The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

REPORT NO.: RES43642 Public Disclosure Authorized

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF REGIONAL RUSUMO FALLS HYDROELECTRIC PROJECT APPROVED ON AUGUST 6, 2013 TO Public Disclosure Authorized REPUBLIC OF ,

REPUBLIC OF BURUNDI

AND

UNITED REPUBLIC OF

ENERGY AND EXTRACTIVES Public Disclosure Authorized EASTERN AND SOUTHERN AFRICA REGION

Regional Vice President: Hafez M. H. Ghanem Country Director: Deborah L. Wetzel Regional Director: Riccardo Puliti Practice Manager: Sudeshna Ghosh Banerjee Task Team Leaders: Norah Kipwola, Laurencia Karimi Njagi Public Disclosure Authorized The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

ABBREVIATIONS AND ACRONYMS Agence Burundaise de l’Electrification Rurale (Rural Electrification ABER Agency – Burundi) AfDB Africa Development Bank CP1 Civil Contractor CP2 Electromechanical Contractor EHS Environmental and Health and Safety ESMP Environment and Social Management Plan ESMU Environmental and Social Management Unit GoB Government of Burundi GoR Government of Rwanda GoT Government of Tanzania HRT head race tunnel IDA International Development Association IP Implementation Progress IPoE Independent Panel of Experts ISR Implementation Status and Results Report JICA Japanese International Cooperation Agency KWh Kilowatt Hour LADP Local Area Development Plan LRP Livelihood Restoration Program MoU Memorandum of Understanding MS Moderately Satisfactory MU Moderately Unsatisfactory MW Megawatt NBI Basin Initiative NEL Nile Equatorial Lakes NELSAP-CU Nile Equatorial Lakes Subsidiary Action Program – Coordination Unit NGO Non-Governmental Organization OP/BP Operational Policy/Bank Procedure OE Owner’s Engineer PAPs Project Affected People PCDP Public Consultation Disclosure Plan PDO Project Development Objective PIM Project Implementation Manual POEDS Panel of Experts on Dam Safety PSC Project Steering Committee RAP Resettlement Action Plan REGIDESO Regie de Production et de Distribution d’eau et d’elelectricite ( Water and Electricity Production and Distribution Board) RFW Rwandan Franc RPCL Rusumo Power Company Limited /Special Purpose Vehicle RPIU Rusumo Project Implementation Unit The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

RRFHP Regional Rusumo Falls Hydroelectric Project SOP Standard Operating Procedure STEP Systematic Tracking of Exchanges in Procurement TANESCO Tanzania Electric Supply Company Limited WB World Bank

,

BASIC DATA

Product Information

Project ID Financing Instrument P075941 Investment Project Financing

Original EA Category Current EA Category Full Assessment (A) Full Assessment (A)

Approval Date Current Closing Date 06-Aug-2013 31-Dec-2020

Organizations

Borrower Responsible Agency Republic of Rwanda,United Republic of Tanzania,Republic NBI NELSAP Coordination Unit (NELSAP-CU),Rusumo of Burundi Power Company Limited

Project Development Objective (PDO) Original PDO The development objective of the Regional Rusumo Falls Hydroelectric Project is to increase the supply of electricity to the national grids of Rwanda, Tanzania and Burundi. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed

IDA-52950 06-Aug-2013 11-Oct-2013 10-Jul-2014 31-Dec-2020 56.65 32.34 20.74 IDA-52960 06-Aug-2013 11-Oct-2013 11-Jul-2014 31-Dec-2020 113.30 65.21 39.93 IDA-H8720 06-Aug-2013 11-Oct-2013 11-Jul-2014 31-Dec-2020 113.30 60.86 44.84 The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

IDA-H8730 06-Aug-2013 11-Oct-2013 10-Jul-2014 31-Dec-2020 56.65 29.44 23.37 TF-57297 24-Oct-2006 24-Oct-2006 24-Oct-2006 31-Oct-2012 7.60 7.60 0

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)? No

I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

1. The Regional Rusumo Falls Hydroelectric Project (RRFHP) is a hydropower run-of-the-river development of an 80 MW hydroelectric power generation facility located at Rusumo on the River Kagera on the common border between the United Republic of Tanzania and the Republic of Rwanda. The project, that entails financing of US$ 347.50 million to the three countries developing the project (Rwanda IDA-52950 and IDA- H8730, Tanzania IDA-52960, Burundi IDA-H8720) and Secretariat -TF 57297 (from the Multi Donor Trust Fund)was approved by the World Bank’s Executive Board of Directors on August 6, 2013 and became effective on July 14, 2014.

