FOR OFFICIAL USE ONLY
Report No: PAD3158 Public Disclosure Authorized
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF EURO 18.4 MILLION (US$20.0 MILLION EQUIVALENT) Public Disclosure Authorized
AND A
PROPOSED GRANT
IN THE AMOUNT OF SDR 14.7 MILLION (US$20.0 MILLION EQUIVALENT)
TO THE
THE UNION OF COMOROS Public Disclosure Authorized
FOR THE
COMOROS SOLAR ENERGY INTEGRATION PLATFORM
June 1, 2020
Energy and Extractives Global Practice Africa Region
Public Disclosure Authorized
This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2020)
Currency Unit = Comorian franc (KMF)
KMF 450 = US$1 US$1= SDR 0.73185012 US$1= EURO 0.91945568
FISCAL YEAR January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank CAPEX Capital Expenditure CERC Contingent Emergency Response Component CMS Commercial Management System CPF Country Partnership Framework DA Designated Account DGEME Energy, Mines, and Water Directorate (Direction Générale de l'Energie, des Mines et de l'Eau) DHS Demographic and Health Survey DSOCU Delegated Sector Oversight and Contracting Unit ECOP Environmental Codes of Practice EDA Electricity Utility for Anjouan (Electricité d'Anjouan) EIRR Economic Internal Rate of Return EPC Engineering, Procurement, and Construction ESIA Environmental and Social Impact Assessment ESMAP Energy Sector Management and Assistance Program ESMP Environmental and Social Management Plan ESRP Electricity Sector Recovery Project EU European Union FADES Arab Fund for Economic and Social Development (Fonds Arabe pour le Développement Economique et Social) FM Financial Management GBV Gender-based Violence GDP Gross Domestic Product GHG Greenhouse Gas GoC Government of Comoros GRM Grievance Redress Mechanism GRS Grievance Redress Service HFO Heavy-fuel Oil IFR Interim Financial Report
IPF Investment Project Financing IPP Independent Power Producer kWh Kilowatt Hour M&E Monitoring and Evaluation MAMWE Water and Electricity Management of the Comoros (Gestion de l´Eau et l´Electricité aux Comores) MPEEIH Ministry of Production, Environment, Energy, Industry and Handicrafts MV Medium Voltage MW Megawatt MWp Megawatt Peak O&M Operations and Maintenance PCE Comoros Emerging Plan (Plan Comores Emergent) PDO Project Development Objectives PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PIM Project Implementation Manual PIU Project Implementation Unit PPA Project Preparation Advance PPSD Project Procurement Strategy for Development PV Photovoltaic RAP Resettlement Action Plan SCD Systematic Country Diagnostic SCA2D Comoros Strategy for Growth and Poverty Reduction SDG Sustainable Development Goal SEA Sexual Exploitation Abuse SHEE Systematic Household Energy Efficiency SIDS Small Island Developing States SONEDE Société Nationale d'Exploitation et de Distribution d'Eau (National Water Exploitation and Distribution Company) SONELEC Société Nationale de l'Electricité des Comores (National Comorian Electricity Company) STEP Systematic Tracking of Exchanges in Procurement ToR Terms of Reference
Regional Vice President: Hafez Ghanem Country Director: Mark R. Lundell Global and Regional Practice Director: Riccardo Puliti Practice Manager: Sudeshna Ghosh Banerjee Task Team Leaders: Jan Friedrich Kappen, David Loew
TABLE OF CONTENTS DATASHEET...... 2 I. STRATEGIC CONTEXT...... 7 A. Country Context...... 7 B. Sectoral and Institutional Context ...... 8 C. Relevance to Higher Level Objectives ...... 14 II. PROJECT DESCRIPTION ...... 15 A. Project Development Objective ...... 15 B. Project Components ...... 15 C. Project Beneficiaries ...... 21 D. Results Chain...... 22 E. Rationale for World Bank Involvement and Role of Partners ...... 22 F. Lessons Learned and Reflected in the Project Design ...... 23 III. IMPLEMENTATION ARRANGEMENTS ...... 24 A. Institutional and Implementation Arrangements...... 24 B. Results Monitoring and Evaluation Arrangements ...... 26 C. Sustainability ...... 26 IV. PROJECT APPRAISAL SUMMARY ...... 26 A. Technical, Economic and Financial Analysis ...... 26 B. Fiduciary ...... 29 C. Safeguards ...... 31 V. KEY RISKS...... 36 VI. RESULTS FRAMEWORK AND MONITORING ...... 39 ANNEX 1: Implementation Arrangements and Support Plan ...... 44 ANNEX 2: Gender Gap Analysis and Action Plan ...... 50 ANNEX 3: Map of the Union of the Comoros ...... 54
Page 1 of 54
DATASHEET
BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name
Comoros Comoros Solar Energy Integration Platform
Project ID Financing Instrument Environmental Assessment Category
Investment Project P162783 B-Partial Assessment Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC)
[ ] Series of Projects (SOP) [✓] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [✓] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country
[ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA)
Expected Approval Date Expected Closing Date
22-Jun-2020 30-Jun-2025
Bank/IFC Collaboration
No
Proposed Development Objective(s)
Improve the commercial performance of the electric utility and its capacity to dispatch variable renewable energy.
Components
Component Name Cost (US$, millions)
Component 1: Investments in Power Storage, Pilot PV and System Upgrades 28.60
Page 2 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Component 2: SONELEC Commercial and Financial Recovery 6.00 Component 3: Technical Assistance, Project Implementation, and Capacity Building 8.00 Activities
Component 4: Contingent Emergency Response Component 0.00
Organizations
Borrower: Government of the Union of Comoros Implementing Agency: Ministry of Production, Environment, Energy, Industry and Handicrafts
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 42.60
Total Financing 42.60 of which IBRD/IDA 40.00
Financing Gap 0.00
DETAILS -NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 40.00
IDA Credit 20.00
IDA Grant 20.00 Non-World Bank Group Financing
Trust Funds 2.60
Support for Small Island Developing States (SIDS) DOCK Suppo 2.60
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount Comoros 20.00 20.00 0.00 40.00
National PBA 20.00 20.00 0.00 40.00
Page 3 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Total 20.00 20.00 0.00 40.00
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2020 2021 2022 2023 2024 2025
Annual 0.05 2.19 3.55 6.40 14.03 13.78
Cumulative 0.05 2.24 5.79 12.19 26.22 40.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas Energy & Extractives
Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1. Political and Governance ⚫ Substantial
2. Macroeconomic ⚫ Substantial
3. Sector Strategies and Policies ⚫ Moderate
4. Technical Design of Project or Program ⚫ Substantial
5. Institutional Capacity for Implementation and Sustainability ⚫ High
6. Fiduciary ⚫ Substantial
7. Environment and Social ⚫ Substantial
8. Stakeholders ⚫ Moderate
9. Other ⚫ Moderate
10. Overall ⚫ Substantial
Page 4 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
COMPLIANCE
Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No
Does the project require any waivers of Bank policies? [ ] Yes [✓] No
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 ✔
Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔
Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔
Physical Cultural Resources OP/BP 4.11 ✔
Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔
Safety of Dams OP/BP 4.37 ✔
Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔
Legal Covenants
Sections and Description FA, Schedule 2, Section I, A, 2 (e): Not later than six (6) months after the Effectiveness Date, an internal auditor and external auditor shall have been recruited and appointed.
Conditions
Type Description Approval Presidential decree establishing the DSOCU has been adopted in accordance with Decree No 20-077/PR dated May 14, 2020
Page 5 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Type Description Effectiveness Financing Agreement has been duly executed, authorized or ratified on behalf of the recipient and the DSOCU, in form and substance satisfactory to the Association, and is legally binding upon the Recipient and the DSOCU with its terms
Type Description Effectiveness Subsidiary Agreement has been duly executed, authorized or ratified on behalf of the Recipient and the DSOCU, in form and substance satisfactory to the Association, and is legally binding upon the Recipient and the DSOCU with its terms
Type Description Effectiveness The Project Implementation Manual (PIM) has been adopted in form and substance acceptable to the Association
Type Description Effectiveness Recipient has established the DSOCU Steering Committee by ministerial decree with composition and mandate acceptable to the Association
Type Description Effectiveness Recipient has hired and appointed on the basis of terms of reference, qualifications, integrity and experience acceptable to the Association a financial officer and an accountant
Type Description Disbursement FA, Schedule 2, Section III, B(b): No withdrawal shall be made under Category 3, for Resettlement Assistance under Part 1 (f) of the Project, unless and until the Association has received evidence satisfactory that: (i) an agreement between the DSOCU and a selected consulting company or non-governmental organization has been signed in form and substance satisfactory to the Association to implement Part 1 (f) of the Project; (ii) the Recipient has established and maintained the payment committee by inter-ministerial Decree to implement Part 1 (f) of the Project.
Page 6 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
I. STRATEGIC CONTEXT
A. Country Context
1. The Union of the Comoros is a small island nation occupying a strategic geographical position in the Mozambique Channel, between East Africa, Madagascar, and the other islands of the Indian Ocean (Seychelles, Mauritius, and Reunion). The country has an estimated population of 795,000. Grande Comore is the largest island and is home to about half of the country’s population and the country’s capital, Moroni. Anjouan has the largest population density of 575 inhabitants per km2 and 42 percent of the population, while Mohéli is the smallest and least populated island with 171 inhabitants per km2 and 6 percent of the population. The population is predominantly young and continues to grow rapidly (2.9 percent a year). The current forecast is for the population to reach 1 million by 2028 and to more than double by 2050.
2. Since independence in 1974, the Comoros has experienced recurrent political crises and conflicts between the islands. This instability contributed to a low real income per capita growth, constrained private sector-led growth, and limited fiscal space for investment in infrastructure and social sectors. The Comoros regained relative political stability after the adoption of the Fomboni Agreement in 2001 (which led to four consecutive democratic transitions), although sociopolitical tensions remain.
3. The Comoros’s economy faces challenges stemming from its geographic remoteness, limited resources, and small and fragmented domestic market. In combination with low economic diversification and competitiveness, these characteristics contribute to large and persistent trade deficits, a narrow export base, and structural dependence on food imports and remittances (around 9 percent and 15 percent of gross domestic product [GDP], respectively).1 Economic performance has been sluggish (slowing down recently to 1 percent and the unemployment rate was last estimated to be 19.2 percent), unable to provide meaningful employment for the young and growing population and address a significant inequality and poverty gap. Remittances, while significant, have an unequally distributed alleviating effect on poverty.2
4. While Comorian society is matrilineal, giving women an important role in society in terms of asset ownership and bequeathal, gender inequalities in the Comoros are entrenched. The 2018 Human Development Index value for females in the Comoros was 0.504 in contrast with 0.568 for males, resulting in a Gender Development Index value of 0.888, placing it slightly below the average for Sub-Saharan Africa. Despite gender equality being enshrined in the Constitution, women have significantly lower school completion and higher unemployment rates. The latter indicates that they disproportionally perform
1 The Comoros benefits from large remittances from the diaspora that are a crucial component of the economy. Many Comorians have migrated elsewhere because of the country’s weak socioeconomic development and history of political instability. According to United Nations statistics, in 2012 there were 108,986 Comorians living abroad, mostly concentrated in France. 2 Over 90 percent of remittances are estimated to go to the island of Grande Comore, financing consumption, h ouse construction, and ‘grand marriage’—with limited impact on investment. This situation reduces the opportunity cost of unemployment, particularly among youth, and affects motivation to overcome constraints to self-employment and entrepreneurship.
Page 7 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
unpaid work. Their participation in the labor force is only 33 percent compared to 57 percent for men. This participation rate is one of the lowest in the region and compounds women’s economic vulnerability.
5. At the Comoros Development Partners Conference held in Paris in December 2019, the Government presented its new development strategy ’Comoros Emerging Plan’ (Plan Comores Emergent, PCE). The PCE aims to achieve a structural transformation of the Comorian economy through targeted and sustained interventions in favor of the private sector. To create a better business environment, the PCE will advance the implementation of a proactive investment promotion and support policy with strong incentive measures contributing to a better participation of the national and international private sector in the development of the country.
6. COVID-19 will slow down progress in poverty reduction, with more than one out of three Comorians projected to be below the US$3.2 poverty line in 2020. The positive impact on economic activity from reconstruction efforts after Cyclone Kenneth are now expected to be more than offset by the dampening effect of COVID-19, lowering growth projections for 2020 to 0.6 percent. The expected large drop in remittances and tourism, both heavily affected by the impact of the health crisis in France, would have a wide negative effect on domestic demand and exports. The shock would affect most economic sectors, with trade and tourism-related sectors among the ones expected to be hit the hardest. Growth is expected to recover relatively quickly after the end of the health crisis, reaching an average of 3.4 percent over 2021-2022.
B. Sectoral and Institutional Context
7. The Energy, Mines, and Water Directorate (Direction Générale de l'Energie, des Mines et de l'Eau, DGEME), as part of the Ministry of Production, Environment, Energy, Industry and Handicrafts, is the lead government agency overseeing the energy sector. Responsibility for day-to-day electricity service delivery is with the public electricity utility Société Nationale de l’Electricité des Comores (SONELEC), providing electricity to the islands of Anjouan, Grande Comore, and Mohéli. Two decrees signed in January 2019 effected two simultaneous organizational realignments among Comorian public utilities: (a) the separation of water and electricity management of Comoros (Gestion de l´Eau et l´Electricité aux Comores, MAMWE), the former joint utility for Grande Comore and Mohéli, into independent power and water utilities, respectively, SONELEC and the independent water utility (Société Nationale d'Exploitation et de Distribution d'Eau, SONEDE); and (b) the merger of MAMWE and the electricity utility for Anjouan, Electricité d'Anjouan (EDA), into the created SONELEC. As a result, SONELEC now manages generation, transmission, and distribution across all three islands.
