has been static, but if the domestic figures are overstated then monthly consumption maybe closer to the average for Samoa overall. Losses, Load Factor and Maximum Demand Table 13 sets out losses, load factor and maximum demand for EPC on Savai’i. (To be completed)
Table 13 : Sales, Losses, load factor and maximum demand ( Savaii)
Year Ended 30 June 2001 2002 2003 2004 2005 2006 Sales MWH 7,947 8,791 8,580 8,429 8,595 8,409 Losses MWH 1,273 1,459 1,901 Losses (%) % 13.8% 14.2% 18.4% Generation MWH 9220 10250 10330 Peak Demand MW 2.6 3.05 2.6 2.9 Annual Load Factor % 63.9% 66.0%
Non-Revenue Sales vs Losses
There are a few villages getting free power as compensation for EPC using water and land for hydro such as Magiagi and those around the diesel station at Tanugamanono. Also one near a hydro where EPC has abandoned attempting to read the meters in response to threats. As the quantity of power used in these places is not known, it is included in losses. Accordingly, all formal and informal arrangements for the gifting of power need to be clearly identified and separated from theft and other losses.
Past Load Forecasts for Savai’i
In 2003 a load forecast was prepared for Savai’i by Nippon Koei (NK). NK’s Median Scenario assumed an average growth rate of 6.0% per annum 2003 through to 2015. This would now appear optimistic where NK sales in 2005 and 2006 were 12.26 GWH and 12.98 GWH respectively. Actual sales in 2006 of 8.4 GWH were only 65% of this figure. Fichtner also adopted this growth rate, but acknowledged that after 2015 they would apply a growth rate of 4% per annum. As noted in Appendix 7 there are no major loads identified for Savaii, and the new township at Salelologa will not necessarily attract any new commercial or industrial development but only possibly some government departments. A possible hotel at PuaPua may provide the growth stimulus necessary to attract other commercial and supporting infrastructure to the island, however, this venture is only in its very early stages.
In preparing load growth for power system planning purposes under the present project careful consideration will need to be given to the underlying growth rate of existing customers. However, any energy from the Vaita’i hydro project should easily be absorbed by the existing system, but careful consideration needs to be given to the proposed development of a new diesel station and powerhouse for the island so as not to add excess capacity before it is required. This will be discussed further in the Interim Report and Demand Forecast prepared for Savai’i.
Appendix 9: EPC Electricity System