2. The project is implemented by the Nile Equatorial Subsidiary Action Program Rusumo Project Implementation Unit, (NELSAP RPIU) on behalf of the project’s owner Rusumo Power Company Limited (RPCL). 3. The project is parallel-financed by the African Development Bank (AfDB) and the European Union, who finance the transmission facilities connecting the hydroelectric power plant of Rusumo Falls to the national grids of Rwanda and Burundi, and supplying electricity to the western provinces of Tanzania. 4. The Project Development Objective (PDO) is to increase the supply of electricity to the national grids of Rwanda, Tanzania and Burundi. 5. The PDO rating has been rated moderately satisfactory (MS) since April 2015 . The Implementation Progress (IP) rating was upgraded from moderately unsatisfactory (MU) to MS in September 2020, following the lifting of the suspension of blasting in the head race tunnel (during March 2020) after NELSAP implemented agreed mitigation measures aimed at minimizing damage to property by blasting activities; and resumed excavating the head race tunnel (HRT). 6. The project has the following components (with parallel-financing from AfDB and contributions from the three governments): a. Component A1 (IDA-financed): Civil Works (US$155.0 million): Includes all excavation/earth works, tunneling and concrete for the power plant complex structures, including a barrage and gated spillway, intake works and diversion/power canal, surface powerhouse, access roads and construction site facilities such as offices and housing. b. Component A2 (IDA-financed): Mechanical and Electrical Works (US$126.0 million): Includes supply, installation, testing and commissioning of: (i) hydro-mechanical equipment; (ii) turbine-generator sets and auxiliaries; (iii) generation substation; and (iv) power complex control and communications equipment. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

c. Component A3 (IDA-financed): Social and Environmental Impacts mitigation (US$22.0 million): Includes financing the Environmental and Social Management Plan (ESMP) and the Resettlement Action Plan (RAP) including cash compensation to approximately six hundred sixty four (664) project affected households and implementation of the associated Livelihood Restoration Program (LRP) and the Local Area Development Plan (LADP). d. Component A4 (IDA-financed): Owner’s Engineer (OE) and project supervision (US$37.0 million): Includes financing an OE to assist the project implementing entity with: (i) overall project management and supervision of the procurement, design, construction, interface management and preparation for operation and maintenance of the power plant complex; and (ii) coordination of the implementation of the ESMP and RAP. This component also finances staff costs to support the setup operations of the RPCL and NELSAP RPIU including a project manager, senior engineers (civil, electrical and mechanical), a quantity surveyor, a safeguards team, a procurement specialist, a financial management specialist, accounts and logistics assistant, a communications specialist and other technical staff. In addition, this component also finances equipment, capacity-building and monitoring/evaluation activities of the project. e. Component B (financed by AfDB and the European Union ): Includes financing for the transmission lines with parallel financing from AfDB and the European Union. This component consists of construction of three transmission lines from Rusumo to: (i) Gitega, Burundi (161 km); (ii) Kigali, Rwanda (119 km); and (iii) Nyakanazi, Tanzania (98.2 km). The lines will connect the power station at Rusumo to the national grids of Rwanda and Burundi, and supply electricity to the western mining provinces of Tanzania, which are currently not connected to the country’s national grid. The transmission lines are expected to play a role in the creation of a regional grid “backbone” for expanded future power trade within the region. 7. The implementation progress of each component is as follows: a. Component A1: Civil Works (CP1) Contract: CP1 Contract was signed on Nov 9, 2016. The Time for Completion was originally 36 months from the Commencement Date of February 2017. Although there were initial delays in effective mobilization by the Contractor (due to weakness relating to key personnel and key construction equipment) as well as delays in providing access by the Employer, implementation of this component eventually picked up speed. Progress in the excavation of the head race tunnel (HRT) was impacted by the need to control the impact of blasting on: (i) a number of houses located in the vicinity of the tunnel alignment, and (ii) the International Road that crisscrosses over the tunnel. While progress has also been somewhat impacted by the Coronavirus Disease 2019 (COVID-19) pandemic, the contractor continues to make significant progress at the main construction areas, including the head race tunnel (HRT), Phase 2 diversion, spillway and dam works, power intake, powerhouse, penstocks, and switchyard area. Works also continue on the administration building and residential areas. b. Component A2: Electromechanical Works (CP2 Contract): CP2 Contract was signed on Nov 9, 2016. The Time for Completion was originally 36 months from the Effective Date. However, mobilization was delayed due to delays in establishment of Letter of Credit (which was completed on Feb 6, 2017). There were additional delays resulting from interface issues between the CP1 and CP2 contractors. The main work on the electromechanical equipment, hydraulic steelworks and cranes stopped between in March 2020 and September 2020 due to border closures related to the COVID-19 pandemic and the departure of most of the contractor’s expatriate staff from the site. The contractor managed to progress a few shipments to site, and conduct some minor earthing works and installation of embedded parts that enables the civil works contractor to continue with secondary concreting. c. Detailed Program of Performance and Combined Construction Schedule:  Each contractor (CP1 and CP2) has a Detailed Program of Performance that covers the works to be undertaken. As there are a number of interface activities that require sequential work by the two contractors, there was a need for a combined schedule that could optimize the implementation schedule of these interface activities and also provide a monitoring tool. A detailed project schedule called the ‘combined construction schedule’ The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

