Language: ENGLISH Original: French AFRICAN DEVELOPMENT FUND PROJECT : PROJECT TO INTERCONNECT THE POWER GRIDS OF THE CENTRAL AFRICAN REPUBLIC AND THE DEMOCRATIC REPUBLIC OF CONGO FROM THE BOALI HYDRO-POWER SYSTEM –PHASE 1 MULTINATIONAL: CENTRAL AFRICAN REPUBLIC AND DEMOCRATIC REPUBLIC OF CONGO PROJECT APPRAISAL REPORT Date : August 2012 Team Leader J. B. NGUEMA-OLLO ONEC.1 3072 I. KONATE ONEC.1 3418 S. ASSYONGAR-MASRA ONEC.1 3541 D. IBRAHIME ONEC.1 2549 ONEC.3 M.A. BEZZAOUIA 3854 Team Members Cons. R. KITANDALA CDFO 6338 Appraisal Team C. DJEUFO CMFO 6809 J. BISSAKONOU CMFO 6807 M. YARO ORPF. 2 2790 Sector Division Manager A. ZAKOU ONEC. 1 2211 CFFO Resident Representative M. SANGARE CFFO 7160 CDFO Resident Representative V. ZONGO CDFO 6333 Sector Director H. CHEIKHROUHOU ONEC 2034 Regional Director M. KANGA ORCE 2060 A.MOUSSA ONEC. 1 2897 P. DJAIGBE ONEC. 1 3961 N. NDOUNDO ONEC. 1 2725 I TOURINO SOTO ONEC. 3 2533 R. ARON ONEC. 3 2792 A. FOURATI ONEC. 3 3854 ONEC. 1 3854 Peer Reviewers O.T. DIALLO Cons. K.DIALLO ORCE 2578 O. FALL OPSM 3820 S. WAKANA CDFO 6350 S. B. TOUNKARA CMFO 6822 C. AHOSSI CMFO 6811 C. BOLLO TEMA CMFO 6813 TABLE OF CONTENTS 1 STRATEGIC THRUST AND RATIONALE ................................................................... 1 1.1 Project Linkages with the Two Countries’ Strategies and Objectives ....................... 1 1.2 Rationale for Bank’s Involvement ............................................................................. 1 1.3 Aid Coordination ....................................................................................................... 2 2 PROJECT DESCRIPTION ................................................................................................ 3 2.1 Project Components ................................................................................................... 3 2.2 Technical Solutions Adopted and Alternatives Explored .......................................... 4 2.3 Project Type ............................................................................................................... 5 2.4 Project Cost and Financing Arrangements ................................................................ 5 2.5 Project Target Areas and Beneficiaries...................................................................... 7 2.6 Participatory Approach .............................................................................................. 7 2.7 Bank Experience and Lessons Reflected in Project Design ...................................... 8 2.8 Key Performance Indicators ...................................................................................... 8 3 PROJECT FEASIBILITY ................................................................................................. 9 3.1 Financial and Economic Performance ....................................................................... 9 3.2 Environmental and Social Impacts .......................................................................... 10 4 PROJECT IMPLEMENTATION .................................................................................... 12 4.1 Implementation Arrangements................................................................................. 12 4.2 Project Monitoring ................................................................................................... 14 4.3 Governance .............................................................................................................. 15 4.4 Sustainability............................................................................................................ 15 4.5 Risk Management .................................................................................................... 16 4.6 Knowledge Building ................................................................................................ 16 5 LEGAL FRAMEWORK ................................................................................................. 17 5.1 Legal Instrument ...................................................................................................... 17 5.2 Conditions Associated with Bank’s Intervention .................................................... 17 6 RECOMMENDATION ................................................................................................... 