8. The World Bank’s most recent energy engagement in the Comoros is the Electricity Sector Recovery Project (ESRP, P131659, closed April 2018). The objectives of the ESRP were to support MAMWE’s revenue protection and loss reduction by improving its billing and collection performance. The main activities included the hiring of external experts as senior managers to lead the commercial and financial restructuring of the utilities, the purchase and installation of management and information systems, and the installation of advanced network metering equipment. The project showed encouraging results. MAMWE’s collection rate (that is, cash collected as a percentage of billed electricity) improved from 55 percent to 70 percent and total losses (that is, billed electricity as a percentage of produced electricity) had recovered from 45 percent to 37.5 percent. Since ESRP closure, these values have further improved to 81 percent and 35 percent, respectively.
Page 8 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
The Comorian energy sector is beset with a multitude of interrelated challenges.
9. First, reliance on imported fossil fuels for power production. In 2018, electricity generation in the Comoros consisted of small-scale diesel generators adding up to a total installed capacity of 31.5 MW: 19.4 megawatt (MW) in Grande Comore, 7.4 MW in Anjouan, and 4.70 MW in Mohéli. Due mainly to the lack of proper maintenance and rehabilitation of the generation equipment, the available generation capacity regularly dips below installed values and is inadequate to consistently satisfy demand across the three islands. Total primary energy consumption is 0.2 tons of oil equivalent per capita, one of the lowest in the world,3 and commercial energy consumption is even lower at only 0.06 tons of oil equivalent per capita. It is estimated that biomass (wood and charcoal) currently makes up 70 percent of energy use in the Comoros. The remainder comes almost entirely from imported diesel oil, most of which is used to generate electricity.
10. Second, a high cost of electricity at US¢33 per kilowatt hour (kWh), reported to be the second highest in Africa. As a small archipelago, the Comoros’s access to commodity markets is constrained by limited economies of scale and inherent difficulties in the country’s fuel supply chain. As a result, the fuel cost faced by the Comorian utilities has consistently remained above international benchmarks, and during periods of high petroleum prices during the past years, placed an unsustainable burden on the company’s operational performance. Moreover, due to the utility’s unfavorable generation infrastructure (exclusively consisting of small, fast-spinning, and high-maintenance backup/peaking diesel gensets with no appropriately sized, slower-spinning, and less maintenance-intensive units to cover the baseload), the islands’ cost of electricity service is the second highest according to a comparative study on the performance of power utilities in Sub-Saharan Africa.4
11. Third, poor electricity service, despite relatively high access rates. Access rates vary by island, with the highest access rate on Grande Comore (80.2 percent) and lower access rates on Mohéli (52.9 percent) and Anjouan (43.7 percent). Despite this disparity between islands, all islands have access rates higher than the Sub-Saharan regional average of 40 percent. However, the poor quality of Comorian electricity services results in a per capita electricity supply comparable to many Sub-Saharan Africa countries with much lower access rates. The overwhelming majority of Comorian households with de facto—but low quality—access to electricity show a near complete dependence on kerosene and candles for lighting and commercial charging stations for mobile phone, as well as significant household expenditures on disposable batteries to power radios and other small appliances.
12. Fourth, the sector is highly dependent on government transfers. Average tariffs, at around US$0.3 per kWh, are below the cost of service. As a result, in 2017, and again in 2018, government transfers were required to cover SONELEC’s operating losses, amounting to around US$6.5 million per year, equivalent to approximately 8 percent of tax revenues or 0.6 percent of GDP. The sector thus represents a substantial burden on public finances. With additional thermal generation assets having come online in 2017 and 2018 (14 MW based in Voidjou, single sourced from a private developer under
3 Compared to a Sub-Saharan Africa average of 0.5 tons of oil equivalent per capita. 4 Kojima, Masami, and Christopher Philip Trimble. 2016. Making Power Affordable for Africa and Viable for Its Utilities (English). Washington, DC: World Bank Group. http://documents.worldbank.org/curated/en/293531475067040608/Making-power- affordable-for-Africa-and-viable-for-its-utilities.
Page 9 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
commercial financing, of which only 4 MW are still operational) and both fuel prices and fuel price volatility a major risk, the burden on the Government’s finances is expected to escalate further. Sector commercial performance is further hampered by poor billing practices and high levels of theft, though billing and collection rates have experienced significant recent improvements, having reached 65 percent and 81 percent respectively at the end of 2019.5
13. Fifth, urgently needed investments in generation and grid rehabilitation that could improve sector performance have suffered from continued delays. With the majority of SONELEC’s generation assets having either reached the end of their lifetimes or being run by independent operators with little or no incentives for fuel efficiency, specific generation cost has further escalated and technical breakdowns have become rampant. While the increase in per kWh fuel consumption is further reducing the utility’s already unsustainable margins, the deterioration of service quality is also affecting collection rates, as a growing share of disgruntled customers is becoming reluctant to pay their electricity bills in a context of increasingly long and frequent power cuts.
14. Sixth, frequent changes of senior energy sector appointees continue to jeopardize donor project implementation and compromise utility independence. The ESRP, for instance, included the hiring of external experts as senior managers to lead the commercial and financial restructuring of the utility. Following a costly and time-consuming search and recruitment of suitable candidates, the ability of the international resident experts to fill their dual mandate of leading the company’s operational recovery and building local management capacity by working side by side with MAMWE’s (SONELEC’s predecessor company on the island of Grande Comore) team of senior directors was derailed by sustained government interference. During project implementation, three managing directors and an interim managing committee as well as three chief financial officers, three commercial directors, and two technical directors succeeded each other at the helm of MAMWE. The persistent lack of continuity of MAMWE’s senior management also affected the morale of the international staff as their efforts to foster knowledge transfer and strengthen local managerial skills through cross-training and working in tandem with MAMWE’s senior directors were undone with every change of their local counterparts. As a result, some resident experts asked to significantly reduce time spent at MAMWE while others refused to renew their contracts. Adding to the above challenges, the international resident experts were never granted the critical managerial and decision-making authority to effectively lead the implementation of reforms. Therefore, as experts were only provided with an advisory mandate, they could not ensure continuity or shield ongoing reforms from the disruption created by the frequent change of MAMWE’s senior management.
Investment in renewable energy, primarily solar photovoltaic (PV), can enhance energy security and affordability but important advances in planning, sector performance, and governance are required.
15. The Comoros has a good level of solar radiation. With ongoing volatility in international commodity markets, renewable energy solutions are becoming increasingly attractive means for reducing and stabilizing the cost of electricity services of small island systems. Solar PV and storage systems— characterized by low operating cost, falling capital expenditure (CAPEX), relative site flexibility, modularity, and short construction times—have tremendous potential to contribute to both reducing
5 Inadequate data management and record keeping at SONELEC means that billing and collection rates have been estimated based on conversations with SONELEC staff.
Page 10 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
SONELEC’s cost of generation and improving the utility’s service quality. Recent and reliable data on solar irradiance potential in the Comoros are scarce, but according to Energy Sector Management Assistance Program’s Global Solar Atlas, the Comorian Islands, with an estimated average solar PV output of 1,500 kWh/kWp per year, have a good level of solar radiation capable of supplying solar PV installations at scale.6
16. The scale-up of renewable energy generation is still in its infancy. So far, the use of renewables is limited to less than 150 kW of (micro-) hydropower installations in Anjouan and Mohéli, negligible solar energy use, and early stage efforts for the long-term development of geothermal energy. A number of development partners are active in the energy sector, with an increasing interest in renewables, such as the European Union (EU), the African Development Bank (AfDB), and the Arab Fund for Economic and Social Development (Fonds Arabe pour le Développement Economique et Social, FADES,). An example of this is the EU-funded elaboration of a National Strategy for the Energy Sector in the Comoros (over a 20- year period) accompanied by a five-year Action Plan in January 2013. Based on the plan, the EU is currently supporting the development of two hybrid (solar PV and diesel powered) pilot sites of 125 kW and 50 kW capacity, respectively, for injection in Mohéli’s medium voltage (MV) grid. In addition, two 3 MW PV plus battery storage pilot independent power producer (IPP) projects are currently under development by private developers, one in Grande Comore (‘Innovent’) and one in Anjouan (‘VIGOR’). While this marks an encouraging first step for private sector investment in the Comorian power sector, both projects are facing challenges, including politically motivated selection of suboptimal sites (both in terms of insolation and environmental impact); a lack of sector transparency and coordination; and high, frontloaded tariffs to compensate for substantial utility payment and sector governance risk (both projects are 100 percent equity financed).
17. The current SONELEC financial situation is a major hindrance to private sector participation in renewable capacity expansion. Though World Bank operations have helped strengthen SONELEC, significant additional efforts will be required to improve the credibility and financial viability of the utility as an offtaker and decrease risk for would-be investors. Therefore, efforts to further improve SONELEC’s financial management (FM) and commercial performance will have to be continued. This will involve all management information, customer management, and billing and metering systems on the islands of Grande Comore and Mohéli put in place under the previous World Bank-financed ESRP to be rolled out on the island of Ajouan as well.
18. Enhancements to the sector framework to improve governance are under way. With the support of the AfDB, institutional reforms and legislation aiming to improve sector planning and promote renewable energy IPPs are ongoing, including the finalization and adoption of a Power Sector Master Plan, the country’s first grid code, and the adoption of standard power purchase agreements. However, implementation of these critical reforms has been stalling for lack of institutional capacity. Therefore, additional technical and institutional support remains necessary, in particular with regard to strengthening the sector planning and oversight capacity of the Government of Comoros (GoC).
6 For comparison, the neighboring island of Mayotte has heavily invested in combined PV and storage facilities and was obtaining 30 percent of power from solar PV in 2016.
Page 11 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
The proposed Comoros Solar Energy Integration Platform (ComorSol) project will address the sector challenges and enable the Union of the Comoros to harness its renewables potential by creating the technical and institutional infrastructure necessary to integrate solar energy into the grid.
19. The project will support the creation of SONELEC’s ‘Solar Energy Backbone’ toward a more affordable, reliable, and available energy supply, adding critical grid, battery storage, pilot generation, and dispatch infrastructure as well as the institutional and operational capacity necessary to integrate intermittent solar energy to the grid. A Delegated Sector Oversight and Contracting Unit (DSOCU) will coordinate the planning, financing, and integration of the country’s first utility‐scale solar PV plants and will ensure coherent, dependable coordination of related energy sector interventions by different donors.
20. The project will contribute to mitigating a number of risks for private companies to participate in the energy sector. The project encompasses a number of activities to support SONELEC’s path to becoming a creditworthy offtaker for future IPPs. These will include a second stage of the successfully completed revenue protection program of the ESRP, further investments in state-of-the art customer management systems and metering infrastructure, and upgrades to storage and transmission infrastructure. A structured least-cost planning process managed by the DSOCU and complementary technical and institutional support will create a favorable environment for private sector investment and participation in the Comorian energy sector.
21. The project, with its ‘platform’ approach, will allow other development financiers to support renewable energy. High-potential solar and battery storage sites across all three islands have already been identified during project preparation. A prefeasibility study was conducted for solar plus storage of 10 megawatt peak (MWp) on Grande Comore, 4 MWp on Anjouan, and 1 MWp on Mohéli across 11 potential sites, and draft Environmental and Social Impact Assessments (ESIAs) and Resettlement Action Plans (RAPs) have been prepared. With these studies in place, the project will have created a plug-and- play enabling environment for future solar investments by the private sector or other development financiers.
22. The project will also set a precedent for other funders by financing a 9 MWp pilot PV project on Grande Comore. The objectives of the pilot PV project will be to (a) create a demonstration effect for participation by development partners and private financiers in the Comorian electricity sector, and PV in particular; (b) mitigate the risk of the solar-enabling infrastructure assets financed by the project (battery storage, grid upgrades, and so on) becoming stranded in case of delays or continued trepidation on the part of other funders; and (c) enable SONELEC to displace a portion of its expensive thermal generation and set it on a path toward financial recovery as soon as possible.
23. Parallel advances needed and development partner activities. Table 1 provides an overview of all key sector reforms and the role of other development partners in this context. The table illustrates that the recently completed IDA-financed ESRP already supported a range of activities to improve the sector’s financial health, including key utility-related interventions, such as hiring of external experts to lead commercial and financial utility restructuring as well as the purchase and installation of management information systems and network metering (highlighted ‘high-impact’ short-to-medium term quadrant). However, as mentioned earlier, the sustainability of further progress with regard to improved utility performance will hinge on much-needed simultaneous further advances in better sector governance, drastic improvements in service quality, and reductions in generation cost.
Page 12 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Table 1. Comoros - Overview of Critical Sector Reforms and Interventions to Be Pursued in Parallel7
Financial/Budgetary Impact Key Sector Policy Options Low Medium High
Difficult/long term Tariffs. Use (small) Sector governance. Utility Sector governance. remaining privatization, Improve fuel supply headroom for management contract, chain efficiency and further tariff IPPs transparency increases Þ Ongoing (AfDB) Þ Ongoing (AfDB) Þ Ongoing (AfDB) Generation mix. Progressive shift to low- cost, slow-turning heavy fuel liquid generators and geothermal
Þ Ongoing (Exim Bank India)
Complex/medium- Utility performance. Sector governance. Sector governance. term Reduce utility Improve sector least cost Improve sector project staffing cost and planning and management and headcount and development coordination introduce of Level of competitive Þ Ongoing (AfDB, EU) Utility performance. complexity and recruitment and Improve utility bill implementation performance-driven Utility performance. collection lead time compensation Improve generation fuel/operational efficiency Þ Partially completed Þ Partially (ESRP) completed (ESRP) Þ Partially completed Þ To be continued (ESRP) (ComorSol)
Clear cut/short Utility performance. Utility performance. Utility performance. term Improve utility FM Improve transmission and Improve utility billing distribution operational and metering Þ Partially efficiency completed (ESRP) Þ Partially completed Þ Ongoing (AfDB, FADES) (ESRP)
Tariffs. Optimize tariff Generation mix. structure Addition of grid connected PV plus Þ Ongoing (AfDB) storage capacity to meet peak demand and system stability requirements
Þ Planned (ComorSol)
7 Shaded cells indicate focus of the ComorSol project.
Page 13 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
24. The proposed ComorSol project will also support urgent infrastructure investments to mitigate the effects of Cyclone Kenneth. Post Cyclone Kenneth, recovery operations require continued actions on grid rehabilitation and maintenance of thermal production units. Cyclone Kenneth hit particularly the northern part of Grande Comore on the night of April 24, 2019, causing significant damage to SONELEC's infrastructure. SONELEC's infrastructure recovery budget was estimated at US$3 million, 90 percent of which is being used to rehabilitate the power grid on the island of Grande Comore. The other urgent actions identified are the reinforcement of SONELEC's maintenance teams and equipment in line with anticyclonic construction standards and carrying out maintenance of thermal units to ensure baseload generation.