(CCS) was agreed by all the parties (NELSAP, OE, CP1 Contractor and CP2 Contractor). This has been updated, and the latest schedule has been submitted during November 2020, updating the estimated construction completion to September 2022.  The combined project implementation progress is 71 percent and latest assessment of the construction completion, taking into account the up-to-date impact of the COVID-19 epidemic, is September 2022. This is based on the CP1 contractor completing its works by January 2022, and subsequent start of the wet tests on the generating equipment by the CP2 contractor.  This is a significant delay with respect to the original completion date of February 2020. As indicated above, the delay in the completion date can be attributed to a range of contributory factors including those noted above: these include initial mobilization delays, delayed access, restrictions on free movements, issues related to blasting for the excavation of the head race tunnel (HRT), CP1 cash flow constraints partially stemming from the relatively low bid submitted and the delays incurred, interface issues, and COVID-19 impacts. There were also some issues related to the performance of the OE and the changes in the NELSAP Project Manager. The issues that caused delays in project start-up have for the most part been sorted out. Once the contractors were mobilized, the three governments worked with the NELSAP RPIU and sorted out the logistics of worker cross-border movement, by creating a project zone across the border within which the workers can freely move across. The NELSAP RPIU is working closely with CP1 to ensure that CP1 has adequate cash flow to advance works; and the OE is working closely with both contractors in managing the interface issues. The contractor is now advancing the excavation of the HRT after fulfilling the necessary pre-requisites agreed with the World Bank.  There do not appear to be any technical aspects that could result in further delays in the expected project completion but there is still uncertainty regarding the future impact of the COVID-19 epidemic. The impact of the current upsurge in COVID-19 cases on the progress of the CP1 works is likely to be limited but it could impact the performance of the CP2 contractor as specialized CP2 staff will need to travel to the Site for erection of the major equipment such as turbines, generators, etc.  There are ongoing disputes between contracting parties which need to be resolved amicably between them with a focus on project progress rather than relying more and more on the Dispute Board (constituted as per the contract, and which has handled a number of claims and counter claims).  The situation has been made worse by COVID- 19 pandemic, which has caused further delays. At the onset of the pandemic and imposition of restrictions in movement and assembly during March 2020, both CP1 and CP2 contractors declared Force Majeure. CP1 contractor continued to work with a reduced workforce, however, CP2 contractor stopped work. Although CP2 contractor is back on site and has resumed work, their absence from the site negatively impacted the earlier foreseen interface positions of the works. This situation may result in further claims from the contractors, and the Task Team has advised NELSAP management to be more proactive and take responsibility in assessment and management of the claims, as and when they arise. NELSAP has hired a legal firm, who are supporting with advice on claims and disputes, and with representation at arbitration. This has strengthened the projects capacity to counter the contractors claims. d. Component A3: Social and Environmental Impacts mitigation: Implementation of activities under this component are advanced and completed in Rwanda but are yet to be completed in Tanzania and Burundi. There are significant issues with regard to environmental and social safeguards management of the project. The project is rated Environmental category A and triggers all World Bank Environmental Safeguards Policies (OP 4.01, OP 4.04, OP 4.36, OP 4.09, OP 4.11, OP 4.37). Compliance with environmental and social safeguards policies as at October 2020, and in the last three Implementation Status and Results Reports (ISRs), has been rated Unsatisfactory due to: (i) inadequate environmental safeguards supervision and enforcement by the NELSAP RPIU and the OE; (ii) continued lack of compliance by the civil works contractor (CP1) - seemingly lack of capacity and understanding of Environmental and Health and Safety (EHS) systems/regulations and non-response to Notices to Correct and to The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

