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LAO PDR: Implementation Support for the Rural Electrification Program (REP)
REP I: IDA Grant Number H2180-LA (P075531) and GEF Grant Number TF056700-LA (P080054)
REP I AusAID Additional Financing: Grant Number TF96084 (P119715)
***
REP II: IDA Grant Number H5380-LA (P110978)
REP II GEF Additional Financing: GEF Grant Number TF098662-LA (P117177)
May 23-31, 2011
AIDE MEMOIRE
1. A joint World Bank/IFC/AusAID/Norad team1 carried out an implementation support mission in
Vientiane and Champasak province, Lao PDR from May 23-31, 2011 to assess the overall progress of
REP I and II and the implementation performance of various activities under both the EdL and MEM
components towards achievement of the development objectives and outcome targets set out in the
respective results frameworks.
2. The team met with key government agencies including the Department of Electricity (DOE)
under Ministry of Energy and Mines (MEM), and Electricité du Laos (EDL). (See Annex 1 for a list of
persons met). The team wishes to record its appreciation to the management and staff of these agencies
for the cooperation and hospitality extended to its members, and in particular, to the Provincial
Department of Energy and Mines (PDEM) and EdL Branch in Champasak for a well organized and
informative field visit to on- and off-grid villages in Champasak province. This Aide Memoire
summarizes the findings of the mission and is subject to confirmation by the Bank management.
3. As part of the Bank’s new Access to Information policy, the team discussed with the Client
whether the Aide Memoire would be publicly disclosed. It was agreed that this Aide Memoire would be
disclosed.
4. The team proposes that the next implementation support mission take place in November/
December 2011 to coordinate with the submission of the quarterly progress reports. In this regard, the
team reminded EdL and DOE of the importance of submitting timely quarterly progress reports by EdL
and DOE as per the Financing Agreements. The Bank looks forward to receiving the next progress
reports for April to June 2011 by August 15, 2011.
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The Bank team was co-led by Ms. Julia Fraser (Sr. Financial Analyst, incoming TTL) and Mr. Jie Tang (Sr.
Energy Specialist, outgoing TTL) and comprised: Mr. Sombath Southivong (Senior Infrastructure Operations
Officer), Ms. Oithip Mongkolsawat (Sr. Procurement Specialist), Ms. Kannathee Danaisawat (Financial
Management Specialist), Ms. Helene Carlsson Rex (Senior Gender Specialist), Mr. Satoshi Ishihara (Senior Social
Development Specialist), Mr. Bunlong Leng (Environmental Specialist), Mr. Panos Vlahakis (Power Engineer,
Consultant), and Ms. Patricia Ramos (Junior Infrastructure Specialist). The AusAID team included Mr. Alex Marks
(AusAID Program Manager), Mr. Mone Sysavath (Program Manager), and Mr. James Muir (AusAID Consultant).
The IFC team included Mr. Val Bagatsing (Senior Country Officer) and Mr. Phongsavanh Phomkong (Investment
Officer) for the EdL on grid component, and Mr. James Morley (Investment Officer), Ms. Xuan-Dung Thi Duong
(Operations Officer), Mr. Sol Castro (IFC consultant) and Mr. Sivath Sengdouangchanch (IFC Legal consultant) on
the DOE off-grid component on PPP micro hydro. The Norad Representative was Ms. Elisabeth Clemens (Senior
Advisor). Logistical support was provided by Ms. Souksavanh Sisoulidavanh.
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*********************
Part A: Implementation Support of Rural Electrification Project Phase I
and AusAID Additional Financing (REP I)
Overview of Project Status
Original Project Cost
Estimate:
US$36.27 million Board Approval Date: April 27, 2006
Revised Project Cost
Estimate:
US$50.88 million IDA Effectiveness Date:
August 30, 2006
Original Credit Amount: IDA Grant H218
US$10 million AusAID Signing/
Effectiveness Date:
October 1, 2010 /
October 14, 2010
Original GEF Amount: GEF TF56700,
US$3.75 million Original Closing Date: March 31, 2010
AusAID Additional
Financing Amount:
TF096084
US$9.42 million Formally Revised
Closing Date:
March 31, 2012
Environmental Category: B Number of Closing Date
Extensions:
1
IDA Disbursement %
(as of 5/29/2011)
92.8% of credit amount
in USD Project Develop.
Objective Rating:
Satisfactory (PDO);
Satisfactory (GEO)
GEF Disbursement %
(as of 5/29/2011)
100% of grant amount in
USD Implementation
Progress Rating:
Satisfactory
AusAID Disbursement %
(as of 5/29/2011)
62.2% of the grant
amount in USD
1. Project Development Objectives (PDOs). The REP I is the first phase of the Rural Electrification
Adaptable Program Loan (APL) Program. The PDOs of REP I are to (i) increase access to electricity of
rural households in villages of targeted provinces; and (ii) improve financial performance of the power
sector. Global Environment Objectives (GEOs) of REP I are (i) substantial adoption of off-grid
renewable energy in Government’s rural electrification program; and (ii) increased efficiency of energy
supply by EdL and consumption by customers, resulting in greenhouse gas emission reductions as
increased hydropower exports substitute for thermal power production in Thailand.
2. Additional financing of US$9.42 million by the Australian Government through the Bank-
administered Mekong AusAID Energy Fund was signed on October 1, 2010. This additional financing
will fill a financing gap to achieve the targeted number of household connections to the grid, and finance
activities to scale up the project impact.
3. Risks to PDO/GEO achievement. The progress towards achieving the PDO and GEO is rated
satisfactory as well as the overall implementation progress. However, the team raised its concern
regarding the risk to fully implementing the AusAID-financed activities within the closing date, and in
particular the DSM/EE component with EdL and the MEM components. Further details are provided in
Annex 2 for the IDA and GEF- financed components and Annex 3 for the AusAID-financed components.
The team urged EdL and DOE management to closely monitor the agreed actions and timetables to
prevent further slippages.
4. Key Results Indicators. The majority of the key result indicators have successfully met the target.
The indicators which have not met the target, such as number of households connected through grid
extension and village hydro, were due to financing gap and shortages of fund experienced during project
3
implementation. Nevertheless, it is expected that the key outcome indicator on number of households
connected will be surpassed due to AusAID additional financing and the highly satisfactory progress of
the P2P scale up program. See the full summary of Result Indicators in Annex 5.
5. Overall Implementation Progress of EdL Component. Implementation of the original activities
funded by IDA, GEF and NORAD under the EdL Component are virtually completed. The
implementation progress for each component is summarized in more details in Annex 2. However, close
follow-up on the AusAID additional financing activities under EdL is required to ensure that they can be
fully implemented by the March 31, 2012 closing date (see Annex 3).
6. Overall Implementation Progress of MEM component. Similar to the EdL component, virtually
all of the original activities under REP I have been completed (see Annex 2), but there is a risk that the
activities financed under AusAID will not be completed by the closing date. The teams stressed the
importance of adhering to the agreed procurement timetables as only 10 months remained before the REP
I closing date.
7. Key issues in the implementation of MEM component identified during the previous mission
remain. This included: (i) guidelines for processing withdrawals of SHS by some of the customers are
not implemented yet; (ii) verification of inventories at PESCOs’ warehouse in provinces against DOE’s
records at Vientiane, which should be conducted on a regular basis, has not been conducted; and (iii)
some SHS customers complained that dis-functioning of the SHS or its parts reported to the PESCOs
were not addressed by the PESCOs in a long time. In addition, the team discussed the poor performance
of certain PESCOs in terms of remitting funds back to the REF. DOE agreed to initiate the termination
for the Khammoune PESCO (which has never deposited funds into the REF account). Because of the
poor performance of some PESCOs, the Bank requested DOE to revise the allocation by province for
solar home systems to take into account PESCO performance as well as reconcile the provincial plans
against the Renewable Energy Master Plan.
*********************
Part B: Implementation Support of Joint IDA-IFC Rural Electrification Project Phase II
and GEF Additional Financing (REP II)
Overview of Project Status
Original Project Cost
Estimate:
US$ 35.80 million Board Approval Date: January 12, 2010
Original Credit
Amount:
IDA Grant H538
US$20 million Effectiveness Date: August 9, 2010
IFC Loan Amount: US$15.0 million GEF Signing/
Effectiveness Date:
May 5, 2011 / TBD
Norad Loan Amount: US$4 million Original Closing Date: June 30, 2014
GEF Additional Grant
Amount:
TF098662
US$1.818 million Formally Revised
Closing Date:
n/a
Environmental
Category:
B Number of Closing Date
Extensions:
0
IDA Disbursement %
(as of 5/29/2011)
0% Project Develop.
Objective Rating:
Satisfactory
GEF Disbursement % 0% Implementation
Progress Rating:
Marginally satisfactory
4
8. Project Development Objectives. The PDOs of REP II are to: (a) increase access to electricity of
rural households in villages of project provinces; and (b) further improve the financial performance of
EdL. The global environmental objectives (GEO) of the GEF additional financing are to: (i) increase
efficiency of energy supply by EdL and consumption by consumers; and (ii) adopt substantial renewable
energy in the government’s rural electrification program.
9. Risks to PDO/GEO achievement. The implementation progress is rated as marginally satisfactory
given the approximate one year delay in procurement vis-à-vis the dates in the project appraisal
document. As a result, no significant disbursements have taken place against a target disbursement of
$10.5 million (29%) by end FY11. Revised procurement timetables were agreed, and the team urged EdL
and DOE to undertake its best efforts to maintain the schedules to allow achievement of the project
objectives within the closing date. In addition, the team raised some concern about new government
arrears accumulating due to insufficient budget allocation by MOF and the rising arrears from irrigation.
These issues should be addressed in the Joint Committee set up by MOF.
