FOR PUBLIC DISCLOSURE Aide Mémoire Ghana : Implementation Support Mission Ghana Electricity Development and Access Project (GEDAP) - P 074191 May 9th – 13th, 2017 1 th th Public Disclosure Authorized The World Bank conducted a mission in Ghana from May 9 – 13 , 2017. The purpose of the mission was to carry out implementation support for the Ghana Electricity Development and Access Project (GEDAP). The team acknowledges the hospitality and collaboration of the Project Implementation Unit of the GEDAP project in carrying out the mission successfully, with all the proposed meetings with the related stakeholders and overall logistics of the field visits to leader of the PIU, Mr. Andrew T. Barfour. A detailed list of people met is presented in Annex I. The main activities of the mission were to supervise the operation of the renewable energy component under GEDAP, which has about five mini-grids in operation in towns located on several islands of the Volta Lake. The agenda followed is presented in Annex II. Public Disclosure Authorized This Aide-Mémoire summarizes the findings and recommendations of the mission. In line with the Bank’s access to information policy, this Aide Memoire will be disclosed as public. MAIN RESULTS o The mission visited the mini grid projects, which were constructed with the quality equipment with sound warranties, in places of difficult access. The contractors had to manage complex logistics to deliver equipment and materials to the sites, carry out civil works, and overall installation, which they managed well and involved communities as much as possible during different stages of mini-grids construction and installation. o The team met with the beneficiaries of GEDAP (Renewable energy component), and these Public Disclosure Authorized households are receiving electricity for the first time in the remote islands of the Volta Lake region. The beneficiaries expressed their gratitude to the Ghana Government and the World Bank for being part of these pilot projects on access to energy, and for opening new opportunities they had never envisioned before and this has been made possible by the mini grid systems operating since July 2016. o The provision of electricity service has been of good quality and continuous over the last eleven (11) months. This has enabled the communities to abandon kerosene lamps, candles and batteries, and to replace them with newer appliances, such as light bulbs (LEDs), refrigerators, freezers, televisions and cell phone chargers. The payment system is based on a prepaid system managed locally by the contractor, Trama-Techno Ambiental of Spain and local associates, hired by the Ministry of Energy (MOE). The contractor provides operations and maintenance (O&M) support and community interface. The customers pay their Public Disclosure Authorized electricity bills at the beginning of the month as per their agreed tiered services and have the 1 The mission team was led by Shinya Nishimura (Senior Financial Specialist, Team Leader), joined by the following team members: Kennedy Fosu (Communications Officer), Sunita Chikkatur Dubey (consultant), Demba Balde (Senior Social Development Specialist), and Dante Mossi (Senior Operations Officer, co-Team Leader). 1 FOR PUBLIC DISCLOSURE choice of top-up if the credit runs out before the month ends. The operation would be transferred to ECG or NEDCO once the contract period ends. o Ghana has applied the same universal tariff to the off-grid systems as the grid connected consumers, as a matter of policy. This has left some financial gaps during the first year, which is expected to be covered by the inclusion of new customers above the lifeline value. o The GEDAP team will explore potentially scaling up the mini grid model based on this pilot programs to other island communities and remote communities with the support of IDA and other funding sources that may be available. It is estimated the area holds some 150,000 households, and there are another 150,000 households on inaccessible areas around Lake Volta. If these households gain electricity access, through scale up of mini grid and off grid solutions like rooftop solar, Ghana’s access rate is expected to increase from about 84% to 94%. o The World Bank team also identified below issues and discussed them with the GEDAP team. The World Bank team is of the view that these issues need to be addressed before such scale up could be made feasible: Electrification Strategy – A clear strategy on how to achieve universal access by 2030 would ensure that we can identify and map what measures and investments are required to achieve that target. The team proposes that the preparation/update of such strategy, utilizing geospatial mapping, be included in the upcoming proposed Technical Assistance loan; Public vs PPP Implementation Models – The mini grid systems in these communities are financed by concessional funds and owned/managed by the Ministry of Energy. This model would not be feasible if the model is to be scaled up to other communities. The team will support the Ministry of Energy to explore different business models to make the scheme sustainable, including review of the affordability, so that it can be replicated to other energy-deprived islands and remote communities; Tariff – Application of universal tariff and the lifeline structure resulted in a shortfall of revenue that does not cover cost fully. A sustainable tariff policy and support mechanism should be assessed with the objective of achieving universal access while ensuring operational and financial sustainability. 