application of contractual remedies; (iii) insufficient attention to social risk management; (iv) inadequate project management of the LRP and LADP activities; and (v) outstanding non compliances with the World Bank’s environmental and social safeguards obligations. In addition, compensation payment for involuntary land acquisition related to the operational flood levels has not yet been paid because of delays in the valuation process. A more detailed description of the environmental and social issues is attached (Annex 1). e. The project has had two accidents (three dead workers, 25 injured in the first and one community member died in the second one), and a major concern is the continuing unsafe use of scaffolding which poses an immanent risk to workers working at heights. Remedial and preventive actions arising from these accidents have been agreed. Some of these have been implemented, and others are covered in the action plan (attached as Annex I to this Paper) discussed below. f. Grievance Redress Service (GRS): The project has registered two cases at the World Bank’s GRS: i. The first case is related to complaints from members of the community residing or working in the vicinity of the project area whose properties were damaged by high levels of surface blasting, and the project delayed in resolving the issue by repairing or rebuilding the structures that were damaged. The RPIU has progressed in resolving the complaint, and, the completion of the outstanding activities is covered in the action plan discussed below. The World Bank is in the process of closing the case with the client. ii. The second case is related to people who were affected by backwater flooding from June 2018 that resulted in negative impacts on marshland, structures and crops. The project divided the affected area into three RAPs and has completed compensation of one of the three RAPs. The NELSAP RPIU is in the process of valuation of properties covered in the outstanding two RAPs and will thereafter present the budget to RPCL for provision of budget to pay the PAPs. The RPIU and RPCL have committed to complete this process by the end of March 2021. g. Environmental and Social Safeguards action plan:  NELSAP and RPCL managements have committed to implement an Action Plan that has been agreed with the Bank aimed at remedying key outstanding safeguards non compliances, and strengthening NELSAP’s capacity and processes to implement/enforce the implementation of the project’s environmental and social safeguards obligations in accordance with the commitments in the Financing Agreement, the project Agreement and the project Implementation Support Agreement (see Actions Table attached in Annex 2).  NELSAP and RPCL have already completed urgent actions which were needed ahead of the consideration to extend the Closing Date. In addition, RPCL and NELSAP management have committed to complete other critical actions progressively and by March 2021.  Given the critical and sensitive nature of these actions, their timely and satisfactory completion is needed to proceed further with civil and electro-mechanical works. RPCL and NELSAP RPIU have agreed to ensure that further work on the CP1 (civil) and CP2 (electromechanical) contracts is linked with completion of the respective contractors’ actions under the Action Plan (including by exercising contractual remedies to stop works, if needed), and to communicate with the contractors accordingly. Compliance with these requirements will be monitored using virtual supervision, frequent meetings and a remote supervision system to be installed, to supplement reports from the Owners Engineer and NELSAP. h. Component A4 (Owners Engineer (OE) Contract): The contract for Design and Construction Phase and Post Construction Phase was signed on Nov 7, 2014 as a Time-based contract. The initial contract was extended up to December 2020 and NELSAP is working on a further extension which will be submitted to the World Bank’s for clearance. As OE, the Consultant is required to administer the contractual responsibilities and obligations of the Client for engineering, supervision, erection and construction to the extent allowed for both CP1 and CP2 contract including certification of payments. Additionally, commissioning tests and works completion inspection are The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

required to be witnessed by the OE including coordination on assistance in conflict resolution between NELSAP and Contractors. The OE is also working on the development of the Emergency Preparedness Plan, Operation and Maintenance Plan and the Instrumentation Plan. The performance of the OE needs improvement particularly in the area of contracts management and working with NELSAP and the contractors to minimize referral of cases to the Dispute Board and keep project progress on track by following Standard Operating Procedure (SOP) which is part of the project Implementation Manual. NELSAP has committed to work continuously with the OE to strengthen the management of the construction contracts. For example, NELSAP has already instructed the OE to start invoking the contractual clauses related to the employer correcting defaults at the cost of the contractor. i. Component B (Transmission lines and substations funded by AfDB and others): Construction works on the three lines and associated Substations are ongoing: i. On the Rwanda side, engineering design is nearing completion while the procurement of materials, soil investigation activities and erection of foundations is in progress. Construction of Bugesera substation and extension of Shango substation is estimated at 80 percent complete. The overall progress of the transmission project in Rwanda is 32 percent. The project was expected to be completed in December 2020; however, the completion date is now expected in February 2021. Further delays are anticipated due to COVID-19 impacts which has slowed the logistics of materials delivery as well as human remobilization since January 2020. Given that portions of the lines for Regie de Production et de Distribution d’eau et d’elelectricite (Water and Electricity Production and Distribution Board “REGIDESO”) of Burundi and Tanzania Electric Supply Company Limited (TANESCO) of Tanzania will be constructed in Rwanda territory, respective land for associated towers must be compensated. PAPs in Rwanda of both the Tanzania and Burundi lines have been compensated fully by the Energy Development Corporation (EDCL) of Rwanda. For the Rwanda line, compensation of the PAPs is at 86.7 percent. ii. For Tanzania, overall project progress stands at 32 percent. Procurement of materials is in progress and towers foundations are under construction. The works were originally scheduled to be completed on November 28, 2020 but are delayed and are now expected to be completed in 28 February 2021. iii. Construction of the Rusumo Burundi line is in progress while the civil works at the Muyinga substation estimated is at 90 percent completion. The Burundi transmission line is expected to be completed in January 2021, but this date is likely to be delayed further due to COVID-19 impacts. Given that the transmission lines are scheduled to be completed in mid-2021 while the power plant is scheduled to be completed by September 2022, the transmission component is not in the critical path of the project completion/commissioning. 8. Disbursements: As at December 11,2020, the project has disbursed 59.31 percent of the IDA proceeds (US$187.9 million). The disbursement rate has improved over the last 14 months from 44 percent in September 2019. Since work are now progressing, disbursements are expected to pick up pace. Disbursement estimates have been revised to reflect the updated project schedule. 9. The project has no outstanding audit reports.

II. DESCRIPTION OF PROPOSED CHANGES

10. Proposed changes and rationale: The team proposes an extension of the project closing date from December 31, 2020 to March 31, 2023. The restructuring is based on requests received from the borrowing countries dated June 26, 2020 (Rwanda), July 10, 2020 (Burundi) and October 30, 2020 (Tanzania). This would ensure completion of all activities under the project and ensure achievement of the project's PDO. The proposed change is based on the revised construction schedule and also builds in limited additional time for possible delays from recent surges in the ongoing COVID-19 pandemic The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

situation. There continues to be risk of further delays if the pandemic situation extends, but this can only be evaluated depending on how the situation unfolds in the next 6-9 months.