25. The project will also increase resilience of the Comorian economy and its infrastructure to pandemics such as the COVID-19 outbreak. The investments in generation and distribution infrastructure that the project is expected to support will enhance reliability of power supply to key public infrastructure—in particular hospitals and clinics—and therefore their ability to continue to deliver services even in the face of global emergencies or major macroeconomic shocks. Furthermore, the PV and storage sites proposed under the project could contribute directly to mitigating productivity drops due to COVID-19 by providing reliable, low-cost electricity to power the country’s economic recovery in the aftermath of the pandemic.
C. Relevance to Higher Level Objectives
26. The proposed project is fully aligned with the World Bank’s 2019 Systematic Country Diagnostic (SCD) and the Comoros Country Partnership Framework (CPF) for fiscal year (FY) 20–248. The World Bank-supported program is structured around three development challenges: (1) overcoming the investment gap; (2) raising Comoros’s human capital; and (3) protecting and leveraging the Comoros’s natural resource base, all of which contribute to the objectives of reducing extreme poverty and increasing shared prosperity in the Comoros. The CPF’s strategic priorities build on a series of interim strategy notes since 2000 and are aligned with the GoC Strategy for Growth and Poverty Reduction (SCA2D) for 2015– 2019. The SCA2D provides a framework for medium-term development to lay the foundations “to make the Comoros an emerging country by 2040, respectful of human rights, promoting gender equality and the rule of law.”
27. The proposed project will contribute significantly to all three of the major development challenges identified in the CPF by improving utility performance and the dispatch of renewable energy across all three islands. In doing so, the project will create an improved enabling environment for mobilizing private sector investment (thus supporting development challenge 1) in solar generation, making use of the Comoros’s abundant solar resource and suitable sites for solar power development (thus supporting development challenge 3). Critical functions of the energy sector will be delegated to a team of international experts, working in tandem with and building the capacity of local energy sector staff (thus supporting development challenge 2).
28. The proposed project is closely aligned with the Sustainable Development Goals (SDGs) and the World Bank’s twin goals. By providing financing for improving the electricity utility’s capacity to dispatch renewable energy, thereby displacing the current and future need for CO2-intensive thermal power, the
8 Report No. 145699-KM.
Page 14 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
project represents a critical intervention for achieving SDG7 of ensuring access to affordable, reliable, sustainable, and modern energy for all. By improving the performance and service quality of grid power provided by the utility, the supported intervention contributes to the World Bank’s twin goals of eliminating extreme poverty and boosting shared prosperity, as it is typically the poorest who are least able to afford backup power sources.
29. ComorSol fully embodies the ‘Maximizing Finance for Development’ approach. The project is designed specifically to provide the critical infrastructure and sector management platform necessary to maximize future private sector investment and financing from other development partners. The ‘sector backbone’ developed through the project will create the technical and governance conditions required to de-risk participation from other funders in the Comoros’s renewable energy sector.
II. PROJECT DESCRIPTION
A. Project Development Objective
30. The objective of the Project is to improve the commercial performance of the electric utility and its capacity to dispatch variable renewable energy.
31. Project Development Objective (PDO)-level results indicators. The PDO level indicators are (a) capacity of SONELEC to dispatch variable renewable electricity (MW); (b) average SONELEC billing rate across all three island systems (%); and (c) average SONELEC collection rate across all three island systems (%).
B. Project Components
Component 1: Investment in Power Storage, Pilot PV, and System Upgrades (US$28.6 million equivalent; of which US$2.6 million from SIDS DOCK Trust Fund)
32. Demonstration PV plant on Grande Comore. This component will finance around 9 MWp of PV on a pilot basis on Grande Comore at one of the 11 prospective solar sites identified as part of project preparation. The facility is expected to displace around 13 GWh of diesel-based thermal generation every year. The preliminarily identified site has the triple advantage of being (a) close to demand centers and existing power distribution infrastructure; (b) low impact in terms of social and environmental issues; and (c) within easy interconnection distance to the existing Voidjou diesel power plant, which currently provides the bulk of power on Grande Comore. In addition to providing a much-needed first batch of renewable generation capacity, the pilot PV plant will also create a demonstration effect and set a precedent for other funders to invest in future PV and renewables, many of whom have been apprehensive of engaging in the Comoros’s challenging energy sector or who have experienced significant roadblocks in implementation.
33. Battery storage on Grande Comore and Anjouan. To enable the future injection of solar energy into the grid on each of the two islands, this component will do the following:
Page 15 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
(a) Install stand-alone battery storage on Grande Comore to ensure that additional expected PV generation (9 MWp from this project and 3MWp from the Innovent project currently under construction) will be accompanied by adequate storage capacity. It is estimated that 16 MWh of stand-alone battery storage will be required considering that Innovent project is equipped with its own 3 MWh coupled storage system. The initial site for the stand-alone battery system will be close to both the pilot PV plant financed under the project and the Voidjou power plant.
(b) Install stand-alone battery storage on Anjouan to ensure proper management of solar and thermal generation on the island. Although the VIGOR project is also equipped with 3 MWh battery storage, its generation will likely exceed the needs of the island at mid-day while being short at peak demand times. The centralized battery system will enable proper management of the network. An additional 3 MWh of storage is expected to be financed on Anjouan under the project. Given the persistence of critical bottlenecks in the Comorian islands’ transmission and distribution systems, interconnection points need to be carefully selected in line with the result of a solar interconnection study to be completed by the DSOCU. These two activities will also facilitate future scale-up of solar PV across the islands.
34. Together, the addition of the pilot PV project and battery storage will significantly enhance the performance of the Comorian power system by (a) absorbing a larger amount of PV production during the day, thereby allowing for PV production to contribute to evening demand peaks (replacing thermal production) and (b) improving grid stability and therefore electricity service quality by reducing both frequency and duration of blackouts.
35. The sites financed under this component (PV and storage) will be developed through a supply and installation contract with a competitively selected contractor. The component will include a period of 10 years of operations and maintenance (O&M) to be split into two phases. The first four years of the O&M contract will be financed directly by this component, with a full warranty for the plant provided by the same contractor and securing adequate performance and O&M through Engineering, Procurement, and Construction (EPC) payments retention. In parallel, SONELEC will establish an escrow account and will use the revenues collected from sales from the solar plant to build reserves. This will help ensure the availability of resources for O&M and replacement of equipment to maintain the performance of the plant for at least another six years. To promote accountability, the balance of the escrow account will be published regularly on the SONELEC website.
Figure 1. O&M Arrangements for PV plus storage
Source: World Bank staff.
Page 16 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
36. O&M costs are expected to include all required items: spare parts, PV operation cost, battery operation cost, insurance, and battery replacement every five–seven years. According to international benchmarks, the annual O&M cost is estimated at 1–2 percent of total CAPEX, without including battery capacity maintenance. While PV maintenance arrangements are in general well established, battery maintenance structures are still involving. Currently, international suppliers provide two different modalities and exact arrangements will be agreed during the bid preparation process:
• Capacity maintenance contract. The battery supplier agrees to keep the capacity at a certain level during a certain period of time in exchange for an annual fee. The annual cost is estimated at 10 percent of the total CAPEX.
• Replacement. The battery degrades over time without any capacity maintenance and is replaced once it reaches its end of life. Battery replacement is around 60 percent of the total initial CAPEX. However, due to market and technology evolution, battery costs are expected to decline drastically in the coming years.
37. System upgrades, rehabilitation, and automation. To ensure the stability of the power system on the three islands, reduce outages, and improve overall quality of electricity supply, this component will also include investments in the power transmission network. Specific residual investment needs will be determined by the DSOCU but could include (a) providing Resettlement Assistance, mainly in-kind or cash compensation to the Affected Persons related to Land Acquisitions and Resettlement; (b) a new integrated dispatch center with supervisory control and data acquisition (controlling solar and thermal generation and transmission); (c) an energy management system on each island to optimize the use of solar and other renewable generation while limiting the load on thermal units; (d) network modernization and automation (including installation of automatic reset devices, circuit breakers, and remote-controlled switches); and (e) reinforcement of transmission lines and transformers.
38. This component will receive co-financing in the amount of US$2.6 million equivalent from the SIDS DOCK Trust Fund. Launched in December 2010, in Cancun, Mexico, SIDS DOCK is an initiative of the Alliance of Small Island States (AOSIS) to help their members transform energy sectors and address adaptation to climate change. As the extension of the closing date for the Administration Agreement of this Trust Fund was still ongoing at the time of Board submission, the Grant Agreement and Grant Funding Request for co-financing will be prepared upon confirmation of closing date extension. The project proposal for these funds has been approved by the Energy Sector Management and Assistance Program (ESMAP), which manages the SIDS DOCK Trust Fund.
Component 2: SONELEC Commercial and Financial Recovery (US$6 million equivalent)
39. This component will strengthen SONELEC’s financial performance by improving billing and metering infrastructure, as well as targeted consumer awareness campaigns. One of the key impediments to the emergence of a viable solar sector on the Comoros is the financial precariousness of SONELEC, the main offtaker. Building on the results of the recently completed ESRP, this component will finance the following activities.
40. Subcomponent 2.1: Geographical expansion and enhancements of SONELEC’s commercial management system (CMS). The ESRP has financed the implementation of a state-of-the-art hardware
Page 17 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
and software infrastructure for SONELEC’s new CMS covering all customers on Grande Comore and Mohéli to ensure the streamlining of billing and collection activities and fully integrating the new prepaid metering infrastructure. ComorSol would fund the rollout of the same CMS in Anjouan, extend the expired maintenance guarantee of hardware and software for another three years until SONELEC is fully capable of maintaining the system on its own, and add critical additional features and modules such as mobile payment. This will also include upgrading the system put in place through the ESRP to reflect the recent separation of the utility into separate water (SONEDE) and electricity (SONELEC) entities.
41. Subcomponent 2.2: Rollout of advanced metering infrastructure. The ESRP had piloted the installation of 1,000 prepaid low-voltage meters and 400 ‘smart’ three-phase meters of different types. After successful testing and selection of the optimal model and technology, SONELEC has requested further support for the continuation of this effort. Consequently, the project will support the mainstreaming of prepaid meters by installing 95,000 additional split-type meters on all three islands, which will have a considerable impact on strengthening the sustainability of SONELEC's revenues and cash flow. The preliminary distribution of additional meters would involve the installation of 33,000 additional meters on Grande Comore, 10,000 on Anjouan and 5,000 on Mohéli.
Component 3. Technical Assistance, Project Implementation support, and capacity building (US$8 million equivalent)
42. Subcomponent 3.1: Project implementation support. Experience with the energy sector in the Comoros has shown that significant support for project coordination and implementation is necessary due to low capacity and significant historic sector governance challenges. Efforts to ensure satisfactory disbursement performance and avoid implementation delays will also be essential. This applies particularly to solar energy investments, which will complement parallel advances from other donors on the rehabilitation of thermal generation infrastructure and the MV transmission grid. Through the creation of a National Delegated Sector Oversight and Contracting Unit (DSOCU or ‘Maitrise d’Ouvrage Déléguée’), Component 3 will improve standards for procurement, project, and tender management and will help create the necessary preconditions for the smooth and swift implementation of further scale-up investments under future projects. The DSOCU will improve on the approach taken by the ESRP, under which individual recruitment of international expert management staff at SONELEC (then MAMWE) provided highly valuable ad hoc support but where a lack of executive mandate and asynchronous consultant procurement at times limited its ability to influence the sector. Following year-long exchanges on the experience with the ESRP and improved approaches to further strengthen governance and implementation capacity of the Comorian energy sector, the GoC fully supports this approach and the recruitment process of the DSOCU is in its final stages.
43. The DSOCU will be mandated to oversee the implementation of the GoC’s energy strategy. Within the scope of this mandate, the DSOCU will be responsible for the transparent and competitive procurement of contracts including power purchase agreements, concession contracts, and EPC contracts, for all projects related to the GoC’s electricity Sector Master Plan in line with national legislation and relevant donor directives. Upon completion of procurement processes, the DSOCU will authorize the signing of contracts by the minister in charge of energy or his/her accredited representative.
44. Through the DSOCU’s Steering Committee, the GoC will exercise close oversight and supervision of the DSOCU’s operations and ensure continued sovereign control of the power sector. The operations
Page 18 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
and periodic meetings of the Steering Committee will be chaired by the Secretary General of the Ministry in charge of Energy and supported by a coordination unit made up of a steering committee coordinator, an executive assistant, an accountant, and a driver. On behalf of the minister in charge of energy as the contracting authority, the Steering Committee will oversee the DSOCU’s analytical, planning, and training activities; monitor the DSOCU’s day-to-day operations; and ensure a functional and inclusive interface between the DSOCU and all key stakeholders of the Comorian energy sector. The coordination unit will support the Steering Committee’s day-to-day operations including monitoring and evaluation (M&E), gender activities, and communications.