10. IFC Co-financing. The IFC financing agreement was signed in July 2010, and EdL is taking the
steps to complete the Conditions of Disbursements as discussed below. IFC will follow overall IDA’s
policy and procedure in terms of procurement and social and environmental safeguards, however, being a
corporate loan, the (use) disbursement of IFC loan is flexible as long as it is earmarked for REP II.
Disbursement will be (made) available, upon completion of relative Conditions of Disbursement (CODs),
proportionally with IDA’s component subject to the amounts and timeline as agreed among involved
parties. There are some CODs that remain to be completed by EDL before the first disbursement can be
made including: (i) proposed name of bank where DSRA will be established; (ii) submission of all
evidences for payment made for related IFC fees and legal fees; (iii) proposed timetable for
disbursements; and (iv) a certificate of compliance issued by EdL's auditors in accordance with section
5.01 (c) of the IFC-EdL Loan agreement.
11. Norad Co-financing. Norad grant agreement which provides parallel financing to REP II was
signed by the Norwegian Government and the MOF on August 3, 2010. The implementation of the
Norad-financed activities will be managed as an integral part of the implementation of the REP II. The
team reminded EdL and DOE that Norad is to be used for technical assistance and capacity building and
consultants’ services must be selected using the Bank’s guidelines. The Bank has agreed to review the
TORs, RfPs and draft negotiated contracts on behalf of Norad, but the agencies will need to seek final
approval from Norad as per Article VIII of the Norad legal agreement. (See Annex 6 for further details on
NORAD-financed activities.)
12. GEF Additional Financing. GEF provided US1.818 million of additional financing in order to
scale up the impact of REP II and to achieve global environmental benefits. The activities under GEF
support include: improving energy efficiency in both the electricity supply and consumption, promoting
adoption of renewable energy in the government’s rural electrification program, and supporting project
implementation. (See Annex 6 for more details.) The GEF Grant Agreement was signed on May 5, 2011.
The team requested EdL and MOF to amend the Subsidiary Financing Agreement to include the EdL
portion (US$999,000) of the GEF Grant in order to meet the condition of effectiveness no later than July
1, 2011.
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13. Overall implementation progress. There has been no significant progress to report on REP II
activities due to procurement delays. The team has been working closely with EdL and DOE to
accelerate the procurement of the large value contracts, and several bid documents (for grid extension and
solar home systems) are expected to be issued next month in June.
*********************
Part C: Next Steps
14. The list of agreed next steps by project is provided below.
No. Actions Component Agreed Date
REP I
REP I- EdL
1. EdL to submit next progress report in a timely fashion N/A August 15, 2011
2. EdL to submit audit report for 2010 to the Bank N/A June 30, 2011
3. EdL to issue bid document for measuring equipment for
loss reduction based on the Bank’s NOL dated May 24,
2011 (re-bid for Lots 1 and 3)
A.2. Loss reduction June 6, 2011
(completed June 6)
4. EdL and Joint-Committee to finalize recommendation on
irrigation arrears
A.4. Financial
sustainability
May 31, 2011
(overdue)
5 EdL to incorporate Bank’s comments to the safeguard
progress report and submit the revised report to the Bank
Environment and
social
June 10, 2011
REP I- DOE
6. DOE to submit next progress report in a timely fashion N/A August 15, 2011
REP I- MOF
7. - MOF to allocate adequate budget for electricity
consumption by Government agencies for FY10/11
onwards
- MoF to settle the accumulated government arrear up to
end of FY 2009 amounting to LAK 38 billion
- Technical committee for irrigation arrear will update the
finding report including more analysis on the causes of
arrears and prepare policy recommendations to the
government on how to settle the arrears and preventing the
future arrear.
A.4. Financial
sustainability
September 2011
September 2011
REP I- WB 8. Send to EdL the comments to safeguards operational
manual
Environment and
social
June 10, 2011
(completed June 21)
REP I Aus AID Additional Financing
REP I Aus AID AF- EdL
9. EdL to request WB for amendment to Financing
Agreements for AusAID AF and REP II to allow
disbursements for P2P program on a reimbursable basis
A.1. P2P July 25, 2011
10. EdL to send updated P2P Operations Manual regarding the
governance structure for the use of the revolving fund to
the Bank (this would be a condition of disbursement for
P2P)
A.1. P2P August 15, 2011
6
11. EdL to contact IECC to finalize the draft contract and
agree on a start date for the DSM-EE follow up to Phase
1B and Phase 2 and submit such contract to the Bank
A.6. DSM and EE June 15, 2011
(completed)
12. EdL to contract ten energy coordinators A.6. DSM and EE July 30, 2011
REP I Aus AID AF- DOE
13. DOE to open a designated account for AusAID
Additional Financing
N/A July 30, 2011
14. DOE to issue bid documents for SHS B.1. Off-grid
investment -SHS
June 20, 2011
(completed June 22)
15. DOE to issue guidelines for withdrawn SHS before the
installation of next batch of solar home systems to be
funded by AusAID and REP II
B.1 Off-grid
Investment -SHS
16. DOE to replace the Khammoune PESCO for non
performance, attempt to collect outstanding payments and
initiate recruitment for new PESCO
B.1 Off-grid
Investment - SHS
June 30, 2011
17. DOE to re-evaluate the allocation of SHSs by province in
order to reconcile the provincial requests with both the RE
Master Plan and the performance of PESCOs
B.1 Off-grid
Investment -SHS
Sept 15, 2011
18. DOE to send revised drafts of Bidding Memorandum,
License Terms and Conditions, and License Certificates to
WB for NOL
B.3. Alternative RE
Delivery Models: PPP
Micro Hydropower
Schemes
June 15, 2011
(overdue)
19. DOE to submit a draft TOR, cost estimate and justification
for the sole source selection of Chiang Mai University on
providing detailed feasibility study up to 4 pig farms no
later than
B.3. Alternative RE
Delivery Models:
Biogas Pilot Site
June 30, 2011
REP I Aus AID AF- WB
20. WB to provide for comments the TOR for Non-Technical
Loss Study to EdL and AusAID
A.2. System Loss
Reduction
July 15, 2011
21. WB to initiate procurement for Non-Technical Loss Study A.2. System Loss
Reduction
July 31, 2011
22. WB to provide NOL to MEM on the SHS bidding
documents
B.1. Off-grid
investment -SHS
June 16, 2011
(completed)
23. WB to provide for comments the TOR for SHS livelihood
assessment to EdL and AusAID
B.1 Off-grid
Investment -SHS
July 25, 2011
24. WB to initiate procurement for SHS livelihood assessment B.1 Off-grid
Investment -SHS
September 30, 2011
25. Bank to provide NOL to Bidding Memorandum, License
Terms and Conditions, and License Certificates sent by
IFC and DOE
B.3. Alternative RE
Delivery Models: PPP
Micro Hydropower
Schemes
June 24, 2011
(not yet received
from DOE)
REP I Aus AID AF- IFC
26. IFC to send revised drafts of Bidding Memorandum,
License Terms and Conditions, and License Certificates to
WB for NOL
B.3. Alternative RE
Delivery Models: PPP
Micro Hydropower
Schemes
June 15, 2011
(overdue)
7
REP II
REP II- EdL 27. EdL and MOF to amend the Subsidiary Financing
Agreement to include the EdL portion (US$999,000) of
the GEF Grant to meet the condition of effectiveness
N/A July 1, 2011
28. - EDL to send a letter to IFC about its decision regarding
the proposed bank where DSRA will be established.
- EDL to make payment, and submit respective
evidences, for all pending IFC fees and legal fees.
- EDL to request E & Y to issue certificate of Compliance
under section 5.01 (c) of the IFC-EdL Loan agreement.
A.1 Grid extension June 15, 2011
June 15, 2011
Within 60 days
before the date of
first disbursement
29. EDL, WB and IFC to work together and come up with a
schedule for IFC loan and IDA grant to be disbursed over
time for REP II.
A.1 Grid extension June 18, 2011
30. See item (9) above A.1. P2P June 30, 2011
31. EdL to draft bid document for the supply and installation
of VPN and 17 servers using standard bid document for
goods and request amendment to Financing Agreement to
include this component under IDA financing
A.3. IT System and
System and Financial
Management
June 30, 2011
(completed)
32. EdL to send WB scope of works and cost estimate for
technical assistance for the training on EdL staff provincial
offices on the AFMS system
A.3. IT System and
System and Financial
Management
June 20, 2011
REP II- DOE
33. DOE to submit the draft RfP and short list of VOPS will
be provided by MEM to the Bank
B.2. Institutional
Strengthening
July 15, 2011
34. DOE to submit a plan for the use of Norad funds for
technical assistance under this component
B.3. Alternative Rural
Electrification
Delivery Model
July 31, 2011
35. DOE will submit a request for sole source selection for the
local firm along with the draft terms of reference to update
the RE Master Plan and update the database
B.4. RE Master Plan
and Database
July 15, 2011
36. DOE to submit a proposal – including cost estimates,
procurement timetable and brief description – for the use
of the Norad technical assistance funds
B.5. Organization
Strengthening of
MEM
July 31, 2011.
List of Annexes
1. List of People Met
2. REP I Implementation Progress by Component
3. REP I AusAID Additional Financing Progress by Component
4. REP I Implementation of the Action Plan for Financial Sustainability of the Power Sector
5. REP I Key Results Indicators
6. REP II Implementation Progress by Component
7. REP II Checklist of the IFC Loan Conditions for FIRST Disbursement
8. REP II Key Results Indicators
9. REP I and I: Environmental and Social
10. Notes from Field Visit to Champasak Province
8
Annex 1: List of Persons Met
Name Company Position
Mr. Khammany Inthirath EdL Managing Director
Mr. Bounma Manivong EdL Director, Business Financial Department
Mr. Bounkeua Xayasone EdL Deputy Manager Southern Region Projects,
Transmission and Substation Dept.