III. SUMMARY OF CHANGES

Changed Not Changed Loan Closing Date(s) ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S)

Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-52950 Effective 31-Dec-2020 31-Mar-2023 31-Jul-2023 IDA-52960 Effective 31-Dec-2020 31-Mar-2023 31-Jul-2023 IDA-H8720 Effective 31-Dec-2020 31-Mar-2023 31-Jul-2023 IDA-H8730 Effective 31-Dec-2020 31-Mar-2023 31-Jul-2023 30-Sep-2010, 31- TF-57297 Closed 30-Jun-2009 Dec-2011, 31-Oct- 2012, 01-Aug-2013

OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES

Change in Disbursement Estimates Yes

Year Current Proposed 2014 8,000,000.00 0.00

2015 63,000,000.00 8,949,928.44

2016 75,000,000.00 9,328,260.88

2017 82,000,000.00 31,346,177.86

2018 80,000,000.00 14,546,774.38

2019 32,000,000.00 73,264,839.90

2020 0.00 50,422,709.50

2021 0.00 55,000,000.00 The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

2022 0.00 61,000,000.00

2023 0.00 12,880,000.00

2024 0.00 0.00

. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Annex 1: Environmental and Social Safeguards Implementation

1. This Annex provides more information on implementation of Component A3 of the project (Social and Environmental Impacts mitigation) and environmental and social safeguards under the project.

2. Component A3 - Social and Environmental Impacts mitigation (US$22million): This component of the project includes financing the ESMP and the (RAP) including cash compensation to approximately six hundred sixty four (664) project affected households and implementation of the associated LRP and the LADP.  RAP: The RAP was designed to cover the impacts related to the dam and power plant on land used for agricultural, residential, and business purposes, noted above, which includes 441 households in Rwanda and Tanzania impacted by flooding of arable marshland in an area up to 5 km upstream of the dam site along the banks of the .  Implementation of the RAP vis-a-vis impacts on the dam and power plant is complete. Implementation of the RAP visa-vis the operational flood level was scheduled to be implemented in year four of the project. This action is delayed. Demarcation of the flooding area commenced in late-2020 and verification of the PAPs is currently expected to start in the first quarter of 2021.  Additional involuntary land acquisition has been required during the project. These impacts and their mitigation measures have been detailed in addenda to the project RAP. These instances of land acquisition have not complied with OP 4.12. In one case land was acquired and utilized before a RAP was prepared and in all cases payment of compensation was initially not in line with the policy. This latter shortcoming has been remedied. 1. Social impacts of blasting: The PIU received 250 grievances from households in Rwanda and Tanzania in 2018. The grievances mainly related to damage to structures owned by project affected people (PAPs) as far as 900 meters away from the powerhouse. Response measures were put in place: rehabilitation or construction of the most at- risk structures (some of which are still under implementation) and the establishment of a Memorandum of Understanding (MOU) between NELSAP and the affected community which lays out the process for repair of the remaining houses. Processes for onwards consultations were documented in the blasting management plans. The implementation of measures to address impacts to the at-risk structures have been delayed due to administrative and procurement processes and also delays in releasing funds to contractors. 2. LRP: The LRP was designed to provide agricultural and non-agricultural training for households affected by the resettlement in Rwanda and Tanzania.  In Rwanda, implementation of the LRP included six agricultural activities and four non-agricultural activities which benefited a total of 127 PAPs [implemented activities include cattle keeping and diary production (9 PAPs), poultry farming (11 PAPs), pig farming (6 PAPS), modern beekeeping, (3 PAPS), vegetables farming (21 PAPs), mushroom growing (4), hair dressing (3 PAPs), tailoring (10 PAPs), restaurant (5 PAPs), and stock and sale of agricultural commodities (55 PAPs)]. While implementation of these activities is complete, the results have been mixed. Just over a third of the activities are promising, while a third did not yield results and another third are struggling to be sustainable.  In Tanzania, implementation of the LRP included ten agricultural activities and two non-agricultural activities which reached a total of 227 PAPs.[implemented activities include Banana development (41 PAPs), avocado production (8 PAPs), sunflower production (13 PAPs), cattle keeping and diary production (24 PAPs), poultry production (28 PAPs), rabbit farming for commercially improved breeds (30 PAPs), piggery farming (10 PAPs), oat farming (16 PAPS), fishery and fish farming production (22 PAPs), modern bee keeping (8 PAPs), brick The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