45. Both the creation and responsibilities of the DSOCU have been endorsed at the highest level of Government by presidential decree. While a presidential decree established the DSOCU and defined its most critical mandates, a directive by the Ministry in charge of Energy will further define its responsibilities and interactions with the above Steering Committee. The presidential decree was signed on May 14, 2020 and published in the GoC’s May 2020 gazette (journal officiel).
46. The scope of work of the DSOCU will consist of the following activities: (a) overall coordination of projects set out in the Comoros Electricity Sector Master Plan, including management of sector and project stakeholders; (b) development of technical studies for Master Plan projects, including review and finalization of the Electricity Sector Master Plan9 as well as solar interconnection studies for new PV; (c) procurement of Master Plan projects, including preparation of bidding documents, bid evaluation, contract negotiation, and contract award; (d) mobilization of funding for Master Plan projects; (e) Master Plan project and contract supervision, including all technical, environmental, social (including citizen engagement activities, grievance redress mechanism [GRM], gender-based violence [GBV] aspects, resettlement implementation), financial, legal, and administrative aspects; (f) strategic sector oversight to monitor progress toward achievement of sector objectives (for example, technical and budgetary trade-offs); and (g) coordination of post-Cyclone Kenneth residual rehabilitation of electricity infrastructure. While the DSOCU will be fully responsible for the implementation of ComorSol, GoC- funded projects, and private sector projects, it will not procure or manage projects on behalf of other donors. Instead, it will play an advisory role to the GoC on other donor-funded projects.
47. The sustainability of the DSOCU and its impact on improving sector governance will be ensured through comprehensive knowledge transfer from close interaction between local and international staff and the implementation of a closely monitored handover plan during the last year of the DSOCU’s assignment. The risk of ‘brain drain’ of local experts and high-performing energy sector staff will be minimized through the very position and critical sector mandate of the DSOCU and the fact that the latter and its local staff will continue to operate after the departure of international experts and the successful completion of their assignment.
48. Subcomponent 3.2: Training and capacity building in transmission and dispatch system operations and maintenance. The project will support the transition from SONELEC’s current short-term- oriented approach that restricts private sector participation to the implementation of turnkey contracts for the construction of new generation capacity. This subcomponent will include the financing to engage private sector operators in the O&M of the three islands’ dispatch systems for a duration of three years, in addition to the PV plus storage O&M provided for under Component 1. SONELEC’s technical staff will
9 A preliminary version of the Energy Sector Master Plan has been produced with AfDB funding but requires updating.
Page 19 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
be trained during that period to carry out future O&M activities once the contracts with private sector have expired.
49. Subcomponent 3.3: Expansion of gender-based communication and awareness campaigns. The recently completed ESRP was successful in increasing women’s awareness and advocating the value of formal electricity connections and the importance of paying electricity bills. The proposed ComorSol will build on this success and the established partnerships with former key stakeholders, turning what was a one-off intervention into an ongoing initiative over the entire duration of the ComorSol project and across the three islands. This expansion will also provide formal employment opportunities to Comorian women who will be trained and employed to act as agents both for the awareness-raising campaigns as well as for an additional program that aims to carry out energy efficiency household audits (see gender action plan in annex 2).
50. Subcomponent 3.4: Technical assistance for sector governance and renewable energy development. The project will provide support to the key energy sector institutions through the hiring of external experts and the provision of training (including workshops) to perform key functions including the following:
(a) Consolidation of sector institutional and regulatory framework. This will include the definition of a legal and regulatory framework, its implementation and development of planning capacity through, among others, the preparation of a generation expansion plan and provide the tools to achieve and sustain this—training, capacity building, software, etc.
(b) Technical support to SONELEC and DGEME
(i) Encourage technical support activities for SONELEC, which will respond to a number of specific needs identified under the ESRP, including the pending separation of financial and commercial accounts after the separation of the utility’s electricity business (SONELEC) from the water business (SONEDE), the companywide upgrading of the utility’s financial and accounting information systems including staff training, and the creation of a customer call center to establish a feedback loop for clients and respond to their questions and concerns.
(ii) Support the establishment of a solar technology training program at the University of Comoros.
(iii) Support the establishment of baseline values for standard industry grid reliability and service quality (for example, System Average Interruption Frequency Index [SAIFI] and Customer Average Interruption Duration Index [CAIDI]) in consultation with the Comorian Consumer Federation (Fédération Comorean de Consommateurs) as well as a credible monitoring mechanisms for ongoing tracking of these indicators.
Component 4: Contingent Emergency Response Component (US$0 million)
51. A Contingent Emergency Response Component (CERC) with zero allocation may be used to contribute to an emergency response through the timely implementation of activities in response to an
Page 20 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
eligible national emergency. The CERC could also be used to channel additional funds should they become available as a result of said emergency. For the Comorian energy sector, emergency conditions may arise subsequent to extreme weather events including cyclones and flooding or economic disruption including fuel import shortages.
52. The CERC mechanism will be further defined in a CERC Operational Manual attached to the Project Implementation Manual (PIM), which will include triggers and conditions for the use of funds. This manual will clearly outline the triggers, eligible expenditures, and procedures for tapping into the CERC. Should the CERC be triggered, all expenditures will be made in accordance with paragraph 11 of the Investment Project Financing (IPF) Policy and will be reviewed and accepted by the World Bank before any disbursement is made. In accordance with paragraphs 11 and 12 of the IPF Policy, this component would provide immediate, rapidly disbursing support to finance goods (positive list agreed with the Government), works, and services needed for response, mitigation, and recovery and reconstruction. Operating costs that are eligible for financing would include the incremental expenses incurred for early recovery efforts arising from the impact of a major crisis.
C. Project Beneficiaries
53. There are three principal project beneficiaries: (a) SONELEC is the main beneficiary of the project—project interventions targeting increased efficiency and cost-effectiveness in electricity generation, transmission, distribution, and revenue protection will result in decreased generation and O&M costs, increased company revenue, and overall improved institutional capacity; (b) customers will also benefit from improved quality of service in terms of network stability, invoice management, and overall customer service; and (c) the GoC will benefit from the utility’s reduced subsidy need owing to improved financial performance of SONELEC.
Page 21 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
D. Results Chain Figure 2. Results Chain
Activities Outputs Outcomes PDO
Develop pilot PV project on Grande Comore
Develop battery storage on Grande Infrastructure to inject Comore and Anjouan intermittent energy into the Comp. 1 utility’s network developed and Create dispatch and automatic Energy upgraded Management System
Upgrade transmission system and automation
Capacity of the grid to Extend the rollout of advanced Pre-paid meters installed metering infrastructure dispatch solar power Comp. 2 generation increased Expand and enhance the utility’s Customer management software Improve the commercial commercial management system rolled out across all three islands performance of the electric SONELEC billing rate increased utility and its capacity to Provide technical assistance to dispatch variable renewable Directorate General for Energy and energy. SONELEC through DSOCU DSOCU established SONELEC collection rate Provide O&M contracts for new and increased existing infrastructure Local staff trained or mentored by international experts Comp. 3 Finance 5 to 6 international experts covering all the sector's expertise Female employment in electricity needs financed sector increased
5 to 6 staff of SONELEC and the Electricity sector master plan Government trained by the DSOCU updated Extend women-focused consumer awareness campaign Source: World Bank staff. E. Rationale for World Bank Involvement and Role of Partners
54. Private sector investment prospects hampered by lack of enabling framework and economies of scale. With its remote location, unprecedented power purchase agreements, financially unviable utility depending on uncertain government subsidies, and total electricity demand bound to remain far below commercially viable thresholds for the next decade, the Comoros’s prospects for private investment in renewable energy are dim. To date, the sector does not offer any of the essential preconditions for commercial development of renewable energy, such as a sufficiently robust power grid, a financially healthy utility (which could credibly enter into power purchase agreements), coherent sector planning, or even a bare-bones legal and regulatory framework.
55. Creating the preconditions for private investment. While the World Bank’s ESRP and efforts by the AfDB and the EU have dedicated substantial resources to help the Comoros build these prerequisites, progress is slow and unlikely to deliver the needed change within a suitable timeframe. Therefore, given the urgent need to relieve the economy from the combined burden of inadequate power supply and increasingly costly and volatile fuel imports, additional efforts are necessary to facilitate the diversification of the country’s energy matrix. With its parallel investments in both a first MW-scale batch of PV capacity and a robust technological and institutional platform for further private and public development of solar energy, the project’s design proposes a pragmatic ‘enabling’ approach of public financing opening the door for, rather than replacing or crowding out, future private sector participation. The project is also
Page 22 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
supported by a US$2.6 million grant from SIDS DOCK initiative, which will be used to finance additional solar energy storage infrastructure under Component 1.
F. Lessons Learned and Reflected in the Project Design
56. Effective project implementation often requires innovative project management arrangements in a fragile context. Even for the ESRP, which exclusively included small contracts and a limited number of goods and service to be procured, the typical procurement arrangements including the reliance on a locally recruited Project Implementation Unit (PIU) have not proven to be viable solutions and are prone to delays and mis-procurement. For ComorSol, given the much larger investments and the need to closely coordinate with numerous other donors and ongoing operations, the need for much stronger procurement and project management arrangements (in the form of the DSOCU) will be even more critical.
57. The intervention of resident experts can make the difference between project success and failure. However, their intervention must be well prepared and carefully managed as numerous and complex challenges have to be addressed. These include the definition of a robust executive mandate including decision-making authority and detailed key performance indicators, the identification of suitable candidates, the recruitment and embedding of experts with the client organization, and robust provisions for expert retention and effective knowledge transfer. Teams tend to underestimate the complexity of these challenges while overestimating the capacity of the client’s PIUs to address these, and the ESRP was no exception. For the ESRP, the added value of the resident experts’ intervention was much reduced by the refusal of the GoC to grant experts more than an advisory mandate. Moreover, the lack of a proper managerial mandate made the intervention of experts much more vulnerable to the continuous change of the utility’s senior management team. Regarding the lengthy recruitment efforts, the ESRP team, after numerous unsuccessful attempts to hire financial and technical resident experts through the PIU, decided to use the services of a specialized recruitment agency. This decision, though it created significant additional cost, was effective in identifying candidates and negotiating contracts much more rapidly than previous efforts by the local PIU. Moreover, the engagement of a recruitment agency was also more effective in retaining the needed experts or quickly exchanging them as needed.
58. Two-pronged technical- and communications-focused approach to revenue protection. Experience with the ESRP demonstrated that the reduction of nontechnical losses should not only be pursued through purely technical solutions such as prepaid meters and billing systems but also need to include active consumer engagement. The results of the ESRP have also shown that well-designed and coordinated campaigns are not only key to avoiding opposition from vested interests but can also significantly boost and accelerate the reduction of nontechnical losses. In the context of the Comorian matrilineal society, the ESRP’s women-led appeal to social norms and individual responsibilities proved to be particularly powerful in countering chronically weak enforcement of property rights and poor payment behavior for public services.
59. Public legitimacy and early clarity on required personnel are essential to the success of delegated sector management. A management contract for SONELEC under the ESRP sought to bring in international experts to perform critical managerial functions at the utility on behalf of the GoC. This arrangement encountered two main challenges: (a) insufficient detail in the initial terms of reference (ToR) made it difficult to attract high-quality proposals for the management contract, so that ultimately
Page 23 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
individual experts had to be recruited, resulting in implementation delays; and (b) even after the individual experts were on board, the lack of explicit official backing for the consultants’ executive mandate meant that they were eventually relegated from a managerial to an advisory role by competing interests. ComorSol has aimed to preempt these respective challenges by (a) specifying detailed profiles of required DSOCU personnel in DSOCU bidding documents and (b) making the signing of a presidential decree codifying the executive authority of the DSOCU a condition for Board presentation (the decree was signed on May 14, 2020, and published in the GoC’s May 2020 gazette (journal officiel)).
III. IMPLEMENTATION ARRANGEMENTS
A. Institutional and Implementation Arrangements
60. The project will be implemented by the Ministry of Production, Environment, Energy, Industry and Handicrafts (MPEEIH) through the mandate of the DSOCU. The project management specialists recruited under the DSOCU will oversee the implementation of all project activities on behalf of the client, in collaboration with a significant contingent of client staff. Therefore, along with its broader sector-wide integrated planning and project management responsibilities, the DSOCU mandate will include all procurement, fiduciary, safeguards, monitoring, and reporting activities related to the project, except for those related to the recruitment of the DSOCU itself.
61. For this purpose, the DSOCU will include the key functions of project coordination, procurement, legal, safeguards, FM, and technical. Each function will be staffed by a complement of international experts and local energy sector personnel, ensuring a robust mix of subject and country expertise. The Fiduciary Unit of the DSOCU will perform all procurement and fiduciary for all project components. Figure 3 presents arrangements in more detail.
62. The DSOCU is backed by presidential decree. The adoption of presidential decree for the creation of the DSOCU was a necessary prerequisite to ensure its legitimacy in a sector that has suffered from a lack of coherent planning and oversight and in which frequent ministry personnel reshuffles—both ministers and line staff—undermine the credibility and longevity of ministerial decisions.
63. The DSOCU will be the key driver of project sustainability by incorporating and developing local utility, ministry, and other energy sector staff. International experts recruited under the DSOCU will work in tandem with Comorian staff. Local staff appointed by the Government and SONELEC will be assigned to the DSOCU throughout the duration of its contract to ensure knowledge transfer and sustainability of project management capacity beyond the duration of the project. In addition to the experience thus gained, Comorian staff will also benefit from dedicated training and capacity-building activities as part of the DSOCU mandate. The DSOCU will also be expected to execute a full handover of its responsibilities to local staff and implementing bodies and to develop a credible plan for achieving this in its proposal package.
Page 24 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Figure 3. DSOCU Organigram
Source: World Bank staff.