2 FOR PUBLIC DISCLOSURE I. PROGRESS IN PROJECT IMPLEMENTATION 1. The mission visited four communities in the islands of northern Lake Volta, in the Brong Ahafo and Volta Regions. These remote islands, reachable only by small motorized boats, were created when Akosombo Dam was built in 1965. Lake Volta flooded the area, which in turn cut them from roads and the possibility of grid extension. 2. The trip from Accra to Kete Krachi takes about eight hours by car, and a ferry crossing. From this city, it was possible to visit the communities of Aglakope, Atigagome and Wayokope, then the mission traveled to Dambai, from where it took another boat to visit the community of Kudorkope. Figure 1: Area of work 3 FOR PUBLIC DISCLOSURE Table 1: Sites visited Aglakope Atigagome Wayokope Kudorkope Total Households 116/124 74/70 50/50 161/175 401/419 (Connected/Planned) Capacity installed 48 KW 22.5 KW 22.5 KW 54 KW 150 KW Commercial users A customer 5 5 expressed interest New connection Some 10 new 10 new arrivals 12-22 houses 80%, 100% 86 request households to since project since project within the end of be added in the the month expansion of the project Other 57 percent are literate 3. The communities have been served for about eleven (11) months by the mini grid systems. This project is a pilot within GEDAP, which included a component in renewable energy electrification, with mini-grids and a credit scheme for home solar systems. 4. The mini-grid consists of a solar power plant, battery storage, with a backup generator, and a low voltage distribution line. All homes have prepaid meters, and collection is done locally, with a strict policy of disconnection when credits expire, and penalties for those who attempt some illegal connection. 5. The visit to most of the sites started with a tour of the power plant, where there was an opportunity to meet with the community leaders and beneficiaries. Most of the communities spoke in Dangbe and Ewe, and one in Twi. The economies of these communities are based on fishing, some farming, cattle and trading with the other communities. 6. Benefits. The pilot program has generated opportunities for improved education of children, refrigeration of their fish catch, improved night illumination leading to elimination of fatal snake bites, as well as to develop new businesses such as shops, and dress-making with an upcoming electrical sewing machine and ironing. Another unintended benefit is that some teachers have moved to the islands with uninterrupted electricity service, thus increasing the overall teaching days. The communities and the operator are also discussing the procurement of productive-use equipment such as solar milling machines. 7. Tariffs. The tariff revenue does not cover all the mini-grid’s investment and operation costs. All residential customers are households on the lifeline tariff. It is important to bring in higher-paying customers to generate additional revenues, although in Kurdokope, with the largest system, there are now five new commercial customers. Ideas as bringing telecommunication towers, creating community cooperatives that can pump water for a community faucet for a fee, or fostering the upgrading of the local businesses to commercial rates, were discussed. ECG and 4 FOR PUBLIC DISCLOSURE NEDCo would have to explore these and other models and discuss them in the upcoming when they take-up operations. 8. Operation and Maintenance. The mini-grid assets will be transferred to the utilities Volta River Authority VRA), Electricity Company of Ghana (ECG) or the Northern Electricity Distribution Company (NEDCO) as is the case for all other rural electrification investments in the country. The utilities were all actively involved in the tests and commissioning of the mini-grid systems. It is expected that the final details of the transfer will be ironed out during the upcoming twelve months. 9. Environmental safeguards. The Environmental specialist could not join the mission, but will conduct a desk review by mid-June 2017. The specialist has requested GEDAP team to provide the relevant documentation on safeguard compliance. The mission did note that the land donated by the community for the power plant was chosen not only for the suitability of sunlight, but also avoid or minimize cutting any trees. 10. Last transaction under IDA 47300.