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NIGERIA TRUST FUND PROJECT : REGIONAL RUSUUMO FALLS HYDROPOWER COUNTRY : MULTINATIONAL PROJECT APPRAISAL REPORT ONEC DEPARTMENT November 2013 TABLE OF CONTENTS I. STRATEGIC THRUST AND RATIONALE ............................................................................................ 1 1.1 PROJECT LINKAGES WITH COUNTRY STRATEGY AND OBJECTIVES .............................. 1 1.2 RATIONALE FOR BANK’S INVOLVEMENT ..................................................................... 2 1.3 DONOR COORDINATION .............................................................................................. 2 II. PROJECT DESCRIPTION ........................................................................................................................ 3 2.1 PROJECT COMPONENTS ............................................................................................... 3 2.2 TECHNICAL SOLUTIONS ADOPTED AND ALTERNATIVES CONSIDERED ........................ 4 2.3 PROJECT TYPE ............................................................................................................. 5 2.4 PROJECT COST AND FINANCING ARRANGEMENTS ....................................................... 5 2.5 PROJECT’S TARGET AREA AND POPULATION .............................................................. 7 2.6 PARTICIPATORY APPROACH ........................................................................................ 7 2.7 BANK GROUP EXPERIENCE AND LESSONS REFLECTED IN PROJECT DESIGN ................ 7 2.8 PROJECT’S PERFORMANCE INDICATORS ...................................................................... 9 III. PROJECT FEASIBILITY .......................................................................................................................... 9 3.1 ECONOMIC AND FINANCIAL PERFORMANCE ................................................................ 9 3.2 ENVIRONMENTAL AND SOCIAL IMPACTS ................................................................... 10 IV. PROJECT IMPLEMENTATION ........................................................................................................... 12 4.1 IMPLEMENTATION ARRANGEMENTS .......................................................................... 12 4.2 PROJECT MONITORING AND EVALUATION ................................................................. 14 4.3 GOVERNANCE ........................................................................................................... 15 4.4 SUSTAINABILITY ....................................................................................................... 16 4.5 RISK MANAGEMENT .................................................................................................. 16 4.6 KNOWLEDGE BUILDING ............................................................................................ 18 V. LEGAL FRAMEWORK .......................................................................................................................... 18 5.1 LEGAL INSTRUMENT.................................................................................................. 18 5.2 CONDITIONS ASSOCIATED WITH BANK’S AND FUND’S INTERVENTION ..................... 19 5.3 COMPLIANCE WITH BANK POLICIES .......................................................................... 20 VI. RECOMMENDATIONS .......................................................................................................................... 20 APPENDIX I: COUNTRY’S COMPARATIVE SOCIOECONOMIC INDICATORS APPENDIX II: AFDB’S ON-GOING PORTFOLIO APPENDIX III: SIMILAR PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS APPENDIX IV: MAP OF PROJECT AREA CURRENCY EQUIVALENTS Exchange Rate as of May 2013 UA 1 = USD 1.509 USD 1 = UA 0.66269 UA 1 = EUR 1.15439 USD 1 = EUR 0.76499 UA 1 = RWF 952.37 USD 1 = RWF 631.13 UA 1 = TZS 2,400.89 USD 1 = TZS 1,591.04 UA 1 = BIF 2,344.40 USD 1 = BIF 1,553.61 Bank’s Fiscal Year 1 January – 31 December Borrower’s Fiscal Year Burundi 1 January – 31 December Rwanda 1 July – 30 June Tanzania 1 July – 30 June Weights and Measures m meter KOE kilogram of oil equivalent cm centimetre = 0.01 meter kV kilovolt = 1,000 volts mm millimetre = 0.001 meter KVA kilovolt ampere (1,000 Va) km kilometre = 1,000 meters KW kilowatt = 1,000 watts m² square meter GW gigawatt (1,000,000 kW or 1000 MW) cm² square centimetre MW megawatt (1,000,000 W or 1 000 kW) km² square kilometre = 1,000,000 m² KWh kilowatt hour (1,000 Wh) ha hectare = 10,000 m² MWh megawatt hour (1,000 KWh) t (t) metric tonne (1,000 kg) GWh gigawatt hour (1,000,000 KWh) Acronyms and Abbreviations AfDB African Development Bank LRMC Long Run Marginal Cost ADF African Development Fund MCC Millennium Challenge Cooperation BADEA Banque Arabe pour le MINECOFIN Ministry of Finance