64. Housed in DGEME’s offices to ensure close coordination and involvement of the national utility, the DSOCU will report directly to a Steering Committee, established before effectiveness. The Steering Committee will include representatives from relevant ministries and will perform strategic supervision of DSOCU activities, including review and approval of DSOCU quarterly reports. Day-to-day operations of the Steering Committee will be supported by a Coordination Unit, which will be headed by a local expert coordinator. Both the Steering Committee coordinator and his/her assistant will be funded through the project.
65. To ensure a swift start to project operations, the DSOCU and the Steering Committee Coordination Unit will be recruited with funding from the project’s Project Preparation Advance (PPA Grant IDA V2170) before effectiveness by the PIU of the ongoing Regional Communications Infrastructure Program - APL 4 Project (‘RCIP4’ - P118213). The roles and responsibilities of the DSOCU will be spelled out in accordance with the PIM, which will be completed by the RCPI4 PIU before effectiveness.
Page 25 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
B. Results Monitoring and Evaluation Arrangements
66. The project will use the indicators and mechanisms defined in the Results Framework for M&E of results and intermediate outcomes. Overall responsibility for M&E lies with the DSOCU, including compliance with environmental and social safeguards. The DSOCU will provide biannual reports to the World Bank. The PIM will include a description of M&E responsibilities and data collection requirements, frequency, and responsibilities.
67. The project will include a citizen engagement review mechanism, conducted by the DSOCU. This approach will include consultations that measure (a) the level of satisfaction of the population affected by the project; (b) feedback from beneficiaries in the selection of specific interventions; and (c) empowerment of citizens who report satisfaction with the project in the project area. The project has included complaints received through GRM addressed as a citizen engagement indicator.
C. Sustainability
68. Several design choices will contribute to the sustainability of the project: (a) definition of clear policies and technical standards by the DSOCU in the PIM in line with best practice for all procurement of solar generation and associated infrastructure procured under its mandate; (b) a 10-year O&M plan covering PV and storage under Component 1 and a four-year O&M contract covering grid upgrades under Component 2 of the project; (c) the development of local skills through joint staffing by Comorian staff and international experts of the DSOCU under Component 3 of the project; (d) the development of standardized documents, processes, and procedures by the DSOCU under Component 3 of the project that will transfer to post-project energy infrastructure project in the Comoros; (e) the provision of a battery maintenance contract for each storage site under Component 2 of the project; (fi) an improvement of SONELEC’s commercial losses and thus financial position as a result of reduced power costs as well as revenue protection measures under Component 3, which will in turn allow it to invest more in maintenance, staff capacity, administrative efficiencies, and the overall integrity of the power system.
IV. PROJECT APPRAISAL SUMMARY
A. Technical, Economic and Financial Analysis
69. The project is economically viable. With the development of 9 MW of solar capacity (aligned with potential solar sites identified in prefeasibility studies), the economic internal rate of return (EIRR) for ComorSol reaches 13.9 percent including benefits from greenhouse gas (GHG) reduction and 10.7 percent without benefits from GHG reduction. This economic evaluation remains conservative by the set of assumptions considered in the economic model and by not including the economic benefits of Component 2.
70. The economic costs are taken to be the respective initial investments for each component. The main economic benefits of the investments are as follows:
Page 26 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
(a) For Component 1, the main benefit comes from the avoided cost of generation compared to traditional diesel generation in the Comoros with an EIRR equal to 10.7 percent, excluding the contribution from GHG emissions reduction. Including the contribution from GHG reduction, the EIRR increases by an additional 3.2 percentage points (to 13.9 percent).
(b) As stated earlier, Component 2 economic benefits have not been included in the economic evaluation. Reducing power theft incurs a financial benefit to the utility but does not incur an economic benefit as surplus is simply transferred from consumers to producers. However, previous initiatives by the World Bank, including a pilot in the Comoros, have proved the economic benefits inherent to communication and awareness campaigns that leverage women’s groups for social change. Furthermore, economic benefits due to lower utility transaction costs can also be expected by the installation of prepaid meters and the expansion of SONELEC’s CMS.
71. The project is also financially viable, with a financial internal rate of return of 25.1 percent and a corresponding net present value of US$65.8 million. Most of the financial benefits can be attributed to Component 2 with the installation of new prepaid meters and the CMS expansion. As a result of ComorSol, SONELEC’s billing and collection rates are expected to increase by 9.9 percentage points (from 64.8 percent to 74.7 percent) and 9.5 percentage points (from 81 percent to 90.5 percent) respectively by 2030. This evaluation of financial benefits remains conservative as the financial model optimistically assumes that without the World Bank’s support, SONELEC will be capable of limiting power theft to current levels.
Financial Forecast for SONELEC
72. As SONELEC financial consolidation has yet to be completed by the former MAMWE and EDA teams, the financial model assumes that the forecast for SONELEC’s financial statements can be approximated as the sum of MAMWE and EDA’s financial forecasts. This assumption relies on the clear geographical separation of MAMWE and EDA’s business activities.
73. The financial model forecasts positive Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA) by 2027. This return to positive financial performance relies on an average of over 20 percent reduction of fuel costs as well as the reduction of the fraud rate by 10 percentage points by 2030. This reduction of the fraud rate, owing to the new meters, is also expected to allow a reallocation of resources previously dedicated to billing control. In particular, the model assumes that SONELEC’s collection improves by 0.5 percentage points year.
74. However, SONELEC’s financial equilibrium also remains conditional on efforts of management and post-merger synergies to be conducted in parallel with ComorSol— in particular, regarding the company’s workforce and its associated costs. In fact, if following current trends, SONELEC’s salaries and benefits are expected to grow at an annual rate of 13.1 percent (comprising a 10 percent annual growth rate from former MAMWE and 16 percent from EDA), which would jeopardize any return to financial sustainability. Therefore, taking advantage of the recent merger of EDA and MAMWE, ComorSol forecasts for SONELEC’s financial performance also assume a 9.5 percent net annual reduction of salary, employee, and general administration expenses, starting in 2019.
Page 27 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
75. A successful return to financial equilibrium also remains conditional on the commissioning of the 18 MW heavy-fuel oil (HFO) plant on Grande Comore in 2021. This new production facility will lead to a reduction of SONELEC’s fuel costs comparable to the initial 9 MW solar capacity enabled by ComorSol but most importantly is critical for the country electricity baseload for solar power to be relevant. To evaluate the impact of the ComorSol project, three scenarios for SONELEC’s future financial performance have been analyzed:
• Scenario 1 (ComorSol model forecast). The HFO plant and the ComorSol project are both commissioned in 2021, and SONELEC implements the cost reduction efforts described earlier.
• Scenario 2. The HFO plant is commissioned in 2021, and SONELEC implements a cost reduction program aligned with the recommendations mentioned earlier. The optimistic assumption in this scenario is that SONELEC’s billing and collection rates will stay stable, without further degrading.
• Scenario 3. The HFO plant and the ComorSol project are not commissioned, and SONELEC only partially change its practice by limiting the growth of its salaries and benefits to 3 percent per year. The same optimistic assumption is maintained regarding SONELEC’s billing and collection rates.
76. The financial performances resulting from these scenarios are evaluated in figure 4 and table 2.
Figure 4. SONELEC Average Tariff and Unit Operating Cost Forecast
Source: World Bank staff.
Page 28 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Table 2. SONELEC Financial Projections
Source: World Bank staff.
B. Fiduciary
Financial Management
77. The DSOCU will be created for a duration of five years under the MPEEIH to oversee project implementation.
78. The assessment was carried out in accordance with the Directives and Policy for IPF and the World Bank Guidance on FM in World Bank IPF Operations issued on February 28, 2017.
Page 29 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
79. The overall FM system was assessed to be inadequate with substantial risk level. The substantial FM risks are mainly due to the fiduciary inherent risk at the country level, capacity issues in the country, and the risk related to the funds flow given the decentralization and the nature of activities to be financed across the three islands. The assessment was carried out in accordance with the Directives and Policy for IPF and the World Bank Guidance on FM in World Bank IPF Operations issued on February 28, 2017. The FM assessment was conducted to evaluate whether the project meets the minimum FM requirements as per World Bank Policy and directives. The FM assessment was conducted at the MPEEIH level, where the DSOCU will be established.
80. Based on the results of the assessment, it is considered that DSOCU FM arrangements will meet the World Bank’s minimum requirements under World Bank Policy and Directive once the following mitigation measures, to be funded by the PPA are implemented: (a) the establishment of the DSOCU; (b) the recruitment of qualified and experienced FM staff comprising one financial officer and one accountant before the project effectiveness as well as internal and external auditors no later than six months after project effectiveness; (c) the development and adoption of an FM procedures manual as part of the PIM; and (d) the purchase of an appropriate accounting system for the DSOCU. The implementation of these mitigation measures shall also contribute to improving the residual FM risk to Moderate.
81. The Designated Account (DA) is denominated in local currency KMF (Comorian franc) to receive funds from the World Bank and the SIDS DOCK trust fund. This account will be opened by the DSOCU at an acceptable bank to enable payment of eligible expenditures. Transaction-based disbursements will be used for this project.
Procurement
82. Procurement under the proposed operation will be guided by the following documents: (a) the ‘World Bank Procurement Regulations for IPF Borrowers’ dated July 1, 2016, revised in November 2017 and August 2018 (Procurement Regulations) and (b) the World Bank’s Anti-Corruption guidelines ‘Guidelines on Preventing and Combatting Fraud and Corruption’ dated October 15, 2006, revised in January 2011 and as of July 1, 2016. The PIM will be drafted in accordance with these documents and submitted to the World Bank for approval. The PIM would also include a complaint management system in accordance with Annex III of the Procurement Regulations. The procurement approach and methods for all contracts will follow approved selection methods and market approach options in the regulations. No activity is envisaged to involve departure from policy thresholds or need additional oversight or Operational Procurement Review Committee review levels.
83. Procurement for the proposed project will be carried out by the DSOCU. A full procurement capacity assessment will be carried out once the DSOCU is recruited to corroborate whether the DSOCU has the necessary capacity, and how this needs to be strengthened if necessary. The DSOCU will be responsible for all procurement and contracting-related queries and processing, including management and compliance with fiduciary requirements.
84. All goods and non-consulting services will be procured in accordance with the requirements set forth or referred to in ‘Section VI. Approved Selection Methods: Goods, Works, and Non-Consulting Services’ of the Procurement Regulations and the consulting services will be procured in accordance with the requirements set forth or referred to in ‘Section VII. Approved Selection Methods: Consulting Services’
Page 30 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
of the Procurement Regulations as well as according to the Project Procurement Strategy for Development (PPSD) and the Procurement Plan approved by the World Bank.
85. A project Procurement Plan covering the first 18 months of the project was prepared as part of the PPSD. The Procurement Plan specifies for each contract (a) a brief description of the activities/contracts; (b) the selection methods to be applied; (c) the estimated cost; (d) time schedules; (e) the World Bank’s review requirements; and (f) any other relevant procurement information. Any updates of the Procurement Plan shall be submitted for the World Bank’s approval. The project will use the World Bank’s online procurement planning and tracking tool, Systematic Tracking of Exchanges in Procurement (STEP), to prepare, clear, and update its Procurement Plan and to carry out all procurement transactions.
86. The main conclusions of the PPSD were as follows: (a) procurement needs to adequately take local context int account, particularly with regard to the risks associated with political instability; (b) the GoC, through the RCIP4 Project Management Unit, already has strong experience in procurement that will be further strengthened by recruitment of the DSOCU; (c) to enable the GoC to benefit from the latest technological developments in PV and storage and the rapid decrease in their costs, the DSOCU will play a strategic role in defining the minimum technical and functional requirements to be met by contractors for goods and works as well as in validating the solutions proposed during the evaluation of bids; (d) though many potential contractors and suppliers for goods and works needed for project activities are active in the region, a pre-qualification of bidders will be necessary to enable the DSOCU to devote appropriate time and resources to in-depth evaluation of individual bids; (e) particular attention will need to be paid to the solar PV and storage contracts planned under Component 1 of the project, delays to which could have an especially adverse impact on project disbursement.
C. Safeguards
Environmental Safeguards
87. Environmental impacts under the project are expected to be moderate and easily mitigated. Despite the project’s large geographical scope across three Islands, ComorSol is classified as environmental and social category B as activities funded under the project are not expected to have significant negative environmental and/or social impacts. There are no large-scale or irreversible impacts associated with the project. All potential impacts are moderate, site specific, and can be easily avoided, minimized, and mitigated with appropriate design and sound construction management. Three environmental and social safeguard policies are triggered: OP/BP 4.01 Environmental Assessment, OP/BP 4.11 Physical Cultural Resources, and OP/BP 4.12 Involuntary Resettlement.
88. Based on the high-potential solar sites across all three islands identified in the prefeasibility study, in compliance with OP 4.01 Environmental Assessment, the Borrower has prepared five ESIAs with its respective Environmental and Social Management Plan (ESMP) across all three islands: three ESIAs for a pilot PV plant, transmission line, and centralized storage in Grande Comore; two stand-alone ESIAs for storage in Ntrenami and Fomboni; and two stand-alone ESIAs for central PV in Mohéli and Anjouan. The five ESIAs have been approved by the World Bank and were disclosed in the country on March 3, 2020, and on the World Bank’s external website on March 4, 2020. The preparation of the ESIAs was carried out in accordance with Comorian national requirements as well as with the World Bank's OP 4.01
Page 31 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Environmental Assessment, the International Finance Corporation’s Health and Safety Guidelines, and Electric Power Transmission Distribution guidelines. The ESMP includes a sound and consistent environmental assessment and management plan to avoid, minimize, and mitigate potential environmental and social impacts. It also includes a set of standard Environmental Codes of Practice (ECOP) for common environmental and safety issues encountered during the civil works and operational phases. The ECOPs will be included in the PIM as a guidance tool for project implementation. The ECOPs will also be included, at a later date, in the contract of the selected private investor operating on these potential sites to develop their renewable PV infrastructure in compliance with the required environmental and social standards.