Mr. Gnanhkham Douangsavanh EdL Project Manager
Mr. Khampaseuth Theppangna EdL Manager, Southern Region
Ms. Khamphiou Phounsavath EdL Deputy Director, Business Financial Division
Ms. Mithuna Soudthavong EdL Assistant, Business-Financial Division
Mr. Somsanith Sadettan EdL Engineering Office Manager
Ms. Thongxay Souryavong EdL Accounting, Department Manager
Mr. Ouna Sikhotchounnamaly EdL IT Office
Mr. Phonesavanh Oudomvilay EdL P2P coordinator and Site M.G
Mrs. Khamphiou Phounsavath EdL Business-Financial Division
Mr. Vongvilay Sisoulath EdL Deputy Manager, Environmental Office
Mr. Sonchanh Lovangaphay EdL Technical staff, Environmental Office
Ms Vanh Volasane EdL Technical staff, Environmental Office
Ms. Phommany Lattamalangny EdL Deputy Manager, Loss Reduction and DMS Office
Mr. Bounnong Panemalaythog EdL Loss Reduction and DSM Office
Mr. Saysanith Phounsavath EdL Deputy Director, T.L and Substations Department
Mr. Anousak Phongeavath DOE REP I & II Project Manager
Mr. Phayvanh Vongsaly DOE Financial Management Officer
Mr. Deb Majumdar MEM International Procurement Specialist Advisor
FIELD VISIT TO CHAMPASAK PROVINCE
Mr. Khampaseuth Theppangna EdL Southern Region Director, Champasak Branch
Manager
Mr. Oudom K. EdL Director Manager, Champasak Region
Mr. Sisay EdL Official Head, Southern Region
Mr. Phouthasack EdL Billing Department, Champasak Branch
Mr. L. Phouthong EdL Planning, Champasak Branch
Mr. Phethsamone Vantha EdL Technical Department, Champasak Branch
Mr. Khanthara Sisamouth DOE Deputy Head of Renewable Energy Division
Ms. Saly Eangmany DOE Power to the Poor, Engineer
Mr. Phim Phone DOE Power to the Poor, Engineer
Mr. Paseuth DDEM Champasak Branch
Mr. Chansamone Yokkhanthone PESCO Manager, Champasak and Attapeu province
9
Annex 2: REP I - Implementation Progress by Component
EdL Component
Component A.1 Grid Extension. The progress of EdL’s grid extension activity is shown in the table
below. The total number of households connected under REP I (including AusAID additional financing
and P2P) is 49,3972 which is 117% over the outcome indicator target of 42,000 households. A total of
570 villages have been connected over the target of 540 – a 106% increase.
Progress of EDL Grid Extension Component as of May 2011
Item Description Target Progress Percentage
1 Detailed Field
Survey
22 kV (thousand km) 1,404.6 1,858.5 132%
12.7 kV (thousand km) 42.5 61.4 145%
0.4 kV (thousand km) 1,063.7 1,302.4 122%
Transformer (site) 627 737 118%
2 Stringing and
Erection
22 kV (thousand km) 1,404.6 1,471.4 105%
12.7 kV (thousand km) 42.5 49.2 116%
0.4 kV (thousand km) 1,063.67 .829.8 78%
Transformer (site) 627 651 104%
8 m pole (piece) 21,689 27,509 127%
10 m pole (piece) 1,475 123 8%
12 m pole (piece) 18,408 24,058 131%
14 m pole (piece) 533 144 27%
3 Electrification In-house wiring (HH) 42,295
32,168 117%
4 P2P HH connections 17,2292
Power to the Poor. Considerable progress has been made in the implementation and scale-up of the P2P
project following the initial pilot in Champasak province which connected 537 households using GEF and
EdL funds. Following the success of the pilot, it was agreed that AusAID additional financing would
contribute $600,000 under REP I and IDA would contribute another $600,000 under REP II. As of end
April 2011, a total of 16,692 households have been connected as part of P2P with 14,680 households
connected in the South and 1,952 households connected in the North. The total number of female headed
household supported is 1,042 and the total number of households with disabled is 535. P2P is active in
488 villages in 16 provinces both in the North and the South. The team discussed various recommended
changes to the P2P reporting format to clarify which connections would be eligible under REP I AusAID
additional financing and under REP II IDA financing and to reword some of the headings for clarity. This
would also prevent double counting of household connected under REP I vs REP II. In addition, the team
requested that the report include information on the financial status of the P2P revolving fund and agreed
to work with the P2P team to finalize the requested changes. The team informed EdL that the Financing
Agreement as well as the Disbursement letter for AusAID and REP II will have to be amended to allow
use of funds for replenishment of the P2P revolving fund. As a disbursement condition for P2P, the team
discussed the need to update the P2P Operations Manual to include guidelines to govern the operation and
use of the P2P revolving fund. It was agreed that a short term consultant be hired for this purpose.
Finally, the team would like to record its appreciation for the timely and regular reporting by the P2P unit.
2 It is noted that this figure also includes the connection for P2P households to be reimbursed under REP II;
however, EdL is verifying the exact figure.
10
Component A.2 Loss Reduction. The procurement of domestic and commercial revenue meters and
calibration and testing equipment, with an estimated amount of USD 491,000, had to be rebid (with the
exception of one lot for which EdL awarded a contract for $19,203 for the supply of measuring
equipment). To the extent that all of the goods cannot be delivered by the REP I closing date, the
contracts can be co-financed with REP II to allow more time. See Annex 6 for additional details on the
A.2 Loss Reduction component.
Timeline for Procurement Activities for System Loss Reduction - ReBid
Milestones Timeline Actual/Updated
Timeline
Finalize Bidding Documents and obtain NOL By January 31, 2010 May 24, 2011 (A)
Advertise By February 8, 2010 June 6, 2011
Bids opening By March 31, 2010 July 11, 2011
NOL for Bid Evaluation Report (BER) By April 30, 2010 August 31, 2011
Contract signed By May 15, 2010 September 20, 2011
Contract completion By December 31, 2010
Component A.3 IT System. There is not much progress in the roll out of the Accounting and Financial
Management System (AFMS):
Modification of the AFMS to cope with the new chart of account and correction of some errors
has been completed by the Chinese consulting firm, who first installed the AFMS.
Installation of all six modules of AFMS (G/L, A/R, A/P, Inventory, Fixed Asset and payroll)
together with the Billing System at 4 EDL branches (Bolikhamxay, Savannekhet, Salavanh and
Champasak).
Partial installation of two modules of AFMS (Inventory and Fixed Assets) together with the
Billing System at the other 13 EDL branches.
REP II will provide continued support to complete the roll out of the AFMS.
Suspense Account. The outstanding balance as of May 2011 is 858,372,200 Kip (compared to 1 billion
Kip as of August 2010). EDL has requested to offset this balance with the longest outstanding debts.
MOF, however, has requested EDL to first refund this amount to MOF, and MOF will then pay it back to
EDL. The team suggests EDL to negotiate with the MOF one more time whether the offset can be done,
otherwise, EDL should follow MOF instruction in order to clear the balance in the suspense account and
some long outstanding debts.
Component A.4 Tariff Reform. In line with the “Action Plan for Financial Sustainability of the Power
Sector” endorsed by the Prime Minister in 2005, the Prime Minister Office has approved annual average
increase for tariff adjustment. However, in order to implement the plan, there is a need for PMO approval
of the detailed implementation plan, which will include increase rate for different customer categories.
EDL had prepared the detail plan, which was endorsed by MEM and submitted to PMO, but the plan has
not yet been approved by PMO. The team urged EDL and MEM to closely follow up with the PMO on
the approval.
Component A.5 Safeguards Capacity Building. The Safeguards Capacity Building componenet had
been designed to enhance EdL’s (and MEM’s) capacity in environment and social assessment and impact
assessment through training, study tours and acquisition of necessary equipment. International consultants
11
(SD&SP Consultant Group and Consultant for Technology (COT)) were hired to conduct the training on
environment and social management for technical staffs and managers. A training program and a study
tour in Thailand was organized for managers in April 2010 and a training program and a study tour in
NT2 was organized for technical staffs in May, 2010. The activities under this component were fully
completed.
Positive outcomes of this Component were demonstrated by the excellent performance of the
Environmental and Social Office of EdL, as (i) the office have completed independently the field survey
and consultation and updated the EIA/EMP/RAP for a new Bank-funded 230 kV transmission and
substation line project, managed the local disclosure process satisfactory to the Bank safeguard review;
(ii) a satisfactory/highly satisfactory performance in safeguard management for a Bank-funded 115 kV
transmission line under construction, as concluded by the field visit of the Bank Safeguard Specialist
during this mission.
See Annex 9 on Environment and Social Issues for more details.
MEM Component
Component B.1 Off-grid Investment Program. Follow up from the last mission, for the 4 units of SHS
reported as lost in April 2008 while being transported by VOPS to PESCO, PESCO has refunded 50% of
the costs to DOE in September 2009 and the other 50% was offset with the bonus paid to the PESCO in
January 2010. In addition, DOE has not submitted the guidelines for withdrawn SHSs as agreed during
the last mission. The mission emphasized that the guidelines should be in place before the installation of
next batch of solar home systems to be funded by AusAID and REP II. It was agreed that the TOR for
local VOPS consultant to be hired under REP II will also include developing withdrawal guidelines and
verify the actual stock of withdrawn SHSs as reported by PESCO.
Component B.2. Institutional Strengthening – VOPS Management Contract. Execution of the
contract was fully completed. The consultant has completed (i) implementation support to DOE in
management of the SHS program, achieving 100% of the program targets on time; (ii) assessment of the
cost and efficiency of the implementation arrangement for SHS program and provided recommendations
on improvement, including recommendations on regulatory modifications of cost and charges for PESCO
services, and monthly charges for consumer payment, which were adopted by MEM; (iii) identification of
nine new PESCOs and training of new PESCOs, which have delivered the targeted SHS installation under
Component B.1 and are managing the operations of the installed SHS systems in their licensed provinces;
(iv) development of delivery models for micro hydropower technologies for off-grid electrification and
completed feasibility study for 13 micro hydropower projects side, for solicitation of private investment.