making (11 PAPs) and tailoring (16 PAPs)]. The implementation of the LRP has been limited and suffered from delays. A third of the activities remain incomplete and a clear plan for completion by December 2021 is required. Twenty-five percent of the activities have not yielded results. The mixed results are related to delays in procurement, inadequate planning, and external factors such as animal disease. 3. Local Area Development Program (LADP): The LADP was prepared to support social and economic uplift in the broader project area in Burundi, Rwanda and Tanzania. Its design was aimed at sharing benefits through community activities such as community-based integrated watershed development, to improve the diversification of community livelihood and strengthen their organizational capacities.  In Burundi, the LADP consisted of eleven activities including, infrastructure for services and associated training (rehabilitation and extension of two water systems and training of water user associations and construction of health centers), agricultural activities, water shed management, and construction of an office block and youth training centers. Of the eleven activities, four are reported as complete, two are underway with completion expected by December 2020, two water projects have not yet started, and three were cancelled (the reasons for cancellation are not clear and are being probed by the World Bank.  In Rwanda, five activities were approved for implementation including infrastructure for water, a health center, and two feeder roads. Four of the five projects are completed and the last is expected to be completed by December 2020.  In Tanzania, 13 activities were approved consisting of works on schools, health centers, water supply and agricultural activities (four secondary schools and primary schools, construction of two health centers and one dispensary, water supply projects, bee keeping agriculture and livestock development). Only five of these activities are reported as complete, some ongoing, and with some works not yet commenced on others. Changes were made to the activities without prior knowledge of the Bank including the addition of three activities and the financing of two of the original activities by the government. NELSAP RPIU has submitted the final LADP reports for Tanzania, Rwanda and Burundi to the World Bank as part of the urgent actions under the Environment and Social Safeguards Action Plan agreed with the World Bank which were required to be completed by December 3, 2020. The World Bank will review these reports and advise on the next steps to resolution. 4. In summary, the activities under the LADP and LRP have been characterized by weak implementation which has resulted in significant delays in execution. The LADP and LRP activities in particularly, have been marked by: (i) Insufficient attention to social risk management: Only a minority of activities which involved involuntary land acquisition or other social impacts were subject to assessment and preparation and implementation of mitigation measures, as per the project’s Financing Agreement, prior to implementation. The World Bank has had to work closely with the client to undertake land audits to bring involuntary land acquisition or other land use arrangements up to par with World Bank policy; (ii) Inadequate project management: The activities under the LRP and LADP have been implemented with mixed results. Some activities were implemented as envisioned, but some were delayed or subject to cancellations. There has been insufficient scrutiny on the LRP activities that were facing challenges in implementation. Some LADP activities have been cancelled and funds re-channeled without clear documentation of the decision-making process. Some of these changes have significant impacts on the objectives of the program—for example, in Tanzania changes have undermined meeting the objectives related to agricultural productivity. Documentation on consultations is missing or inadequate, and where relevant, the World Bank’s clearance has not been sought. Remedial actions to address these non-compliances and short comings have been agreed in the Environmental and Social Action Plan. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

5. Environmental Safeguards:  The project is rated Environmental category A and has triggered all World Bank Environmental Safeguards Policies (OP 4.01, OP 4.04, OP 4.36, OP 4.09, OP 4.11, OP 4.37). The rating on compliance in the September 2020 ISR is: Environmental Assessment (OP/BP 4.01): Unsatisfactory; Natural Habitats (OP/BP 4.04): Unsatisfactory; Forests (OP/BP 4.36): Unsatisfactory; Pest Management (OP/BP 4.09): Moderately Satisfactory; Physical Cultural Resources (OP/BP 4.11): Moderately Satisfactory; and Dam Safety (OP/BP 4.37): Unsatisfactory. This rating is due to weak compliance with Environmental safeguards policies, environmental and health and safety (EHS) compliance with specifications (including national regulations) and therefore contractual requirements during civils works (especially of CP1 contractor).  Reasons for lack of compliance from the client side includes: (i) Inadequate environmental safeguards supervision and enforcement by NELSAP (RPIU); ii) lack of proper supervision and enforcement by the OE; iii) weak contract management. Reasons for the lack of compliance by CP1 contractor include (i) seeming lack of capacity and understanding of EHS systems to manage works; (ii) non-response to Notices to Correct and to application of contractual remedies. COVID-19 has also exacerbated the situation due to limitation of presence of the OE in site for several months and limited leverage of NELSAP on the CP1 contractor to resolve long standing environmental non-compliance.  Outstanding EHS obligations: The project is located within natural and critical habitats of the Akagera international river which borders Rwanda and Tanzania. Since the beginning of the construction, no biodiversity monitoring has been undertaken on the impacts of the works in aquatic and terrestrial ecosystems; the placement of the rock crusher and rock piles next to the river has caused water pollution; spoil area no technically managed but mainly as a dumping place where materials includes rock, cement, soil, among others; cutting of riparian vegetation without not initiating any restoration effort since the project began; weak health and safety culture which has led to: two accidents (three dead workers; 25 injured, one local man dead), continuing unsafe use of scaffolding which poses an eminent risk to workers working at heights and a lack of appropriate protection measures at the borrow pit; lack of water monitoring plan as agreed in the ESIA and bidding documents; among others. Also, several of the Local development subprojects in the three countries (including water systems, roads, health centers, among others) have started without proper World Bank review and clearance of safeguard instruments.  Dam Safety (Emergency Preparedness Plan (EPP)): The Owner’s Engineer has started to work on the preparation of the Emergency Preparedness Plan, and the RPIU is aware that this should be complete latest a year before the project close. The plan will include a dam-break scenario, analysis of downstream levels and impacts, impact of mal-operation or mal-function of gates, and information on downstream activities along the riverbanks. 6. NELSAP and RPCL managements have committed to implement an Action Plan that has been agreed with the World Bank aimed at remedying key outstanding safeguards non compliances, and strengthening NELSAP’s capacity and processes to implement/enforce the implementation of the Project’s environmental and social safeguards obligations As part of this Action Plan, NELSAP and RPCL have committed to implement specified measures to strengthen the capacity of NELSAP RPIU to implement and monitor the LADP and LRP activities including through additional staff and training of the district/field staff as well as revamping the planning, budgeting and approval processes and monitoring of the activities. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Annex 2: Environment and Social Safeguards Action Plan