89. The project’s storage investments could generate waste in the form of depleted batteries containers thus creating the need for a nationwide used battery management plan. While the Comoros thus far has no legislation on used battery management, the country could apply international standards on rendering investment compatible with the environment. Therefore, it was proposed that used batteries will be stored in containers in a secure location until a more rational method can be found. The battery management plan will be supervised by the Environmental Unit of the Ministry in charge of Energy with the support of Ministry in charge of Environment.
90. Public consultations and field visits have confirmed that no archaeological vestiges or any sites defined as physical cultural resources will be affected. For more assurance, the relevant safeguard documents have made provisions for cultural resources management in the event that OP 4.11 - Physical Cultural Resources is triggered during the implementation phase and comprise ‘chance finds’ procedures for inclusion in the contractor contract.
91. Parts of the activities described within the proposed project will focus on training and capacity building where no environmental and social safeguard aspect would be expected. The DSOCU will collaborate with private investors in the rehabilitation of transmission lines. This activity should not produce any adverse negative impacts and environmental and social risks. In addition, all battery storage sites will be on site at SONELEC centers. Activities under the proposed operation will be in zones without any sensitive habitat or high biodiversity. Activities could, however, induce certain risks and adverse environmental and social impacts, including the effects related to general nuisances such as noise, dust, and vibration; community health and safety risks such as increased HIV/AIDS transmission; risks related to the influx of workers and local recruitment; GBV; sexual exploitation abuse (SEA) risks; increased risk of accidents; harm to potential chance finds of physical cultural resources during the civil works; temporary/permanent land acquisition and economic displacement during civil works; and environmental and public health risks from improper disposal of old system batteries during exploitation phases.
92. The proposed operation will be implemented by the DSOCU on behalf of the Ministry in charge of Energy. Before effectiveness, a capacity assessment of the DSOCU’s safeguards team (including its internationally recruited full-time environmental and social specialists) will be conducted. The capacity assessment will verify whether the DSOCU team and institutional arrangements to implement project activities are fully operational and robust enough to ensure full compliance with the project’s environmental and social safeguards provisions.
Page 32 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Social Safeguards
93. Social impacts have been assessed and mitigation measures identified as part of the development, consultation, and disclosure of ESIA in accordance with OP 4.01 - Environmental Assessment. The project is classified as a category B due to the moderate level of social risks and impacts of its foreseen activities, whose scope will be rather site specific and thus easily manageable. The project is expected to bring positive social impacts to its beneficiary populations but may have some negative impacts for which specific mitigation measures are proposed in the safeguard instruments. Social risks and impacts of the proposed operation are considered to be substantial and have the potential to cause direct and/or indirect social impacts, mainly effects related to community health and safety risks such as increased HIV/AIDS transmission; risks related to the influx of workers and local recruitment; GBV; SEA risks; increased risk of accidents; and land acquisition and economic displacement during civil works.
94. OP 4.12 - Involuntary Resettlement is triggered for this project due to involuntary resettlement emanating from Component 1. The construction of battery storage sites across the three islands; network rehabilitation; modernization and automation (including installation of automatic reset devices, circuit breakers, and remote-controlled switches); and reinforcement of transmission lines and transformers may result in the need for limited land acquisitions and/or restrictions on access to sources of livelihood. The risk of physical resettlement is assessed as moderate, although there may be potential economic displacement or loss of assets., which will lead to land acquisition, loss of crop land, loss of property, and loss of sources of income or livelihoods. These potential social impacts are expected to be site specific, and resettlement measures can be readily designed and implemented. A total of 113 households are estimated to be affected by involuntary resettlement. Due to limited Borrower capacity to cover compensation costs to these households, The Borrower has prepared four RAPs to mitigate potential negative impacts identified for the three islands: one RAP for the pilot PV site, transmission line, and centralized storage in Grande Comore; one RAP for battery storage in Anjouan; and one RAP each for PV sites in Mohéli and Anjouan. These instruments have been consulted, cleared, and were disclosed in- country on March 3, 2020, as well as on the World Bank’s external website on March 4, 2020, in compliance with the World Bank’s OP 4.12 and the related Comoros legal requirements. The RAPs estimate a total compensation need of US$672,820 to these 113 affected households. Due to limited Borrower capacity to mobilize these funds, on April 29, 2020, World Bank management approved to cover compensation to affected households of up to US$1 million from IDA funds.
95. The construction of expected infrastructure transmission lines’ rehabilitation or civil works related to Component 1 will be subject to the mobilization of external contractors. However, the relatively small scale and footprint of the planned interventions is unlikely to require large mobilizations of workers. Nevertheless, the ESIA of the project was developed to cover worker mobilization issues and health security and safety measures for workers, which will include the development of code of conduct for workers.
96. GBV risk for the project was assessed as low. Indeed, the project will pay attention to prevent and address possible GBV or cases of SEA because of mobilization of short-term workers close to local communities mainly during the construction of 10 MWh of storage. Measures developed in the ESIA to address these challenges include (a) an continuous assessment of labor influx risks ; (b) a requirement
Page 33 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
that the Borrower includes clauses on workers’ conditions and management, child protection, and GBV prevention in all contracts; (c) provision of technical assistance and training to the Borrower and awareness raising on GBV among all contractors, workers, and local residents; and (d) the setup of an accessible and accountable GRM to ensure that any incident related to workers and GBV will be addressed in an effective manner with sufficient social sensibility. The PIM will be updated to cover worker GBV/SEA issues.
97. The project will prepare and adopt a project-level GRM. The GRM will address all project-related complaints at local, regional, and national levels, including, but not limited to (a) corruption; (b) the non- respect of the rights of direct project beneficiaries; (c) resettlement issues; and (d) GBV and labor issues. As part of the project’s Results Framework, the project will percentage of complaints addressed. The project will also carry out annual household surveys to gauge changes in customer satisfaction with energy service delivery (by cell phones and follow-up home visits where required).
Climate Co-benefits
98. The project will generate significant climate change co-benefits by laying the infrastructure and institutional foundation for the displacement of fossil fuels with renewable energy generation and directly support the GoC’s intended nationally-determined contribution commitment to expand renewable energy generation. The project was submitted for climate co-benefits screening, and the proposed investments in PV plant, battery storage, and system upgrades were found eligible for mitigation co- benefits.
Gender
99. Even though gender equality is highlighted in the Comorian Constitution, active involvement of women in most sectors, including energy, remains challenging due to women’s limited access to formal employment. The barriers that women face to labor force participation are related to disparity in education, social and cultural norms, care burden, and legal issues. Moreover, the unequal distribution of paid and unpaid work results in women’s time poverty relative to men, which reduces women’s labor force participation generally. These barriers are even more significant for women’s participation in the energy sector due to the higher levels of education and technical skills required as well as cultural norms related to working in male-dominated fields. Consequently, only 19 percent of people employed in the electricity sector are women.
100. However, the strong influence that Comorian women have at the community level provides an opportunity to promote their formal employment and engagement in income-generating activities. The, interventions that highlight women’s influence in the community can have a transformative effect on their employment outlook and economic empowerment. In addition, women’s involvement, as based on the outcomes of the ESRP, is expected to contribute to the project’s objectives in improving bill payment, legality of connections, and other good practices, including on energy efficiency. Specifically, on energy efficiency, recent dedicated reports from the World Bank highlight that engaging an individual to take the lead in a community is a recommended approach for tackling related challenges.
101. With support from the World Bank’s Africa Gender and Energy program and the Youth Innovation Fund, the ESRP was successful in increasing women’s advocacy against illegal electricity connections and
Page 34 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
the importance of paying electricity bills for SONELEC’s capacity to supply reliable energy. The initiative emerged from two World Bank team findings during project implementation. First, the project’s Poverty and Social Impact Analysis findings indicated that nearly 60 percent of registered electricity theft cases in 2015 were filed against women. This is mainly a consequence of the Comorian matrilineal system under which women own the family house and hence electricity service contracts are registered in their names. Second, given their social status resulting from matrilineal traditions and their relative lack of participation in the political arena, Comorian women are widely perceived as impartial and well suited to promote transparency and civic values in their respective communities. Capitalizing on this opportunity, the World Bank team worked with the client under the ESRP to establish a program for women advocacy against electricity theft and fraud. A multi-stakeholder team comprising grassroots women’s associations, civil society, private sector representatives, customer support syndicates, and SONELEC staff worked together to train more than 100 women and reach over 5,000 customers. In only 100 days, the face-to-face grassroots advocacy approach of the women’s group led the number of outstanding bills in the pilot regions of Hamanvou and Bambao to drop from 3,834 to 777 customers.
102. The project will help narrow identified gender gaps for women’s formal employment (detailed in annex 2) in the following ways: (a) provide employment opportunities to women, building on their unique position to influence behavior by engaging them as messengers in community awareness campaigns on bill payment and other good practices and (b) engage them as agents for carrying out Systematic Household Energy Efficiency diagnostics (‘SHEE audits’) that provide an additional employment opportunity within the sector and also enhance the outcomes of the community awareness campaign. In particular, the awareness-raising campaign will select and train 100 women to be employed across the three islands for a duration of two to three months each year in partnership with previous ESRP partners as well as additional ones (Mouvement des Femmes de Moroni [Moroni Women’s Movement], SONELEC, Réseau des Femmes Entrepreneurs [Women Entrepreneurs Network], Fédération des Consommateurs aux Comores [Comorian Consumer Federation], and so on). Regarding the energy efficiency audit efforts, women will be trained, certified, and subsequently employed to carry out SHEE audits and to promote best practices.
103. Gender M&E indicators will track progress on employment of women in the awareness-raising campaigns and as agents for household energy efficiency audits. The impacts of the campaign and audit efforts will also be monitored to ensure their continued effectiveness (bill payment, awareness on illegal connections and safety issues, energy efficiency measures, and so on). Other output and gender-related indicators will be included in the PIM.
Grievance Redress Mechanisms
104. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit
Page 35 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
V. KEY RISKS
105. The overall risk of the project is assessed as Substantial, mainly due to overall substantial risks in political and governance, macroeconomic, technical design, fiduciary, environmental and social, and high risk in implementation capacity. Appropriate corrective and supportive measures will be put in place to mitigate the risks.
106. Political and Governance (Substantial). The Comoros regained relative political stability after the adoption of the Fomboni Agreement in 2001 (which led to four consecutive democratic transitions), although sociopolitical tensions remain. A referendum held on July 30, 2018, endorsed a constitutional change to the presidential rotation system following a controversial national conference. Presidential elections were held in the Comoros on March 24, 2019, and President Azali Assoumani was reelected in the first round of voting. However, political uncertainties about the new government’s ambitions and intra-governmental dynamics in 2020–2021 are a risk to the success of the project (for example, lack of inter-ministerial coordination and greater focus on investment projects than on the institutional/policy aspects that would make those investments sustainable). Mitigation: The project was developed through broad-based consultations with all line ministries, the private sector, and key development partners. The creation of a robust institutional and technological platform for the further scale-up of solar energy will contribute to the project’s sustainability by allowing development partners and potentially private investors to continue developing solar and eventually other intermittent renewables at much reduced technological risk and transaction cost.
107. Macroeconomic (Substantial). Growth deteriorated in 2019 (1.9 percent compared to 3.6 percent in 2018) due to Cyclone Kenneth (April) that caused damages mainly in the agricultural sector, with higher fiscal spending and private remittances attenuating the impact. Growth is expected to rebound in 2020– 2022 (3.8 percent on average). Slow income growth or economic contraction could delay SONELEC’s path to financial sustainability as power demand declines and consumers increasingly struggle to pay their bills on time. Macro risks specific to the project include price volatility for fuel, PV, and battery storage as a result of exchange rate fluctuations and supply chain interruptions. Mitigation: Growth is expected to recover relatively quickly after the end of the health crisis, reaching an average of 3.4 percent over 2021– 2022. Other than pandemics, the largest macro shocks to the energy sector typically arise from fuel price volatility. The project’s emphasis on solar, which has seen a much more stable price decline in recent years is expected to largely insulate project outcomes from fuel price fluctuations.
108. Technical design of Project (Substantial). Although the project will use well-established technologies and presents no unusual construction or operational challenges, the variety of technologies and the physical dispersion of investments may create challenges during implementation. Specifically, (a) solar PV and battery systems have never been implemented by SONELEC; (b) battery storage is still a nascent technology in developing countries and poses challenges in terms of sustainability and management; and (c) specific sites will be identified during project implementation and securing land for construction of solar plants can often create delays. Mitigation: The DSOCU will ensure continued
Page 36 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
coordination in supervision of components. Component 3 will finance training for SONELEC’s technical staff on installation and O&M of these types of systems.
109. Institutional Capacity for Implementation and Sustainability (High). The scope of work of the DSOCU will largely consist of responsibilities regarding project preparation, bid preparation, contract supervision, and sector planning that are typically held by the GoC. While the DSOCU’s jurisdiction will be clearly defined and agreed to by the Government, which will retain a right of oversight over the execution of the DSOCU’s mission, there is a risk of political interference that might threaten the DSOCU’s institutional freedom and ability to execute its mandate. Mitigation: The project will ensure broad buy-in among government stakeholders on allocation and delegation of responsibilities to the DSOCU. Furthermore, selected staff from DGEME and SONELEC will be integrated into the DSOCU to ensure knowledge transfer and GoC ownership. Finally, the DSOCU will be backed by presidential decree (passed on May 14, 2020).