The VOPS has updated the Off-grid Operation Manual incorporating the regulatory changes and delivery
models for micro hydro and has fullfilled in full as a result of performance evaluation of the Quality
Insurance (QA) Surveyor, an international firm hired as an independent monitor for checking and
verifying the performance of the VOPS Contractor. Upon completion of the VOPS Contract, DOE has
conducted a full assessment of the performance of the VOPS Consultant with assistance of the Quality
Assurance Surveyor and paid bonus to the VOPS Contractor for excellent performance as specified in the
contract.
12
Off-grid Customer Database. The mission was informed that the VOPS Manager developed by the
VOPS Consultant is no longer used due to insufficient information provided in the system and difficult to
operate. The FM Consultant has developed the REF Management System. The functions currently
provided in the completed portion include:
Keep track of the monthly inflow and outflow in aggregated amounts;
PESCO’s performance indicators;
Monthly movement transactions in terms of units and amounts, such as new customers to be
installed to calculate the planning and installation fees, no. of customers and amounts collected to
calculate the net inflow, etc.
The portion to be developed will be the off-grid customer database to track the customer movement in
detail by customer and provide the outstanding debt per customer. In order to obtain the complete
customer database, a lot of data will need to be re-entered in the new system. As most of PESCO do not
have computer skill, the mission recommends that some staff be recruited to handle the data entering at
the central level.
Component B.2 Institutional Strengthening - Quality Assurance (QA) Surveyor. The final report of
the QA surveyor was submitted in June 2010. Activities have been completed and no further updates
required.
Component B.3 Alternative RE Delivery Models. The revised Rural Electrification Fund (REF)
Operation Manual was endorsed by the MEM in May 2010. However it has not been translated into Lao
language. DOE plans to further update the Operations Manual and translate to Lao language by the end of
2011, using remaining funds from GEF under REP1.
Component B.4 Rural Electrification Master Plan and Database. The consultant contract for Rural
Electrification Master Plan was completed by September 2010 as originally planned. The final workshop
was held in July 2010 and was attended by the Bank team.
Component B.5 Sector Financing Strategy. Activities completed and no further updates from the last
Aide Memoire.
Financial Management
Disbursements. As of May 29, 2011, the cumulative disbursements amounted to:
IDA Grant H2180 - SDR 6.283 million (US$ 9.509 million equivalent) out of the total
original IDA Grant of SDR 7 million (89.76%),
GEF Grant TF056700 - US$ 3.749 million out of total GEF Grant of US$ 3.75 million
(99.98%)
AusAID Grant TF096084 - US$5.862 million out of total AusAID Grant of US$9.42 million
(62.23%)
Due to overruns in some categories under IDA Grant H2180, the reallocation has been approved
by the Bank since February 2011. For some reasons, the revised allocations have not yet been reflected in
the Client Connection, the Bank concerned department has been noticed and the revision should be made
very soon. According to the current exchange rate, the Project has exchange gain of $650,000 from IDA
13
Grant H2180. The team recommends that the two IAs should monitor closely the movement of the
exchange rate and come up with the agreed plan to utilize the exchange gain within the closing date of
March 2012. The team noted that the disbursement grace period up to 4 months has not been provided for
both IDA Grant H2180 and GEF Grant TF056700, internal process will be arranged by the team with the
Bank concerned department soon.
Under AusAID Grant, the funds provided to EDL are to finance several large goods and
consultant contracts which can be paid via direct payments or special commitments, therefore, no
designated account (DA) will be opened by EDL. For DOE, a small amount of DA ($30,000) will be
opened to pay the consultants.
Management of REF Reflow Account for P2P. The amount pre-financed by EDL for payment
of coupons under P2P activity as of May 2011 amounting to approximately US$1.1 million, together with
US$60,000 under pilot project has not been reimbursed to the Project. The mission was informed that a
separate bank account has been set up to hold the repayment of 20,000 kip per month from the households
under P2P activity. The mission has consulted internally with the Bank concerned departments for the
amendment of the Grant Agreement to allow the reimbursement of the amount pre-finance by EDL under
sub-loan category, which is currently not available. Once it is done, the pre-financed amount can be
reimbursed by EDL using the SOE form, no supporting document is to be attached to the withdrawal
application.
Interim Financial Reports (IFRs). The quarterly IFRs have been submitted with delays by both
EDL and DOE. The mission would like to remind EDL that the financing agreement requires that
quarterly IFRs be submitted to the Bank within 45 days after the end of each quarter.
The Discussion of Progress Report prepared by DOE outlined several serious issues, some of
which have been outstanding for long and raised during the previous missions, but have not yet been
addressed. The mission strongly recommends that the appropriate measures should be developed to
address these issues:
Several advances by the Project Manager amounted to US$7,870 have been outstanding for
long time, some of them are outstanding since last year. In addition, the expenses to attend
the SD week in Washington D.C. in February 2010 by four project staff has not yet been
reimbursed to the project. The mission recommends that all advances should be cleared
within 10 days after the end of the activity, the longer the advance is outstanding, the more
possibility that the supporting document cannot be provided. For the claim of overseas
travel, all supporting document are required, except for per diem which is to be provided at
the rate not exceed the Bank provided to its own staff. Please refer to the previous aide
memoire for more detail.
The current collection scheme for small equipment, e.g. 20w SHS, does not support the
sustainability of the REF Reflow Account. The expenditures incurred from installation of the
small equipment scales are much less than the total inflow, hence, resulted in negative inflow.
The DOE should carefully review the collection scheme to ensure the sustainability of the
REF Reflow Account so that the customers can benefit the most from such system even after
the withdrawal of the donor support.
Since the departure of the VOPS contractor from January 2010, the inflows to the REF
Reflow Account (the amount collected and transferred by PESCOs) has been reduced
significantly ($7,000 per quarter compared to $9,000 per month). It is noted that some
PESCOs transferred only 1-2 times since January 2010, more than 50% of PESCOs did not
transfer any collection during the first quarter of 2011 (January to March 2011). The new
14
VOPS should be selected as soon as possible to resume the administrative and monitoring
tasks. During this period, DOE should monitor and follow up all issues closely, proper action
should be taken immediately to investigate and resolve the issues.
During the field visit to Champasak, the mission met with Champasak PESCO, and was
informed that he has not transferred the fund collected from the customers to the REF Reflow
Account since October 2010, as he is not happy that he has not received bonus, which should
have been paid since June 2010. According to DOE, one bonus has been paid by VOPS in
January 2010 to all PESCOs, which should be the bonus for the year 2009. The DOE is
currently working on the bonus to be paid for the year 2010. The mission recommends that
DOE communicate clearly with all PESCOs when bonus for the year 2010 will be paid and
all PESCOs should be requested to clear all debts.
Currently, there are several PESCOs with very poor performance which seldom or have never
transferred the funds collected from the customers to REF Reflow Account since the absent
of the VOPS – Khammouane, Borkeow, Savannakhet, Sekong, Xayabuli – Paklai and
Vientiane. The poor performance PESCOs should be evaluated and terminated. However,
the terminated PESCOs should be forced to clear all the outstanding debts, The mission
recommends that the DOE should consider whether any mechanisms should be added to the
existing PESCO selection criteria in order to prevent such problems occurring in the future,
such as DOE staff be assigned to responsible for following up closely with PESCO during the
selection period of the new VOPS, interest to be charged if funds are not transferred within
certain period, performance bond to be requested from PESCO, etc.
Significant increase in PESCO debts with total balance of 471 million Kip as of March 2011
(150 million Kip as of June 2010 and 358 million Kip as of December 2010). The DOE
should investigate the reason and a mutually agreed timeframe should be agreed for the
settlement of the outstanding debts. In addition, the PESCOs should be requested to confirm
the amount owed to the DOE quarterly, any discrepancy can then be investigated and
resolved promptly.
The cumulative withdrawn equipments as of March 2011 was reported as 2,728 units
(increased from 2,140 units in June 2010). Proper procedures have not yet been developed
for the administrative of the withdrawn equipments, such as confirmation of the withdrawn
equipment kept by PESCO, physical count by VOPS to check the existence and working
condition, etc.
Audit of FY2009. Two separate audit reports were submitted to the Bank for MEM and EDL
components on June 30, and July 6, 2010 respectively. The audit opinions are unqualified. The audit
report of EDL entity has just been submitted to the Bank on November 5, 2010 and the audit opinion is
unqualified. The management letter of EDL entity has just been submitted to the Bank during the mission
(on May 25, 2011), and outlined several weaknesses in internal control and operational procedures which
should be brought to the management attention as follows:
No aging report was prepared for accounts receivable, BS-2000 system is not able to generate
the complete aging report. Allowance for long outstanding debt was only providd at 3% of
total revenue excluding export sales.
No formal debt collection procedures in place. There are written policies and procedures on
debt collection. Different branches have different methods in collecting debts and there is no
follow by head office on the results of debt collection.
There is a difference of 817 million Kip between the balances of accounts receivable per
general ledger (G/L) and billing system (BS-2000) at VTE Municipality.
15
In July 2009, EDL made late payment for the personal income tax to the tax authorities. In
December 2009, incorrect amount was paid, and the different was settled in March 2010.
No segregation of duties between the staff who verifies the meter to the staff who records the
details before posting in the system at VTE Province. The preparer and the verifier were the
same person.
Fixed asset register is not updated.
The depreciation expense for the new fixed asset acquired during the month is calculated as if
the asset is acquired on the first of the month.
There was no specific vehicle log book maintained for all of the motor vehicles of the
Company.
No reconciliation was performed for Capital in Progress (CIP) transferred.