and Economic Développement de l’Afrique Planning CIDA Canada International MoFEDP Ministry of Finance and Economic Development Agency Development Planning CSP Country Strategy Paper NBI Nile Basin Initiative CTB Coopération Technique Belge NELSAP Nile Equatorial Lakes Subsidiary Action Program CV Curriculum Vitae NPV Net present value DPs Development Partners NSGRP-II National Strategy for Growth and Reduction of Poverty EA Executing agency NTF Nigerian Trust Fund EAC East African Community PAP Project Affected People EAPP East African Power Pool PBA Performance Based Allocation EDPRS-II Economic Development and PCR Project Completion Report Poverty Reduction Strategy i EIRR Economic internal rate of PEFA Public Expenditure and Financial return Accounting ENPV Economic net present value PFM Public Financial Management EOI Expression of Interest PIDA Program for Infrastructure Development in Africa ESIA Environmental and Social PIU Project Implementation Unit Assessment ESMP Environmental and Social PPA Power Purchase Agreement Management Plan EU European Union RAP Resettlement Action Plan EWSA Electricity, Water and REGIDESO Régie de Production et de Sanitation Authority Distribution d’Eau et d’Electricité du Burundi FC Foreign exchange costs RISP Regional Integration Strategy Paper FIRR Financial internal rate of return ROR Run of River FM Financial Management ROW Right of Way FNPV Financial net present value SA Special Account GDP Gross domestic product SAI Supreme Audit Institution GHG Greenhouse Gas SBD Standard Bidding Documents GoB Government of Burundi SINELAC Socitété Internationale des Pays des Grands Lacs (International Society of Great Lakes Countries) GoR Government of Rwanda SME Small or medium enterprise GoT Government of Tanzania SOE Statement of Expenditure GPN General Procurement Notice SPV Special Purpose Vehicle GPRSF-II Growth and Poverty Reduction TANESCO Tanzania Electric Supply Company Strategy Framework Limited ICT Information and T-Line Transmission line communication technology IMF International Monetary Fund TOR Terms of Reference IFR Interim Financial Reports UA Units of account IRR Internal rate of return UNDP United Nations Development Program IFC International Finance UNDP United Nations Development Corporation Program ITF EU – Africa Infrastructure UNIDO United Nations Industrial Trust Fund Development Organization JICA Japanese International USD United States Dollar Cooperation Agency KfW Kreditanstalt für Wiederaufbau VAT Value Added Tax (German Financial Cooperation) LC Local costs WB World Bank LADP Local Area Development Plan ii PROJECT INFORMATION SHEET CLIENT’S INFORMATION Country Borrower Executing Agency (EA) Régie de Production et de Distribution d’Eau et d’Electricité du Burundi Burundi Republic of Burundi (REGIDESO), Rwanda Republic of Rwanda Energy, Water and Sanitation Authority (EWSA) Tanzania The United Republic of Tanzania Tanzania Electric Supply Company Limited (TANESCO) FINANCIAL PLAN Project Component Financier Amount (UA Million) Hydropower plant World Bank 225.315 African Development Bank Group 64.492 Transmission lines component EU – Africa Infrastructure Trust Fund (ITF) 10.603 Borrowers / Recipients 5.093 Total 305.503 Breakdown of Transmission Line Component (Instrument and amount, UA million) ADF-12 ADF-12 ADF-12 Total Additional Total (Regional cancelled Total ADF NTF (PBA) ADF-12 re- ADB Country Operation) resources allocation Group financing Loan Grant Loan Grant Loan Grant Loan Loan Loan Grant Loan Burundi 6.680 10.020 16.700 16.700 16.700 Rwanda 7.000 10.500 17.500 0.364 1.020 18.884 6.500 25.384 Tanzania 8.963 13.445 22.408 22.408 22.408 Total 15.963 6.680 23.945 10.020 39.908 16.700 0.364 1.020 41.292 16.700 6.500 64.492 Total ADB Bank Group financing 64.492 EU – Africa Infrastructure Fund (ITF), for Burundi EURO 13 million 10.603 Counterparts fund: i) Government of Burundi 2.719 ii) Government of Rwanda 1.351 iii) Government of Tanzania 1.023 Total financing for the Transmission Line Component 80.188 KEY FINANCIAL INFORMATION ADF Loan NTF Loan Loan/Grant currency Unit of account (UA) United States Dollar (USD) 0.50% yearly on the undisbursed portion of the 0.50% yearly on the undisbursed portion of the loan Commitment fee loan starting 120 days after the signing of the starting 120 days after the signing of the loan loan agreements agreements Service charge 0.75% yearly on the disbursed and outstanding 0.75% yearly on the disbursed and outstanding Repayment 40 years after the grace period 20 years after the grace period Grace period 10 years 7 years KEY FINANCIAL AND ECONOMIC OUTCOMES FIRR FNPV @ 8% EIRR ENPV@ 12% PROJECT (Power plant & Transmission Line Components) 23.16% US$ 153.60 m 40.89% US$ 200.53 m TIMEFRAME – MAIN MILESTONES (expected) Concept note approval 18