110. Fiduciary (Substantial). A Public Expenditure and Fiscal Management Review was finalized in October 2016 and concluded that there had been a degree of improvement in public financial management (PFM) since the previous assessment done in 2007. However, the 2016 Public Expenditure and Financial Accountability (PEFA) assessment also identified several critical gaps in the areas of budget credibility, completeness and transparency, execution, and control. The Government has been pursuing a program of PFM reforms since 2010 and the Ministry of Finance is committed to modernizing the PFM system through the implementation of the PFM Strategy for 2010–2019. The PFM Strategy is a comprehensive response by the authorities to address the weaknesses of their PFM system, as identified by the previous PEFA assessment and recommendations from development partners, including France, the EU, the International Monetary Fund, and the World Bank. Mitigation: The DSOCU will comprise international FM experts with extensive experience in fiduciary management of the energy sector. This will reduce not only the immediate risk to the project but is also expected to reduce risk to subsequent projects through sharing of best practices with local staff. The creation of a Steering Committee to oversee the DSOCU will create a second layer of monitoring and risk management.
111. Environmental and Social Risk (Substantial). The project is a category B project. The project is not expected to have any significant social and environmental impacts (resettlement, biodiversity, forests, soil erosion, and so on). However, social impacts are possible from limited resettlements that might be necessary to accommodate storage facilities. It is anticipated that the GoC will use existing barren and unused public lands for the project with no need for private land acquisition. Should suitable unused public grounds not be available, then land acquisitions and/or long-term lease arrangements will be made by the GoC. Mitigation: The GoC has prepared RAPs, Environmental Assessments, and ESMPs. Mitigation measures would be monitored by the DSOCU. The Government has limited capacity to address social environmental and social impacts. The project is expected to have an environmental and social specialist.
112. Other – COVID-19 (Moderate). The COVID-19 pandemic is expected to lead to a decline in consumer ability to pay for power, in particular in light of its uncertain impacts and duration. Indeed, the positive impacts on economic activity from reconstruction efforts after Cyclone Kenneth are now expected to be more than offset by the dampening effect of COVID-19, lowering growth projections for 2020 by 0.6 percent. The expected large drop in remittances and tourism, both heavily affected by the impact of the health crisis in France, would have a wide negative effect on domestic demand and exports.
Page 37 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Mitigation: Growth is expected to recover relatively quickly after the end of the health crisis, reaching an average of 3.4 percent over 2021-2022. .
Page 38 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
VI. RESULTS FRAMEWORK AND MONITORING
Results Framework COUNTRY: Comoros Comoros Solar Energy Integration Platform
Project Development Objectives(s) Improve the commercial performance of the electric utility and its capacity to dispatch variable renewable energy.
Project Development Objective Indicators
RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 Improve the capacity of the National Utility to dispatch variable renewable electricity
Capacity of the National Utility to dispatch 0.00 13.75 18.50 variable renewable electricity (Megawatt)
Improve average billing and collection rates across all three island systems
Average SONELEC billing rate across all three 65.00 71.00 76.00 island systems (Percentage)
Average SONELEC collection rate across all three 81.00 83.00 85.00 island systems (Percentage)
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 Component 1: Investments in power storage, PV, and system upgrades
Page 39 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 Power storage capacity installed across the three 0.00 16.00 19.00 islands (Megawatt hour(MWh)) Automated dispatch and power control systems No Yes Yes installed on all three islands (Yes/No) Generation capacity of energy constructed or 0.00 9.00 9.00 rehabilitated (CRI, Megawatt) Renewable energy generation capacity (other than hydropower) constructed under the 0.00 9.00 9.00 project (CRI, Megawatt) Component 2: SONELEC Commercial and Financial Recovery Customer management software rolled out across No Yes Yes all three islands (Yes/No) Pre-paid meters installed (Number) 1,400.00 60,000.00 96,400.00 Component 3: Technical assistance, project implementation support, and capacity building activities Delegated Sector Oversight and Contracting Unit (DSOCU) established (Yes/No) No Yes Number of local energy sector staff trained or 0.00 3.00 5.00 mentored under DSOCU (Number) Electricity sector master plan updated (Yes/No) No Yes Yes Female electricity sector employees (Percentage) 19.00 22.00 25.00 Complaints received through GRM addressed 0.00 80.00 90.00 (citizen engagement indicator) (Percentage) Baseline for electricity service quality established No Yes Yes (Yes/No)
IO Table SPACE
UL Table SPACE
Page 40 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection An independent dynamic stability analysis of the three island systems confirms a combined capacity to integrate at least 25 MW of intermittent solar power generation capacity. The target value is determined as follows: the Independent Independent technical Capacity of the National Utility to dispatch project will add 9 MW of PV One-off grid analysis. consultant. variable renewable electricity through the pilot project,
and an additional 19 MWh of 2-hour storage across the 3 islands, yielding another 9.5 MW of dispatchable capacity. In total, therefore, the project will directly enable a total of 18.5 MW of dispatchable renewable energy capacity. Average SONELEC billing rate across all Electricity billed divided by Quarterly SONELEC SONELEC SONELEC three island systems electricity generated Average SONELEC collection rate across Cash collected divided by Quarterly SONELEC SONELEC SONELEC all three island systems electricity billed ME PDO Table SPACE
Page 41 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Power storage capacity has been installed across the Power storage capacity installed across three islands to stabilize the Quarterly SONELEC SONELEC SONELEC the three islands power grid and prepare the injection of intermittent PV generation capacity. Automated dispatch and power control systems have been installed on all three islands to improve service quality and create the Automated dispatch and power control Monthly SONELEC SONELEC SONELEC preconditions for managing systems installed on all three islands the interaction of intermittent PV power generation with thermal baseload and reserve capacity. Generation capacity of energy Quarterly DSOCU DSOCU DSOCU constructed or rehabilitated Renewable energy generation Quarterly DSOCU DSOCU DSOCU capacity (other than hydropower)
constructed under the project Customer management Customer management software rolled Quarterly SONELEC SONELEC SONELEC software rolled out across out across all three islands all three islands Number or pre-paid meters Quarterly SONELEC SONELEC SONELEC Pre-paid meters installed installed across all three
islands
Page 42 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
The GoC has established a Delegated Sector Oversight Delegated Sector Oversight and One-off GoC GoC GoC and Contracting Unit and Contracting Unit (DSOCU) established recruited its national and international staff. Number of local MoE, SONELEC, or other local Number of local energy sector staff government staff trained Monthly DSOCU DSOCU DSOCU trained or mentored under DSOCU and mentored by international DSOCU experts. Power sector master plan Monthly DSOCU DSOCU DSOCU Electricity sector master plan updated updated Percentage of electricity sector employees who are Annually SONELEC SONELEC SONELEC Female electricity sector employees women as reported by SONELEC. Complaints received through GRM % of complaints received Quarterly SONELEC SONELEC SONELEC addressed (citizen engagement indicator) through GRM addressed Measurement and monitoring system for Baseline for electricity service quality Quarterly SONELEC SONELEC SONELEC standard grid service established indicators in place and data baseline established. ME IO Table SPACE
Page 43 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
ANNEX 1: Implementation Arrangements and Support Plan
COUNTRY: Comoros Comoros Solar Energy Integration Platform
Detailed FM Assessment
1. An FM assessment was conducted to evaluate whether the project implementing agencies responsible for FM meet the minimum FM requirements as per World Bank Policy and Directive. The FM assessment was carried out in accordance with the Directives and Policy for IPF and the World Bank Guidance on FM in World Bank IPF Operations issued on February 28, 2017. The assessment was conducted at the MPEEIH level, where the DSOCU, the project implementing agency, will be established. The MPEEIH implemented the ESRP through the National Electricity and Water Company (formerly named MAMWE, now SONELEC), with the support of external consultants. The FM performance was broadly moderately satisfactory during the project life cycle. Based on the assessment conducted during the appraisal mission, the overall FM system was assessed to be inadequate and the risk rating was assessed as substantial.
2. The mitigation measures will be mostly implemented with the PPA and comprise (a) the creation of the DSOCU; (b) the recruitment of qualified and experienced FM staff composed of one financial officer and one accountant for the DSOCU before the project effectiveness as well as internal and external auditors no later than six months after project effectiveness; (c) the development and adoption of an FM procedures manual as part of the PIM before the project effectiveness; and (d) the purchase of an adequate accounting system for the DSOCU. The implementation of these mitigation measures shall bring the residual FM risk to Moderate. To further strengthen the FM arrangements, a number of actions were agreed and are set out in the FM Action Plan in table 2.2.
3. The overall country fiduciary risk is Substantial. A Public Expenditure and Fiscal Management Review was finalized in October 2016 and concluded that there had been a degree of improvement in PFM since the previous assessment done in 2007. However, the October 2016 PEFA assessment also identified several critical gaps in the areas of budget credibility, completeness and transparency, execution, and control. The Government has been pursuing a program of PFM reforms since 2010 and the Ministry of Finance is committed to modernizing the PFM system through the implementation of the PFM Strategy for 2010–2019. The PFM Strategy is a comprehensive response by the authorities to address the weaknesses of their PFM system, as identified by the previous 2013 PEFA assessment and recommendations from development partners, including France, the EU, the International Monetary Fund, and the World Bank. The project shall not apply project-specific arrangements with minimal application of country public finance management systems.
4. Budgeting and planning. Budget arrangements will be described in the FM procedures manual to be developed as part of the PIM, which will be prepared and adopted before project effectiveness. The DSOCU will prepare the annual budget which will be approved by the MPEEIH and reviewed by the Steering Committee. The periodic variance analysis will enable the timely identification of deviations from the budget. These reports will be part of the unaudited interim financial reports (IFRs) that will be submitted on a quarterly basis.
Page 44 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
5. Accounting. The DSOCU will acquire an appropriate accounting software for the preparation of the quarterly IFRs, the annual financial statements, and the daily monitoring of the project financial transactions.
6. Staffing. The DSOCU will recruit a financial officer and an accountant as well as internal and external auditors no later than six months after project effectiveness with qualifications and experience acceptable to carry out the FM activities of the project.
7. Internal controls/FM procedures manual. As part of the PIM, the FM procedures manual will contain the procedures governing the budgeting, accounting, reporting, auditing procedures, contract management as well as the flow of funds applicable to the project. The DSOCU will periodically review the manual over the project life to ensure its continuing adequacy and compliance with the requirements set out therein. The procurement procedures applied by this project will be in line with the Procurement Regulations.
8. Internal audit. The DSOCU will recruit a qualified internal auditor who will continuously review the governance, risk management, and control over the project’s activities. During project implementation, the internal auditor will be required to conduct at least two reviews per year to confirm adequacy and adherence of internal controls and submit the reports to the Project Steering Committee and a copy to the World Bank.
9. Financial reporting. The DSOCU will prepare quarterly unaudited IFRs for the project; the report format will be agreed with the World Bank. These IFRs will be submitted to the World Bank within 45 days after the end of the quarter to which they relate. The annual financial statements will be prepared using the revised SYSCOHADA. At the end of each fiscal year, the project will prepare annual financial statements which will be subjected to an external audit.
10. External audit. The project accounts will be audited annually, and the audit report will be submitted to the World Bank no later than six months after the end of each financial year. At the time of Board presentation, there is no overdue audit report for the sector. The project will comply with the World Bank disclosure policy on audit reports.
11. Flow of funds - disbursement arrangements. The DA is denominated in local currency KMF (Comorian franc) to receive funds from the World Bank and the SIDS DOCK trust fund. This account will be opened at an acceptable bank to enable payment of eligible expenditures. Transaction-based disbursements will be used for this project. An initial advance up to the ceiling of the DA and representing four months forecasted project expenditures payable through the DA will be made after the project effectiveness and subsequent disbursements will be made monthly against submission of the Statement of Expenditures or other documents as specified in the Disbursement and Financial Information Letter. The project will be allowed to use direct payment advance, reimbursement, and special commitment as disbursement methods.
Page 45 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Table 2.1. Eligible Expenditure for Credit and Grant per Category
Category Amount of the Credit Amount of the Grant Percentage of Allocated (expressed Allocated (expressed Expenditures to be in EUR) in SDR) Financed (inclusive of Taxes) (1) Goods, works, training, non- 3,680,000 5,880,000 100% consulting services, and consulting services for Part 2 and Part 3 of the Project
(2) Goods, works, training, non- 12,420,000 8,452,500 100% consulting services, and consulting services for Part 1 of the Project excluding Resettlement Assistance
(3) Resettlement Compensation 460,000 367,500 100%
(4) Refund of Preparation Advance 1,840,000 0 Amount payable pursuant to Section 2.07 (a) of the General Conditions
(5) Emergency Expenditures under 0 0 Part 4 of the Project
TOTAL AMOUNT 18,400,000 14,700,000 100%
12. Supervision plan. Based on the current overall FM risk, the project will be supervised at least twice a year, in addition to routine desk-based reviews and regular FM meetings, to ensure that the project’s FM arrangements operate as intended and that funds are used efficiently for the intended purposes.
13. Emergency component. In case of activation of the CERC, the allocated funds will be managed through a separate DA opened at a bank acceptable to the World Bank. The project FM procedures will apply to the CERC activities in terms of budgeting, accounting, reporting, and auditing.
14. FM risk assessment and mitigation. The content of these risks is described in table 2.2.
Table 2.2. Project FM Risk Assessment and Mitigation Conditions for Risk Risk Mitigating Measures Residual Risk Effectiveness Rating Incorporated into Project Design Risk (Y/N) Inherent risk H S Country level: H The GoC is committed to N H implement further reforms of the
Page 46 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Conditions for Risk Risk Mitigating Measures Residual Risk Effectiveness Rating Incorporated into Project Design Risk (Y/N) The MPEEIH system mirrors the country’s PFMs (with support central-level PFM system and its from the development partners). weaknesses resulting in the risk of lack of transparency and accountability in the use of public funds Entity level: FM requirements not H The DSOCU will recruit FM staff Y M met, weak FM capacity who possess adequate experience and competence. Project level: The resources of the S The DSOCU will comply with the N M project may have been distracted internal control processes as set due to weak control environment out in the FM procedure manual, part of the PIM. The internal audit unit will also continuously review the adequacy of internal controls and make improvement recommendations. Control risk Budgeting: Weak budgetary S The FM manual part of the PIM Y M execution and control leading to will spell out the budgeting and budgetary overruns or budgetary control arrangements inappropriate use of project to ensure appropriate budgetary funds oversight. The budget follow-up will be documented in the quarterly IFR. Accounting: Reliable and accurate S The DSOCU will recruit suitably N M information not provided to qualified and experienced FM inform management decision personnel to ensure appropriate performance of the accounting and FM functions. The financial reporting processes will be facilitated by the utilization of appropriate computerized accounting systems. Internal control: Business S The FM procedures manual will Y M process, role, and responsibilities be reviewed to ensure continuing within the project are not clear, adequacy over the course of the leading to ineffective control project life.