18 Annex I. CAR Comparative Socio-Economic Indicators Annex II. DRC Comparative Socio-Economic Indicators Annex III. Table of ADB Portfolio in the Two Countries Annex IV. Key Projects Related to the Development of the Two Countries Annex V. Map of Project Area CURRENCY EQUIVALENTS, WEIGHTS AND MEASURES, ACRONYMS AND ABBREVIATIONS October 2011 UA 1 758.614 XAF UA 1 1.56162 USD UA 1 1.15650 EUR UA 1 9.92398 CNY Fiscal Year 1 January – 31 December WEIGHTS AND MEASURES M Metre 1 m V Volt 1 V Cm Centimetre 0.01 m KV Kilovolt 1000 V Mm Millimetre 0.001m kVa Kilovolt-ampere 1000 VA Km Kilometre 1000 m W Watt 1 W m² Square metre 1 m² kW Kilowatt 1000 W cm² Square centimetre 0.01 m² MW Megawatt 1000 kW mm² Square millimetre 0.001 m² GW Gigawatt 1000 MW km² Square kilometre 1000 000 m² kWh Kilowatt-hour 1000 Wh Ha Hectare 10 000 m² MWh Megawatt-hour 1000 kWh Kg Kilogramme 1 000 g GWh Gigawatt-hour 1000000 kWh T Tonne 1 000 kg Kgoe Kilogramme of oil equivalent ACRONYMS AND ABBREVIATIONS ADB African Development Bank ADF African Development Fund ACER Central African Rural Electrification Agency AFD French Development Agency ARSEC Central African Autonomous Electricity Regulatory Agency BCFAF Billion CFA Francs BDEAC Development Bank of Central African States CAPP Central Africa Power Pool CAR Central African Republic CSP Country Strategy Paper DRC Democratic Republic of Congo DSFC Financial and Accounting Services Directorate ECC Energy Consumption Control ECCAS Economic Community of Central African States EIRR Economic Internal Rate of Return ENERCA Enérgie Centrafricaine – (Central African Energy Utility) EU European Union FIRR Financial Internal Rate of Return GDP Gross Domestic Product GEF Global Environment Facility HV High Voltage IEC Information, Education, Communication IEPF Institute of Energy and the Environment of La Francophonie LV Low Voltage MDG Millennium Development Goals MV Medium Voltage NGO Non-Governmental Organization NPV Net Present Value PEFA Public Expenditure and Financial Accountability PRGSP Poverty Reduction and Growth Strategy Paper PRSP Poverty Reduction Strategy Paper MUA Million Units of Account UNDP United Nations Development Programme UPDEA Union of Producers, Transporters and Distributors of Electric Power in Africa WB World Bank i GRANT INFORMATION Client Information Central African Republic Donees Democratic Republic of Congo CAR Ministry in charge of Energy Executing Agencies DRC Ministry in charge of Energy FINANCING PLAN PHASE 1 Amount in UA Million Sources Total CAR DRC Instrument TOTAL ADF 35.28 29.73 5.55 Grant ADF Country Share 3.60 1.67 1.93 Grant ADF Regional Share 31.68 28.06 3.62 Grant Total Project Cost 35.28 29.73 5.55 ADF KEY FINANCING INFORMATION Grant Currency Unit of Account (UA) Interest Type Not Applicable Interest Rate Margin Not Applicable Commitment Fee Not Applicable Service Charge Not Applicable Interest Type Not Applicable Tenor Not Applicable Grace Period Not Applicable FIRR 26.04% NPV UA 101.10 million EIRR 45.36% NPV UA 229.98 million TIMEFRAME AND MILESTONES Concept Note Approval 7 September 2011 Project Approval 19 September 2012 Effectiveness 20 November 2012 Completion 30 June 2017 Last Disbursement 31 December 2017 Last Reimbursement Not Applicable ii PROJECT SUMMARY 1 Project Overview: The Project for interconnection of the CAR and DRC power grids from the Boali hydro-power system is an anchor operation which will help to strengthen bilateral economic cooperation and sub-regional integration. It will help to build a section of the electrical system of CAR and DRC border areas and to supply electricity to these areas, which are characterized by an infrastructure deficit. Apart from improving power service quality which will benefit all users, the project will connect 29 000 new subscribers. The project will be implemented in two phases over a 48-month period starting from 2012. Phase 1, which is the subject of this report, will cover the rehabilitation and strengthening of power generating units, transmission lines, transformer substations and distribution grids. It will concern mainly the CAR but also the localities of Zongo and Libenge in DRC. Phase 2 will essentially concern the high voltage line linking Zongo to Libenge. The total project cost is estimated at UA 59.50 million, of which UA 35.28 million for Phase 1. ADF intervention in CAR falls under an Electricity Infrastructure Emergency Rehabilitation Programme (PURCE) which is also supported by the World Bank, the French Development Agency and China. It comprises energy efficiency measures which will help to (i) reduce line losses (rehabilitation of power grids, switchover from 63 to 110 kV, etc.); and (ii) increase electricity production without increasing the reservoir capacity (rehabilitation of hydro-power plants). These measures will reduce greenhouse gas emissions because they increase the quantity of renewable energy and reduce self-generation by individuals and ENERCA’s thermal generation. Equipping the Boali 3 power plant for power generation will provide more renewable energy and reduce the use of thermal power plants to cover the generation deficit. It is an exemplary climate change adaptation measure which will optimize hydro-power