Table 2.1 ACTIONS COMPLETED

Action Indicator Timeline Status (December 4, 2020)

1. Communication with community (NELSAP/RPCL) Community engagement in at least the past year has been limited and based on recent discussions the communities are clearly requesting more engagement and information sharing from NELSAP.

Action 1: Recruit a community Evidence of launching of December 1, 2020 Activity uploaded to STEP and approved relations expert with Procurement process. for procurement on December 2. demonstrated experience working in contexts where there is high community dissatisfaction.

Action 2: Submit community Draft plan submitted to the Bank November 25, 2020 Submitted to the World Bank on engagement plan focused on for review December 2, 2020 actions NELSAP will take to engage communities in the short Incorporate World Bank November 30, 2020 term (December 2020 – February comments and adopt plan 2021).

Action 3: Immediately engage Minutes, photographs and other December 3, 30, 2020 Virtual meeting held with Tanzania PAPs communities by sharing and evidence of community on November 30, 2020 soliciting information on: (i) engagement surface blasting; (ii) approach to Meeting held in Rwanda during resolving blasting and back-water November 2020 flooding related grievances; and The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

(iii) any other matters raised by Minutes of meetings submitted to Bank communities.

2. Accident at Borrow Pit (NELSAP/RPCL/CP1) Action 1: Immediately implement Submit report and pictorial December 1, 2020 NELSAP hired six security guards (three safety measures and install evidence of completion of for day and three for night duty) to permanent closure of the borrow implementation of agreed safety ensure 24/7 safety cover at the borrow pit. measures agreed pit

Fencing has commenced and in progress. Pictures submitted to the World Bank 3. Blasting (NELSAP) Action: Submit the revised Receipt of revised approach note November 25, 2020 Submitted to the World Bank; the World approach note detailing process Bank provided comments on December for addressing impacts of the 3, 2020; NELSAP to submit copy with structures covered by the MOU. comments incorporated by December 7, 2020 4 Land use: (NELSAP) Action: Submit map and summary Receipt of documentation November 25, 2020 Land use incorporating World Bank document with details of land use comments submitted on December 2, arrangements under the project. 2020

5 Livelihood Restoration Plan: (NELSAP) Action: Submit final report for Receipt of document December 3, 2020 Submitted to World Bank on December Tanzania and Rwanda providing 3, 2020 status of all activities undertaken including beneficiaries, results (directly related to objectives), and financial summary.

6 Local Area Development Plan: Receipt of report Burundi and Tanzania Report submitted (NELSAP) December 3, 2020 to World Bank on December 1 and 2, 2020 respectively The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Action: Submit final report for Tanzania and Rwanda providing Rwanda submitted on December 3, 2020 status of all activities undertaken including beneficiaries, results (directly related to objectives), and financial summary.

Table 2.2. TIMEBOUND ACTIONS TO BE COMPLETED

Action Indicator Timeline Completion Communication with community (NELSAP/RPCL) Complete recruitment February 1, 2021 of #1 Action 1: Recruit a community relations expert with above demonstrated experience working in contexts where there is high community dissatisfaction.

(Current Status: Request for recruitment of expert and associated additional budget submitted to RPCL Board on December 2, 2020 for approval. World Bank to confirm whether any further changes are required on Terms of Reference - ToR). 7 Project Management Capacity: (NELSAP/ RPCL) There are significant weaknesses in project management capacity that has led to persistent non-compliance of social and environment safeguards commitments. It is critical that this capacity be revamped to remedy the non-conformities and restore and maintain the project in compliance status going forward. Submit draft plan to World Bank for January 15, 2021 Action 1: Submit to the World Bank for review, a staffing plan review. that is aligned with the tasks required to implement relevant January 29, 2021 The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

project aspects for the two years of the extension. Note: World Bank’s comments immediate activities are required to address emerging risks, incorporated, plan has been adopted specifically: immediate recruitment of a communications and implementation started. relations expert (see above table). Staffing plan should contain March 19, 2021 at least: (i) one senior social specialist, (ii) community Complete implementation of plan, development officers for each country [district level], (iii) including recruitments of all agreed Environmental Expert, (iv) Health &Safety expert additional personnel. March 26, 2021 Submit evidence of training to the Action 2: LADP/LRP – Train district staff (CDO, Environmental World Bank officer, DEO, Procurement/FM) to ensure they have the knowledge on the project design, and implementation and monitoring modalities (SoP’s).