No insurance have been purchased for all the motorcycles kept in Nam Nguen 1.
Audit of FY2010. For EDL, E&Y has been appointed by EDL as its auditor for FY2010 and
FY2011. The audit field work has almost finished and the audit report is expected by the deadline of
June 30, 2011.
For MEM, the previous auditor has been subsequently evaluated as not acceptable to the Bank, therefore,
after the end of the audit contract, MEM is requested to select a new auditor. However, the selection
process has been carried out slowly until recently. The audit report is not expected by June 30, 2011.
Environment and Social
Please refer to Annex 9.
16
Annex 3: REP I AusAID Additional Financing - Implementation Progress and Agreed Actions
The Grant Agreement for the AusAID additional financing for REP I was signed on October 1, 2010 and
became effective on October 14, 2010. The AusAID financing of US$9.42 million was to fill in a
financing gap on grid extension in order achieve the project outcome of connecting 42,000 households
and to scale up the impact of several other components. The table below presents AusAID financed
activities, associated targets.
Table 1: Additional Financing Activities vs. Original Project Components
REP 1 Original Project
Components
Additional Financing
Activities Cost
(US$ m)
Remarks
A. EdL Component
A.1 Grid Extension 38 distribution subprojects 6.24 Fill in financing gap to
connect 11,500 HH
P2P * 0.60 Scale up impact to
connect 8,000 HH
A.6 DSM and EE hiring energy coordinators and TA 0.10 Scale up impact
B. MEM Component
B.1 Off-grid Investment procurement of SHS
2.00 Scale up impact to
connect 5,000 HH
B.3 Alternative RE
Delivery Model
micro hydro
TA to pilot biomass power plant
0.28
0.10
Scale up impact to
connect 250 HH
B.6 Organizational
Strengthening of DoE
hiring an international procurement
consultant;
training for DoE’s procurement capacity
building
0.10
Scale up impact
Total - 9.42 -
Component A.1 Grid Extension (US$6.24 million). EdL has signed seven contracts for goods and
materials for the AusAID-supported grid extension for a total value of $5,995,271. Construction of the
grid extension has commenced and completion is expected by end of September 2011. It is expected that
7475 out of the target of 11,500 household connections will be achieved by March 31, 2012, with the
remainder to be achieved under P2P. The number of household connections as of May 2011 is reported to
be 1,874. Progress of household connections for each of the target provinces is summarized in the table
below.
Progress of AusAID-supported Grid Extension
HHs Connected Target HH Connections
Province On-Grid P2P On-Grid P2P
Bolikhamxay 181 1032 809 1900
Khammouan 464 645 1,580 1000
Savannakhet 460 423 2,553 800
Saravan 163 856 1,416 1700
17
Sekong - 342 925 1000
Champasak 606 653 2,722 1200
Attapeu - 233 1,561 400
TOTAL 1874 4184 11566 8000
Power to the Poor (P2P) (US$0.6 million): In the past, EdL has been reporting that P2P connections in
the northern provinces would be covered under AusAID. To date, 1, 952 households have been
connected in the north. However, there is no reason that AusAID financing should be restricted to the
North and the team discussed with EdL to modify its reporting to allow all households connected from
October 1, 2010 (the signing date of Ausaid) through March 31, 2012 to be claimed as P2P connections
under REP I AusAID up to an amount of $600,000. It was agreed that EdL would submit the new
reporting tables by mid June with the revised figures. The team also expressed its satisfaction that the
P2P unit is including data on female headed HHs and HHs with people with disabilities in its reporting.
During the mission, it was discovered that the Financing Agreement and Disbursement Letter would need
to be amended in order to allow disbursement of P2P as a subloan as the current withdrawal schedule only
includes disbursement categories for goods and consultants’ services. It was agreed that EdL would
formally request an amendment to the Financing Agreements for both AusAID additional financing and
REP II by June 15, 2011. The team also discussed the need for the Operations Manual to be updated to
include provisions for the use of the P2P revolving fund which would be a condition for disbursement.
Once this is completed, EdL can request to be reimbursed for households connected on or after October 1,
2010 (the signing date of the Grant Agreement).
Component A.6 DSM and EE (US$0.1 million). Building on earlier activities, it was agreed that EdL
would appoint ten energy coordinators under the AusAID additional financing to continue implementing
energy efficiency initiatives in government buildings and in doing so, support the DSM/EE activities to
be supported under REP II. Following the Bank’s no objection to sole source IIEC provided on May 29,
2011, EdL agreed to immediately contact IIEC to finalize the draft contract and submit such contract
(using the sample contract for small assignments provided) to the Bank no later than June 15, 2011.
(IIEC was the original firm recruited to assist EdL in implementing the DSM/EE component under REP I.
The Bank agreed to a sole source selection for IIEC during an interim period of Phase 1B and Phase 2 to
prepare protocols, specifications and bidding documents of low-cost and medium-cost EE measures for
46 public sector buildings, to assist the DSM Cell to recruit new energy coordinators (ECs), and to scope
out and prepare Phase 2 implementation plan.) The team stressed the urgency of mobilizing IIEC as soon
as possible so that they can assist EdL in recruiting and managing the energy coordinators. AusAID
financing can be used to finance the EC contracts up to March 31, 2011 after which they can be financed
using Norad funds under REP II.
The timetable below was agreed with EdL for appointing IIEC and hiring the energy co-ordinators:
1. IIEC draft contract sent to Bank June 15, 2011
2. Mobilization of IIEC July 1, 2011
3. Contract ten energy coordinators July 31, 2011
4. Completion of recruitment and training September 30, 2011
program for energy coordinators
5. End of IIEC assignment December 31, 2011
18
Component B.1 Off-grid Investment for Solar Home Systems (US$2.0 million). It was agreed that
DOE would prepare a single bid document to procure about 15,000 SHSs in two lots for a total estimated
cost of $6 million ($2 million from AusAID financing under REP I and $4 million under REP II3).
Unfortunately, the bid document has experienced protracted delays. The Bank received the revised draft
bid document on April 18, 2011 and provided preliminary comments on the commercial terms on May
24, 2011 to allow DOE to respond with an alternative proposal on its desire to request the supplier to
submit a sample. It is expected that the no objection to the bid document will be issued by June 3, 2011.
The team raised its serious concern that further slippages in the revised procurement timetable could
result in the goods not being delivered by the REP I closing date of March 31, 2011 and urged DOE to
undertake its best efforts to adhere to the agreed schedule below. In addition, it was agreed that the
delivery schedule for Lot 1 would be 90 days and the spare parts would be moved to Lot 2.
In addition, the team queried the proposed allocation of SHS by province in the bid document since about
25% of the SHS are expected to be installed in Khommoune, Savannakhet and Xayabir provinces for
which the PESCOs have been particularly poor performers and have failed to remit funds to DOE.
Therefore, DOE agreed to re-evaluate the allocation of SHSs by province in order to reconcile the
provincial requests with both the RE Master Plan and the performance of PESCOs by September 15,
2011 to allow sufficient time for the PESCOs to submit their cluster plans. In order not to delay the
issuance of the bid document, the team reserved the right to discuss and agree with DOE the final
breakdown by province before the final contract is signed.
Timeline for SHS Procurement
Milestones Timeline as of Sep 2010 Updated Timeline as of 29 May
2011
Draft Bidding Documents
submitted to the Bank for review
By February 28, 2010 June 1, 2011 (June 14, 2011-A)
NOL to Bidding Documents By April 30, 2010 June 3, 2011 (June 16, 2011-A)
Advertising By May 7, 2010 June 20, 2011 (June 22, 2011-A)
Receiving of Bids By June 30, 2010 August 1, 2011
BER Submitted for Bank NOL - September 5, 2011
NOL to BER By August 31, 2010 September 20, 2011
Signing of Contract / Effectiveness By September 15, 2010 December 31, 2011
Delivery of Goods – Lot 1 By December 31, 2010 March 31, 2012
Delivery of Goods – Lot 2 - Between June 30 and Sep 30, 2012
Complete installation of Lot 1 - May 31, 2013
Completion of all installations By June 30, 2011 December 31, 2013 including time
for wet season delays
Component B.3 Alternative RE Delivery Model - Micro Hydropower Schemes (US$0.28 million). In
December 2009, DOE appointed IFC as lead transaction advisor to assist in the implementation of a pilot
PPP (Public Private Partnership) transaction to electrify a number of villages using micro hydro systems.
3 During the mission, it was subsequently agreed that $300,000 under REP II should be reserved to support the PPP
microhydro pilot schemes in Houaphan province. In this regard, it is noted that bid document allows for variation of
+/- 33 percent.
19
While this procurement method is common for large infrastructure projects internationally, it will be the
first time this model is has been attempted for such small investments, or in Lao PDR at all. The IFC TA
is split into 2 phases – Phase 1 covers a technical review of potential sites, legal and regulatory review,
and transaction structuring; Phase 2 covers implementing a competitive tender to select a private investor.
IFC Phase 1 Transaction Structuring Report was submitted in December 2010. The report recommended
moving forward with two pilot public private partnership (PPP) microhydro schemes in Houaphan
province as follows:
1. Paonuea Village Micro Hydro Facility and Distribution System: 119 households, system capacity
21.4 kW (equivalent to 180 watts x no. of households)
2. Paotai Village Micro Hydro Facility and Distribution System: 102 households, system capacity
18.36 kW (equivalent to 180 watts x no. of households)
DOE would select a private partner to construct and operate these two micro hydro systems in Houaphan
province. The partner will be selected through a fully transparent competitive tender with a single bid
criterion: capital subsidy needed. The estimate for total REF funds needed is approximately $500,000.
This is split in two components:
A fixed "Availability Payment" of approximately $50,000 per year for the life of the project (5
years)
A "Capital Subsidy" payable at the beginning of the project. The amount will depend on the bids
received, but is expected to total about $275,000.