Delay in the project The manual will contain all the implementation due to key internal control processes weaknesses in contract pertaining to the various project management (large contracts activities. related to infrastructure and equipment) The FM procedures manual will establish robust contract management procedures.
Page 47 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Conditions for Risk Risk Mitigating Measures Residual Risk Effectiveness Rating Incorporated into Project Design Risk (Y/N)
The implementation by the DSOCU will be reinforced by highly qualified international experts.
The assets safeguard across the Loss of assets and country will be clearly defined in equipment/infrastructure the PIM. damages A maintenance contract over PV infrastructure will be financed under the project. The national electricity company will earmark energy revenues to take over the maintenance after the project exit. Funds flow: S The process leading to payment Y M Inappropriate funds will be well described in the FM arrangements may lead to non- procedures manual and financing of the project activities. monitored to mitigate the risk of the use of funds for unintended Delay (payment and purposes. replenishment of funds) due to the lack of experience in managing World Bank-financed project Financial reporting: The project S The DSOCU will recruit qualified Y M may not be able to produce the FM personnel who possess financial reports on time as adequate experience and required for project monitoring competence. and management The DSOCU will use appropriate computerized accounting that will enable the efficient and timely generation of financial information. Auditing: Delays in submission of S The internal auditor will be N M audit reports recruited early. The computerized accounting Poor quality of audit report system will lead to timely generation of IFRs and financial statements. The Comoros does not have a professional accountancy body recognized by the International Federation of Accountants.
Page 48 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
Conditions for Risk Risk Mitigating Measures Residual Risk Effectiveness Rating Incorporated into Project Design Risk (Y/N) Hence, six months after project effectiveness the external auditor recruitment will be opened at the international level and only qualified external auditors will be short-listed. Governance and accountability: S Robust FM arrangements, World N M Possibility of corrupt practices Bank FM and procurement including bribes, abuse of supervisions. administrative and political positions, mis-procurement and Effective internal control misuse of funds, and so on are a arrangements critical issue. Overall FM risk S M
15. FM Action Plan. The FM Action Plan described below has been developed to mitigate the overall FM risks.
Table 2.3. Project FM Action Plan Responsible Effectiveness Remedial Action Recommended Completion Date Entity Conditions Recruit qualified staff including FM officer DSOCU By project effectiveness Yes and an accountant and provide appropriate training on World Bank procedures Develop FM procedures manual as part of DSOCU By project effectiveness Yes the PIM Purchase adequate accounting software DSOCU No later than three months after No effectiveness Recruit qualified internal auditor DSOCU No later than six months after No effectiveness Recruit an external auditor based on the ToR DSOCU No later than six months after No agreed with the World Bank effectiveness
Implementation Support Plan
16. As management of the project and overall sector oversight and contracting will be delegated to the DSOCU, implementation support requirements are expected to be relatively minor. The DSOCU will consist of a blend of competitively recruited international experts for each of its major functions and Comorian energy sector staff that will bring the required knowledge of the local sector and political context. Onboarding of the DSOCU will be supported by the Bank’s energy team in its early stages, though the DSOCU is expected to operationalize rapidly after recruitment. Ongoing support to the DSOCU will be provided by its Steering Committee, which will oversee the DSOCU’s analytical, planning, and training activities; monitor the DSOCU’s day-to-day operations; and ensure a functional and inclusive interface between the DSOCU and all key stakeholders of the Comorian energy sector.
Page 49 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
ANNEX 2: Gender Gap Analysis and Action Plan
COUNTRY: Comoros Comoros Solar Energy Integration Platform
Rationale: Why a Focus on Gender in Energy Matters
1. Access to clean and reliable household energy reduces energy poverty and gives women and men additional income-earning opportunities. Women, disproportionately undertaking unpaid work, can earn income and gain employment not only from using the energy services, for example, by setting up small businesses but also by taking advantage of the new opportunities of employment within the energy sector. In some countries, this could mean the retail or maintenance of appliances and in some other employment in positions that arise through the extension of the grid or enhanced service quality. Economic opportunities and social dynamics affect the one having the highest impact on closing gender gaps and can be realistically achieved. Specifically, in the Comoros, some key elements need to be considered regarding the country’s particular context, as outlined in the following paragraphs.
2. Headship and assets ownership. In the Comoros, 27.8 percent of households are headed by women. However, land and home ownership are more equally (or even inversely) distributed across sex. For example, according to the Demographic and Health Survey (DHS) study, 61.1 percent of female- headed households and 62.2 percent of male-headed households own land usable for agriculture. At the individual level, 58.53 percent of all females surveyed by the DHS study (either jointly or alone) own land usable for agriculture, while the same number for males is 48.04 percent. Last, 66.5 percent of all females (either jointly or alone) own a house, while this figure is 53.95 percent for males.10 The implications of the discrepancy between headship and ownership are explained in the ‘Comoros Gender Gap Analysis’ section.
3. Participation in decision-making processes. According to the Comoros’s SCD by the World Bank, women are well suited to promote transparency and civic values in their respective communities as they represent a reference point, are a source of trust, and hold informal power within local communities. Although the traditional system tends to exclude women from decision-making at the local level and to some extent at the household level, and women are forbidden access to the public squares where men make decisions regarding village affairs, their approval is often essential to cement decisions made in these male-dominated village assemblies. Moreover, women are at the forefront of social change and are supported by the diaspora, which pushes the boundaries with regard to traditional assumptions on gender.
4. Women are increasingly involved in the public sphere. Female associations are dynamic at the local level, and several women’s organizations have emerged at the national level to oppose discriminatory practices against women and advocate for their empowerment. However, although women are active at the grassroots level, they encompass a limited role in higher-level political ranks. In
10 World Bank’s own calculations using Comoros DHS data (2012). https://dhsprogram.com/what-we-do/survey/survey-display- 443.cfm.
Page 50 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
2018, women held only 6 percent of all seats in the national parliament, none of the ministerial-level positions, and 27.2 percent of the Government in general.11
5. A case study for women communal participation. A community-driven approach has been tested in Mutsamudu12 with the establishment of a watershed management committee. Among other things, the project improved community and particularly women’s formal participation in water resources and water services planning and management.
Comoros Gender Gap Analysis
6. To gain insights into key gender gaps, a preliminary analysis was conducted for the Comoros. The aim was to summarize relevant gender gaps across multiple data sources and investigate the existence of a link between these and the opportunities for women to play a role within the energy sector that were identified in the ESRP.
7. Headship and assets ownership. The discrepancy between headship and ownership detailed earlier is explained by Comorian matrilineal rules in which the transmission of real estate goes through the female lineage. In principle, these assets available to women could be used as collateral, for example, in access to credit and finance. However, in practical terms, the usufruct of these assets tends to go to the husbands, maternal uncles, or brothers.13 These differences can translate into differences in access to credit for production or in means of production available to males and females. For example, despite, in principle, owning similar amounts of land, male-headed households own, on average, a higher amount of livestock or farms.14
8. Agency/voice and decision-making. According to DHS data regarding economic autonomy, women who were currently in union and who had been paid in money for their work were asked who mainly decides how to use this money. In only 40 percent of the cases, women said that they mainly decide how to use their earnings. A quarter of the women said that the decision was made jointly with the spouse and in a third of the cases it is mainly the spouse who decides on the use of the woman's earnings. Regarding the role and involvement of women in decision-making at the household level, the final say in certain decision-making such as women’s health care and major household purchases was studied. In all cases, the data show that the involvement of the spouse in making each decision is important. In 48 percent of cases, the spouse mainly decides on the women’s health care, the latter deciding independently only in 21 percent of cases. The decisions concerning important purchases for the
11 World Bank. 2019. Little Data Book on Gender. https://data.worldbank.org/products/data-books/little-data-book-on-gender. African Development Bank. 2016. “Country Strategy Paper 2016–2020.” https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/COMOROS_-_2016- 2020_Country_Strategy_Paper.pdf. 12 The second largest city in the country located on the island of Anjouan. 13 World Bank. 2019. Systematic Country Diagnostic. http://documents.worldbank.org/curated/en/354101559590231457/Comoros-Towards-a-More-United-and-Prosperous-Union- of-Comoros-Systematic-Country-Diagnostic. 14 Author’s own calculations using Comoros DHS data (2012). https://dhsprogram.com/what-we-do/survey/survey-display- 443.cfm.
Page 51 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
household are taken mainly by the spouse in 40 percent of the cases and independently by women only in 27 percent of cases.
9. Paid/unpaid labor, income and economic opportunities. Women participate in the labor force much less than men do, with participation rates of 33 percent and 57 percent, respectively. The participation rate of women is one of the lowest in the region.15 Women’s unemployment rate is higher at 10.4 percent against 6.7 percent for men.16 Even if women are employed, they are more likely to have an employment that qualifies as ‘vulnerable’, meaning that they lack formal arrangements and tend to be self-employed (70 percent versus 55 percent, respectively).17 Employment in the Comoros is characterized by predominantly own-account workers, more than 60 percent of the employed work for themselves. However, women are disproportionally affected by this trend, as more than 64 percent of women are self- employed workers compared to about 46 percent of men.18
10. Labor market data for the Comoros not only show a lower women’s participation but also clearly show that there is an earnings premium for married men and a marriage penalty for women. The average wage increases from US$1.67 to US$1.73 for single versus married men, respectively. By contrast, married women earn US$1.45 on average, which is less than the average for single women, which is US$1.64. This female marriage penalty is likely to be rooted in the cultural and legal structure of the Comoros. The Comorian 2005 Family Code provides that a married woman cannot choose where to live in the same way as a married man, which limits women’s economic choices. Further, the Family Code stipulates that a married woman cannot get a job in the same way as a married man because professional and career choices of a married woman “must not jeopardize the interests and the stability of her family.” According to the World Bank’s Women, Business and the Law report, only 19 of all the 189 economies covered limit women’s professional choices in this way.19
11. Wealth and productivity.20 According to the World Bank’s Poverty Assessment for Comoros (2017), there is no significant relationship between the gender of the household head and economic welfare of the household. However, differences can be observed in productivity in economic sectors and labor participation by sector and gender. Households whose heads work in the agricultural sector are much more exposed to poverty than households whose heads operate in other sectors of activity. Of the 45 percent of Comorians households that depend on agriculture for their livelihoods, more than half live in poverty. In comparison, less than a third of households whose heads work in the nonfarm sector are poor, with poverty being particularly low among households engaged in the service sector. At the same time, females are more likely to work in the agricultural sector. In fact, there are two main categories of women-headed households: (a) widows relying mostly on farming and (b) single women working in the
15 ILO stats. https://ilostat.ilo.org/data/. 16 Ibid. 17 https://data.worldbank.org/indicator/SL.EMP.VULN.MA.ZS. 18 World Bank. 2019. Systematic Country Diagnostic. http://documents.worldbank.org/curated/en/354101559590231457/Comoros-Towards-a-More-United-and-Prosperous-Union- of-Comoros-Systematic-Country-Diagnostic. 19 Ibid. 20 World Bank. 2017. Comoros Poverty Assessment, page 58. http://documents.worldbank.org/curated/en/342321528113131924/pdf/125069-WP-P156542-OUO-9-Comoros-Poverty- Assessment-revised.pdf.
Page 52 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
commerce and service sectors. The former suffer from much higher levels of poverty than the other groups.
Entry Points and Proposed Actions
12. The gender gap in formal employment for women in the Comoros is significant. Their participation rate in the labor force is 33 percent compared to 57 percent for men. Moreover, 70 percent of women’s employment opportunities lack formal arrangements or are created through self-employment. The current rate of employment for women in the electricity sector sits at 19 percent which the project aims to address. The ComorSol project aims to close this gap by providing women employment opportunities in community awareness campaigns and as agents for household energy efficiency audits. The project will formally engage women in the energy sector and build on their unique position to influence behavior. This will provide valuable, remunerated work experience to women who, in particular in rural settings, have little to no opportunities to obtain salaried incomes.
13. Gender activities will be coordinated in conjunction with the DSOCU by a designated focal point. For the community awareness campaign, the following actions are proposed:
• Establishment of a formal agreement and action plan with key stakeholders (Mouvement des Femmes de Moroni [Moroni Women’s Movement], SONELEC, Réseau des Femmes Entrepreneurs [Women Entrepreneurs Network], Fédération des Consommateurs aux Comores [Comorian Consumer Federation], and so on) • Development of training program and selection process across the country • Development of before/after survey for monitoring the results and preparatory work with the utility to obtain baseline data on bill payment and illegal connections for targeted areas • Selection and training of 100 women to be employed across the three islands (which will enhance the overall share of electricity sector employees who are female to 25 percent) • Collection and analysis of feedback and data on the success of the campaign and subsequent iterations based on the assessment as well as the potentially shifting priorities for the following year. 14. For the energy efficiency audit program, the following actions are proposed:
• Baseline assessment of current practices to understand energy-efficiency-related behavior and design the action plan and capacity-building activities • Development of training and certification program and alignment with the implementation plan of the community awareness campaign • Training and certification of women on energy efficiency diagnostic and best practices to enable them to be employed as agents • Rollout and monitoring of program.
Page 53 of 54
The World Bank Comoros Solar Energy Integration Platform (P162783)
ANNEX 3: Map of the Union of the Comoros
COUNTRY: Comoros Comoros Solar Energy Integration Platform
Page 54 of 54