8 Component A3: (NELSAP/ RPCL) LADP and LRP Planning, Budgeting and approval processes There are no documented operating procedures with accountabilities and timelines for the LADP and LRP sub- projects (e.g. work planning, budgeting, approval processes and monitoring), which appears to be contributing to poor management of LADP/LRP by NELSAP and poor implementation by the districts. Revised PIM submitted to the World January 31, 2021 Action 1: Revise and update the Project implementation Bank for review. Manual (PIM) to include standard operational procedures for the LADP and LRP sub-projects (planning, implementation, World Bank comments incorporated, February 26, 2021 monitoring, and fiduciary processes) and submit to the World and revised PIM adopted; Bank. No new activity should be commenced until the revised implementation started based on PIM is found satisfactory to the World Bank. revised PIM. January 30, 2021 The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Action 2: Develop and submit annual work plans1 for LADP/LRP Annual RPCL approved work plans activities (concurred by RPCL). submitted to the World Bank. January 30, 2022 January 30, 2021 Action 3: Revamp RPCL approval process (for activities and the Submit RPCL approval processes release of funds) to align with annual work plans and eliminate including details on standards for approval delays. timeframes for approving tasks, budgets, and for disbursing funds to support work plans.

9 Blasting damage:(NELSAP) Action 1: Complete repair of three remaining priority Submit completion report with February 26, 2021 structures. pictorial evidence.

Provide evidence of signed January 15, 2021 Action 2: Complete livelihood assessment related to damage assessment consultancy contract on the priority structures and make payments on related compensation. Submit final assessment to the World February 12, 2021 Bank. Feb 26, 2021 Submit proof of payment of compensation 10 Accident at Borrow Pit : (NELSAP/CP1) Action 1: Long-term Safety Plan developed. Submit draft long-term safety plan. January 15, 2021

Incorporate World Bank comments January 29, 2021 and submit revised final plan.

1 Work plan documentation to be agreed upon with the World Bank but would include documented evidence of community engagement on options (including all discussions held) and agreement. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Action 2: Long term safety plan and Restoration of sand Submit report and pictorial evidence February 26, 2021 borrow pit. of restoration of borrow pit 11 Non-compliances and notices to correct (NCR’s): (NELSAP/CP1) Submit report and pictorial evidence January 29, 2021 Action 1: Close all open non-compliances and notices to showing closure of all non- correct. compliances and NCR’s

Submit to the World Bank a strategy January 15, 2021 agreed by NELSAP, RPCL Action 2: Document procedure to be used going forward to management and OE, that will be ensure non-compliances and NCR’s are closed in reasonable applied to ensure that all the NCRs of timeframes. CP1 contractor are adequately and speedily remedied and to ensure that the CP1 work scope strictly complies with the environmental, health and safety obligations going forward. The strategy should be in accordance with contractual terms. 12 Water quality monitoring system: (NELSAP/ RPCL/ CP1) Action: Submit monitoring plan/program for water quality Submit draft plan to the World Bank January 15, 2021 management, indicating sites, parameters and responsibilities for review. for remediating issues Complete plan incorporating World February 12, 2021 Bank’s comments and start implementation.

13 Hazardous and organic waste Management: (NELSAP/CP1) Action 1: Close the NCR for CP1 storage facilities for which as a Evidence of closing of NCR submitted January 15, 2021 notice to correct has been sent out to. to the World Bank. The World Bank AFR RI-Regional Rusumo Falls Hydroelectric Project (P075941)

Action 2: Complete contracting process of a company to Share ToR’s of the waste disposal December 15, handle disposal of current and future waste. company. 2020

Share evidence of signed contract January 15, 2021 between CP1 and disposal company. 14 Biodiversity monitoring: (NELSAP) Action: Initiation of the Biodiversity monitoring system and the Submit evidence of a contract signed January 29, 2021 action plan. with contractor to perform biodiversity monitoring.

Begin implementation and reporting. February 15, 2021 15 Landscape restoration plans: (NELSAP/CP1) Action: Preparation of a landscape restoration plan on Submit draft plan to the World Bank January 29, 2021 degraded areas along riverbank, spoil areas, and others as for review. agreed with the Bank. 16 Local Area Development Plans: (NELSAP) Action: All outstanding ESMP’s for LADP projects should be Submit complete ESMP’s January 29, 2021 completed, reviewed and cleared by the World Bank and incorporating World Bank;s disclosed at the NELSAP website. comments. 17 CP1 Workers Camp conditions: (NELSAP/CP1) Resolve issues raised in the CP1 workers camp to improve Video with dates of initiation and January 29, 2021 living condition for workers (See table in Annex 1) completion of works