There is $280,000 available under REP I AusAID additional financing to finance the capital subsidy (as
long as the payments become due prior to the March 31, 2012 closing date) and another approximate
$300,000 under REP II IDA financing. The team pointed out to IFC and DOE that at least the last two
years of the availability payment will fall outside of the REP II closing date of June 30, 2014. Therefore,
these payments would need to be financed from the REF account. It was agreed that IFC would develop a
projection of estimated REF monthly payment obligations between now and the end of the concession to
inform how much AusAID, IDA and REF reflow funds would be utilized.
During the mission, IFC, DOE and the Bank discussed the draft Bidding Memorandum, License
Certificates and License Terms and Conditions. Based on these discussions, IFC will revise the
documents and advertise this week for potential bidders to comment on the draft transaction document.
The indicative transaction timetable
Indicative Transaction Timetable for Micro Hydro PPP Development
Milestones Timeline
proposed by IFC
Revised timetable
(to be vetted by
DOE)
Draft Transaction documents sent to
bidders
June 1, 2011 June 1, 2011
Bidder meetings to discuss transaction
documents
June 9-10, 2011 June 9-10, 2011
Draft transaction document sent for June 15, 2011
20
Bank NOL
Bank NOL June 24, 2011
Final transaction documents sent to
bidders
June 27, 2011 June 27, 2011
Bid submission date July 18, 2011 July 18, 2011
Opening financial bids and
announcement of successful bidder
July 22, 2011
Bid evaluation report submitted for
Bank NOL
Bank NOL
Announcement of successful bidder
Signing of license certificate July 29, 2011
Given the time needed to appoint the evaluation committee, it was agreed that DOE would initiate the
process to appoint the committee immediately and ensure that before confirming the members that they
would be available during the evaluation period.
Component B.3 Alternative RE Delivery Model - Pilot Biomass/Biogas Power Plant (US$0.1
million). DOE proposed to focus this activity on a pilot biogasification plant using pig manure and
proposed to extend Chiang Mai University’s current contract to cover the detailed design for and
construction supervision of such a plant. During the last mission, it was agreed that AusAID would fund
the detailed design, preparation of technical specifications of the plant for the pilot demonstration site
within the available budget. In the previous mission of September 2010, DOE had agreed to submit the
TOR/estimated budget for the detailed design and the preparation of the technical specifications for the
Bank review by September 30, 2010.
Given the delays in submitting the TOR, the team discussed a revised scope for the assignment that would
include the above mentioned activities in addition to the development of financial model to assess the
sustainability of the scheme and size of required subsidy, environment and social impact assessment,
calculation of environmental benefits in terms of GHG emission reductions (for GEF purposes), proposed
contractual arrangements, and the design of a monitoring report for farmers to regularly report to DOE on
key performance parameters. The first phase of the work would cover four pig farms in order to ensure
that at least one demonstration project was constructed under Phase 2. During the first phase of work, the
consultant would propose a methodology for selecting farms in a transparent and competitive manner
since a government subsidy would be involved if the biogasification programme was scaled up beyond
the initial demonstration project(s). Phase 2 of the work would include the supply and installation for at
least one pilot demonstration project. DOE agreed to submit a draft TOR, cost estimate and justification
for the sole source selection of Chiang Mai University no later than June 30, 2011. The procurement
schedule is as follows:
Timeline for Pilot Biogasification Plant
Milestones Timeline
DOE provides draft TOR, cost estimate and request for SSS June 30, 2011
Bank provides NOL Mid July 2011
21
Draft negotiated contract submitted to the Bank July 31, 2011
Contract award for Phase I End August 2011
Submission of Final Phase I report End February 2012
Component B.6 Organization Strengthening of DOE (US$0.1 million). The international procurement
consultant to support DOE under REP as well as to support another department of MEM under the Bank’s
Hydro Mining Technical Assistance Project (HMTA) was mobilized in January 2011. The contract is for
a total of 12 man months over an 18 month period. The team learned that DOE has been financing 50%
of the contract under REP II Norad financing instead of AusAID additional financing under REP I. The
team instructed DOE to finance 100% of the payments under AusAID additional financing from now
until the closing date (March 31, 2012) and from thereon, pay 100% under HMTA. The team also
requested DOE to provide an estimate of the payments due between now and March 31, 2012 to
determine how much excess funds from the $100,000 may be unused under the contract.
22
Annex 4: REP I Status of the Implementation of the Action Plan for Financial Sustainability of the
Power Sector (2005-2010)
Implementation of the Action Plan for Financial Sustainability of the Power Sector (2005-2010) is on
track. Status of agreed actions is summarized in the sections below.
1. Annual Tariff Adjustment. The tariff adjustment for 2010 according to the Tariff Adjustment
Plan (2005-2010) endorsed by MEM in 2005 is on track. Following the Bank’s comments during the last
supervision mission, EdL submitted the updated Tariff Adjustment Plan with an annual average increase
of 6% in the next five years (2011-2016) with reduced amount of capital investment by EdL to around
US$ 758 million for MEM’s approval in May 2010. The Plan has been submitted to the Prime Minister
Office by MEM, but not yet approved by PMO. The team urged EDL and MEM closely follow up the
PMO approval.
2. Settlement of Arrears. For settlement of the Government arrears up to September 2005, LAK 113
billion, payments from MOF to EdL over 2005 through 2009 were in line with the settlement plan agreed
between the two (see Table below). Due to insufficient budget allocated by MoF to settle the annual
consumption, the total arrears as per April 2011 remains LAK 84,821 billion. MoF has committed to
allocate another LAK 38 billion to settle the verified arrears before September 2011. The table below
shows the latest status of government arrear.
Status of Government Arrears and Settlement Plan as of April 2011
Unit: MILLION LAK
MOF Fiscal
Year (Oct-Sep) Total bill
Collected from
GoL Agencies Arrears
MOF
Settlement
Payment
Outstanding
Accumulated
Arrears
As of 9/2005 113,478.47
2005-2006 78,849.67 38,717.44 40,132.24 18,758.00 21,374.24 134,852.71
2006-2007 71,344.86 41,561.11 29,783.75 24,134.00 5,649.75 140,502.46
2007-2008 83,323,85 65,465.21 17,858.65 40,000.00 (22,141.35) 118,361.10
2008-2009 89,319.65 63,386.87 25,932.78 48,000.00 (22,067.22) 96,293.88
2009-2010 101,322.25 33,701.43 67,620.82 69,793.57 (2,172.75) 94,121.12
April 2011
9,300.12
84,821.01
3. Arrears from Irrigation continues to increase from the last mission. The accumulated arrears as
of June 2010 were LAK 70 billion. To reach an agreement on settlement of the arrears and solutions for
preventing new irrigation arrears from occurring, EdL held a workshop in June 2010 with concerned
government agencies to discuss the issues and possible solutions, including installation of pre-paid
meters. A committee led by MoF and comprising representatives from EdL HQ, EdL branch offices,
MOF, Ministry of Agriculture, and Prime Minister Office was set up to collect data and provide
recommendations. The draft report has been prepared and will be shared with the Bank. The main
findings are as follows:
(a) Water consumption rate has been set unreasonably, which could not cover the electricity
consumption for pumping water;
(b) Water use fee collected has been used for other purpose than electricity bill settlement; and
(c) Inefficiency of irrigation systems.
23
4. The committee will meet on June 1 to discuss on the findings and make recommendation to the
government. The Bank advises that the committee should look at three aspects:
(a) policy issue: will government provide subsidy to farmers covering electricity for
irrigation water, if so, government should allocate government budget to finance such
subsidy. Being a services provider, EDL should not cover the subsidy.
(b) collection system: find out if EDL can collect the electricity bill directly for the water
users;
(c) getting data on actual water consumption by individual household..
5. Demand Side Management and Energy Efficiency (DSM & EE). A DSM and EE Cell was
created within EdL and entered into full operation in the early stage of REP I implementation. All planned
training activities under REP I were completed. A DSM and EE Strategy was prepared and an action plan
including the first-stage no-cost and low-cost measures proposed for DSM/EE at major government
agency consumers was under implementation in four pilot buildings. Further implementation of the plan
will be done under REP II. Please see Part B on preparation of DSM/EE activities under REP II.
6. Operational Efficiency. The system loss reduction activity under the rural Electrification APL
Program aims to reduce the system loss from more than 20% in 2005 to 17% by the end of the REP I and
13% by the end of REP II. During January to July 2010, the distribution system loss was reduced to
11.44%, achieving the REP II target.
24
Annex 5. REP I Status of Key Performance Indicators
Objectives and indicators Baseline 2006 End of Project Target
Values
Progress Remarks
Global Environmental Outcome
"Market share"of off-grid
renewable HHs under REP
I
8% of "Market share"
of off-grid renewable
HHs during SPRE
19% of newly
electrified households
have solar/VH
22% Target exceeded.
Final objective of
reducing CC gas
emissions was
achieved through
loss reduction of a
comparative 18.85%.
Measurable increase in
awareness and adoption of
energy efficiency
technologies and practices
by Government agencies
and other EdL customers
A complete lack of
awareness by EdL
customers
100% central
government agencies,
20% of domestic and
33% of commercial
customers aware of
energy efficiency
Survey to be
conducted at the later
stage of the REP I to
measure the
percentages.
Project development Objectives
Numbers of villages and
HHs electrified
About 428,000 by the
end of 2004
Increase villages and
HHs electrified by
about 250 and 42,000,
respectively
Increase of villages
electrified by 671
(441 by the grid and
230 by SHS) and
the number of HHs
electrified by 63478
Implementation status of
the Sustainability Action
Plan
Tariff adjustment
initiated in July 2005
Satisfactory
implementation of the
Sustainability Action
Plan
1) Tariff reform
2) Loss reduction
3) DSM & EE EDL
Cell established
4) Arrears
- Settlement of the
committee
- Enough budget
allocated
1) New average
tariff of 673
Kip/Kwh (USD
0.084) to be ratified
by the MEM and
start being applied
on the 1st of July.
2) 10.55% system
losses (18.85% in
2009)
3) Completed.
4) GoL agencies
Arrears: 18 months
- Operational
- Unsatisfactory
EdL-Grid electrification
Number of villages
electrified
Number of HHs electrified
2004 access levels-
about 428,000 HHs in
about 35% of villages
Add 42,000 HHs in
540 villages in the 7
central provinces
441 (82%) villages
electrified; 32,168
HHs in addition to
(17,229 disadvant-
aged rural families
connected to the
grid under the P2P.
AusAID Additional
Financing is to fill a
financial gap to reach
the original target –
11,500 HH connected
by EdL and an
additional 8,000 HH
under P2P.
EdL-Reform & Improved
Efficiency
Rate of return on revalued
assets; debt service
2004 financial
performance indicators
RRRA>4%
DSCR>1.5 times
SFR>30%
1%
DSCR 1.69 times
SFR 35%
See details in Annex
A2 below.
25
coverage ratio; self-
financing ratio; account
receivables
AR<2 months
AR= 2.4
Overall system losses About 22% in 2005 System losses below
17%
10.55%
Establishment of DSM cell
and implementation of pilot
DSM/energy efficiency &
awareness building
programs
Energy audit and other
pilot programs
implemented
Established and
operational. 50 GoL
central agencies
energy audited and
no-cost and low
cost efficiency
measures in 4 pilot
buildlings.
Further
implementation of
action plan to be
done under REP II
MEM-Off-Grid Electrification
Number of villages
electrified
200 villages, 17
provinces
230 villages, 17
provinces
AusAID Additional
Financing for an
additional 5,000 SHS
to scale-up impact.
However
procurement has not
yet begun and there is
a risk that the goods
would not be
delivered by the
closing date.
Number of HHs electrified Currently 6,000 HHs
in 7 provinces
10,000 new HHs 14,081(98%) by
SHS
Village hydro share in HHs
electrified through off-grid
Only 150 out of the
6,000 HHs not SHS
1,000 (10%) HHs
through VH
0
MEM-Reform & Improved
Efficiency
Development of alternative
delivery model
Only hire-purchase &
MEM delivery
Alternative delivery
models developed
Completed
Development of legal,
regulatory and institutional
arrangements for the REF
REF established with
issuance of Prime
Minister’s Degree in
August 2005
REF opened to other
participants
REF established and
operational
Fully satisfactory.
Development of a sector
financing strategy and pilot
projects
Recommendations
made by consultants
on sector financing
strategy
Sector financing
strategy developed and
legal documents for
concessioning small-
hydro projects to IPPs
prepared
Completed
Establishment of RE
Master Plan and Database
Initial version of RE
database developed
Initial RE Master Plan
and RE Database
developed
Initial RE Master
Plan and RE
Database developed
Fully satisfactory.
Implementation of Action
Plan for DoE organizational
strengthening
Development of
Action Plan under way
Completion of Action
Plan
Achieved
26
Annex 6: REP II Implementation Progress by Component
Under REP II, IDA is financing goods and incremental operating costs (no technical assistance) for EdL
and DOE; IFC is financing grid extension with EdL; Norad is financing technical assistance and capacity
building for EdL and DOE; and GEF is financing goods, services, training and incremental operating
costs for components A.2(a), A.5, B.3, and B.5.
The overall implementation progress is rated as marginally satisfactory given the approximate one year
delay in procurement vis-à-vis the dates in the project appraisal document. As a result, no significant
disbursements have taken place against a target disbursement of $10.5 million by end FY11. Detailed
progress by component is discussed below.
EdL Component
Component A.1 Grid Extension (IDA US$14.6 million4 + IFC US$15 million; Norad $0.5 million for
TA). (a) installation and commission of MV and LV transmission lines, transformers, and house wiring
to cover about 27,700 households in the project provinces; and (b) provision of technical advisory
services to EdL in project implementation and supervision, and capacity building for economic and
financial evaluation, project management, and procurement.
It was agreed that the procurement for grid extension under REP II would be divided into 5 packages of
goods (funded by IDA and IFC) and one package of installation (funded by EdL). All goods packages
would be procured using ICB. EdL’s detailed project cost estimate submitted during the mission is as
follows:
(in US$ millions)
Contract EdL IDA IFC Total
REP 1/1 Overhead conductors 3.55 6.45 10.00
REP 2/1 Distribution transformers 0.89 0.80 1.69
REP 2/2 Distribution transformer fitting material 0.51 0.50 1.01
REP 2/3 Distribution line materials 3.37 2.10 5.47
REP 3/1 Concrete poles 3.37 2.10 5.47
REP 3/2 Concrete cross arms 0.45 0.70 1.15
REP 4 Watt hour meters/meter boxes 0.33 0.40 0.73
REP 5 Office equipment 0.25 0.10 0.35
Sub-Total Goods 12.72 13.15 25.87
Works 1 Construction/installation 12.00 12.00
Works 2 Info for Outreach to Villages 0.10 0.10
Works 3 UXO Clearance 0.22 1.60 1.82
GRAND TOTAL 12.32 12.72 14.75 39.79
The team proposed to EdL that it might wish to consider dividing the contracts between IDA and IFC as
opposed to having IDA and IFC co-finance each contract as it might reduce the administration burden on
EdL. For instance, IDA could finance REP 1/1, 1/2 and 1/3 and IFC could finance the remaining
4 It was discussed that this amount could be reduced by $230,000 to pay for goods (VPN plus 17 servers) under
Component A.3 for Information Technology. However, as stated earlier, this would require an amendment to the
Financing Agreement as this component is currently not eligible under the IDA Financing Agreement.
27
contracts; however, it is realized that at least one contract would need to be financed from both sources.
Regardless, EdL would follow WB procurement guidelines for all goods packages.
The procurement under this component has been delayed for almost one year. The bid opening date as
stated in the project appraisal document was June 2010. The revised procurement schedule is provided in
the table below. It is noted that for meters, the timeline might take one month longer since changes to the
technical specifications are required.
Timeline for Goods Procurement under Grid Extension Component
Milestones Timeline/Milestone
Realistic Optimistic
Draft Bidding Documents submitted to the Bank for review Wed 15/6/11 Wed 15/6/11
NOL to Bidding Documents Assume two rounds Fri 15/7/11 Mon 27/6/11
Advertising Mon 20/6/11 Mon 20/6/11
Receiving of Bids Thu 4/8/11 Thu 4/8/11
Prepare BER and Submitfor Bank NOL – Assume two rounds Mon 19/9/11 Mon 5/9/11
NOL to BER Thu 29/9/11 Mon 12/9/11
Contract Negotiations and Signing of Contract Fri 14/10/11 Thu 22/9/11
Date of effectiveness Mon 5/12/11 Fri 11/11/11
Delivery of Goods Thu 3/5/12 Mon 9/4/12
Installation completed Tue 24/12/13 Fri 11/10/13
Project Closing date Mon 30/6/14 Mon 30/6/14
Power to the Poor. There is US$600,000 in IDA financing to scale up the impact of P2P under REP II.
During the mission, the team discovered that an amendment to the IDA Financing Agreement (as well as
to the AusAID Grant Agreement under REP I) is needed to allow the disbursements of “sub-loans” for
P2P credit schemes to poor households under the Project. In order to process this amendment, the team
requested the P2P team to submit by June 30, 2011 (i) the revised P2P operations manual which includes
an overview of the arrangements for the revolving fund and (ii) a list of households connected to date by
province and by month to determine the eligibility for reimbursement under REP I AusAID and REP II of
P2P credit schemes extended to date.
During the last mission, the P2P team raised questions about the availability of funds for the P2P scale-up
and proposed for the following activities and budget.
No Description Budget Proposed (US$)
1 Value of Credit Extended 495,500
2
Cost of EdL's training group, Workshop, social &
environmental group (Posters, Brochures, coupons,
Manuals..) 48,586
3 Miscellaneous Costs (Awareness Materials, Transport) 55,828
Total Budget 599,915
The team clarified that for items (2) and (3) above, IDA resources cannot be used to finance EdL staff
salaries working on P2P. To the extent that any of the items qualify under the definition of “incremental
28
operating costs5”, expenditures up to US$100,000 can be reimbursed under the Project. The team further
clarified that this US$100,000 for IOC is for EdL as a whole and not specifically for the P2P unit, so the
P2P unit would need to reach agreement within EdL. All other expenses (including pick-up trucks) will
need to be covered by EdL’s own resources.
As per the Project Appraisal Document, Norad will finance technical assistance to EdL in (i) project
implementation and supervision; (ii) capacity building for economic and financial evaluation, project
management and procurement. During the mission, the team discussed with EdL the concept of having
the implementation supervision consultant also assist EdL to establish standardized specifications and
equipment for the whole of EdL. This would help EdL improve future tendering processes, do eliminate
the need for consultants to produce technical specifications, improve spare management of EdL, reduce
implementation and operation cost, and rationalize some of the domestic electricity market. EdL agreed
to submit a draft TOR for this consultancy no later than September 30, 2011.
Component A.2. Loss Reduction (IDA US$1 million; Norad US$0.68 million; GEF US$0.2 million):
(a) enhancement of EdL’s loss reduction efforts through the provision of goods to support the
implementation of prioritize investment projects recommended by the Loss Reduction Master Plan; and
(b) provision of technical advisory services to EdL for nontechnical loss reduction activities.
EdL’s proposal for financing under the Loss Reduction component is as follows:
Project Activity Category Funding
Source
Procurement
Method
Budget
A2.1 Implementation for nontechnical loss Consultancy Norad QCBS 680,000
A2.2 Portable watt hour meter testers 3 phase (14
sets)
Goods IDA ICB 252,000
A2.3 Watt hours meter test bench (1 set) Goods IDA ICB 219,797
A2.4 LV Capacitor Bank Goods IDA ICB 180,000
A2.5 Watt-hour meter Goods IDA ICB 420,000
A2.6 Portable watt hour meter testers 3 phase (16
sets) and Megger Power Clamp 3 phase (35
sets)
Goods IDA ICB 400,000
Sub-total 2,151,797
The team indicated that $200,000 of GEF financing for technical assistance on technical loss reduction is
missing from the above table. It was also clarified that the Norad budget is for loss reduction in general,
and not only nontechnical loss. In addition, some of the project activities above have been financed under
REP I and therefore can be removed the list – EdL to revise proposal.
It was agreed earlier that AusAID would finance a Bank-executed study for nontechnical loss reduction.
The Bank indicated that it would share a draft terms of reference for EdL comment no later than June 30,
2011. Norad financing could be used for consultancy services to assist/train EdL in implementing the
recommendations under the Bank-executed study.
5 “Incremental Operating Costs” means reasonable expenditures directly related to the Project incurred by the
Recipient (which expenditures would not have been incurred absent the Project), including expenditures for Project
staff travel and per diem, office supplies, communications services (including telephone and internet costs),
publication services, translation services, maintenance of office equipment, and maintenance of vehicles, but
excluding civil services salaries of officials of the Recipient’s civil service.
29
Component A.3 IT System and Financial Management (Norad US$0.3 million): Provision of
technical advisory services to EdL to: (a) integrate the operation of EdL headquarters and branch offices
in the project provinces by making the existing information technology system fully operational; and (b)
strengthen its financial management through the information technology system, which includes
computerized billing and accounting systems.
Since the last mission, EdL has proposed the following budget for IT system under REP II:
1. IT Roll Out. Due to the limited number of IT staff to support the users during the conversion period
and lack of powerful IT equipment to support the day-to-day activities, the EDL has proposed the
action plan to continue the roll out of the Accounting and Financial Management System (AFMS) as
follows:
Acquire the virtual private network (VPN), internet network, which will allow the IT staff to
access remotely to the user system, so that the problems can be investigated and solved timely.
The budget is estimated at $50,000.
Install new servers at all 17 branches which will provide more disk space as the existing server is
run on PC which has limited disk space and caused the system not workable. The budget is
estimated at $170,000.
Engage local IT consultants to assist in system roll out. Enough IT consultants will be engaged
and first trained by the EDL IT staff to get familiar with the EDL IT configurations and the
AFMS. They will then assist to support the users during the conversion period at the provincial
sites. The budget is estimated at $100,000.
2. Financial Model. Budget for updating the financial model according to the new Power Development
Plan including training for EdL Staff (US$35,000)
It was agreed in principle that EdL would prepare a single bid document for the supply and installation
of the VPN plus 17 servers using the bidding document for goods by June 20, 2011. However, the team
highlighted that this component is not eligible for financing by IDA under the Financing Agreement as it
was originally envisaged to only involve technical assistance – and all technical assistance was to be
financed by Norad. Therefore, unless EdL wishes to request an amendment to the Financing Agreement,
this equipment would need to be funded using EdL’s own resources. If an amendment is requested, EdL
FM Dept would need to discuss with the EdL Project Team for managing the Component A.1 to finalize
the IDA funding re-allocation of $320,000 to finance the goods under the IT System Component. For the
engagement of the IT consultants to be financed by Norad, the Bank recommends that the TOR should be
revised to incorporate in more detail the tasks to be performed, required mandate and expected timeframe
to complete the job at all provincial branches. EdL agreed to submit the TOR for the consulting services
for the Bank review by June 20, 2011. The team also advised EdL to initiate the procurement for the VPN
and 17 servers in parallel.
Component A.4. Safeguards Capacity Building (Norad US$0.25 million): Provide goods and training
to EdL and its provincial authority counterparts to strengthen their capacity in management of
environmental and social assessment and impacts associated with distribution and substation projects.
30
Component A5. Demand-Side Management and Energy Efficiency Program (IDA US$0.3 million;
Norad US$0.75 million, GEF US$0.88 million): Provision to EdL of: (a) goods to support the
implementation of the action plan under the DSM and EE Master Plan; and (b) technical assistance to
implement the action plan.
With the budget available, the priority activities (most of them are in the table below) under the REP II fo
DSM and EE, include:
(i) Hire a firm (like IIEC under REP I) for (a) continuous capacity building of EdL’s DSM and
EE Cell; (b) preparation of priority DSM/EE projects (hospitals, CFL, markets), including
detailed auditing and design for investment, and support and supervise the implementation of
these projects to be funded under REP II (with funding indicated above); (c) mentoring,
training and supporting the energy coordinators to be hired by the DSM/EE Cell under this
component;
(ii) Implementation of the projects (no cost and low cost) recommended by the Master Plan for
DSM and EE developed by the international consultant under REP I;
(iii) Hiring the 10 energy coordinator, and more if needed, to (a) expand walk-through energy
audit of more government office building in Vientiane and in provincial government as well;
(b) help these government agencies at both central and provincial level to implement no-cost
activities, and facilitate implementation of low-cost projects if budget is made available
(either under this component or from government’s own budget)
(iv) Implementation of the priority investment projects as prepared under item (i), according to
budget availability for investment; and
(v) Other activities as listed by the DSM and EE Cell.
It was agreed that the Low-cost investment program at the central government office building as
recommended by the international consultant under REP I should be implemented as a priority. These
activities are targeting to energy saving at the central government agencies, which are the major consumer
default on electricity bill payment, and the MOF is also expecting EE program in these agencies to save
energy consumption so as to save budget allocation and reduce electricity arrears.
EdL proposed the following for financing under the project –the team has provided its preliminary
comments on the proposal as shown in the table below:
Project Activity Category Funding
Source
Procurement
Method
Budget
A5.1 Master Plan and Implementation of the Loss
Reduction Master Plan
Consultancy Norad QBS QCBS 750,000
A5.2 CFL Pilot Project (Residential Customers) in
Vientiane Capital
Goods IDA Shopping 48,000
A5.3 Amplian Standard & Labeling Program Goods IDA Shopping 25,000
A5.4 Office Rental for 10 Coordinators (24 months) Goods IDA EdL Shopping 38,000
A5.5 Public Awareness Campaign Goods IDA Shopping 20,000
A5.6 Office Equipment Facilities for 10 EC Goods IDA Shopping 25,000
A5.7 CFL Pilot Project (Residential Customers) in
Vientiane Province
Goods IDA Shopping 48,000
A5.8 CFL Pilot Project (Residential Customers) in Goods IDA Shopping 48,000
31
Khammuane Province
A5.9 CFL Pilot Project (Residential Customers) in
Savannakhet Province
Goods IDA Shopping 48,000
A5.10 Hiring Energy Coordinators * Works
Consultancy GEF * IC 170,000
A5.11 EE Pilot Project (Medium Cost)** Goods GEF ICB 398,000
A5.12 EE Pilot Project (Low Cost)*** Goods GEF ICB 200,000
A5.13 EE Awareness Building Campaign Goods
Consultancy GEF IC 11,000
A5.14 EDL Project Manager Cost Cost GEF EdL 20,000
Sub-total 1,849,000
*There is also US$100,000 in AusAID additional financing under REP I for hiring energy coordinators which can
co-finance the contracts with GEF under REP II.
** Develop implementation plan for medium-cost EE measures for all 50 buildings (Medium-cost implementation
plan for 4 buildings have been prepared under REP I)
*** Implementation of no-cost/low-cost EE measures in the remaining 46 government buildings (No-cost/low-cost
implementation plan has been prepared for 50 government buildings and 4 buildings have been piloted under REP I)
The Bank provided its no objection on May 29, 2011 to sole source IIEC for an estimated contract value
of $65,000 to: (1) help EdL recruit energy coordinators; (2) implementation of low-cost EE measures in
the 46 public sector buildings for which plans were developed during Phase 1B in 2009 under REP I; (3)
preparation of medium-cost EE measures in 50 public sector buildings; (4) preparation of a CFL program
proposal for the residential sector; and (5) preparation of DSM/EE Phase 2 scope of works.
MEM Component
Component B.1 Off-grid Investment Program (IDA US$4 million): Application of off-grid renewable
energy technologies, including solar home systems (SHSs) and pico-hydro to provide electricity to about
10,000 households in the project provinces.
The procurement of the bulk purchase of solar home systems under REP II will be combined with the
procurement of solar home systems under AusAID Additional Financing to REP I. See Annex 3 under
Component B.1 for more details
The team reminded DOE that the total budget for off-grid investment is $4 million. Therefore, DOE
should retain some budget from this to cover the investment needs of the PPP microhydro (about
$300,000) and the biomass and biogass investment as needed. DOE should finalize the number of SHS
purchase based on the actual bid prices and budget needs for the items (b) and (c).
Component B.2. Institutional Strengthening (Norad US$0.5 million): Provision of technical advisory
services to MEM to support: (a) the implementation of its comprehensive program of management; and
(b) the monitoring of the performance of the outsourced management and the off-grid investment
program, including provincial electrification service companies (PESCOs) and village electricity
managers.
The Bank provided its no objection to the TOR for the VOPS management contract on May 12, 2011.
DOE has proposed a contract with two phases – each of 18 months duration for a total estimated cost of
$500,000 (to be financed by Norad using Bank procurement procedures). DOE has advertised the
Request for Expressions of Interest (REOI) with a deadline of June 30, 2011. It was agreed that DOE
32
would submit for Bank no objection a waiver in order to use CQS method and advertise locally with
appropriate justification no later than June 4, 2011. Given the delays in recruiting the new VOPS
consultant and the necessity of having the VOPS in place well before the delivery of the new solar home
systems, the team urged DOE to undertake its best efforts to mobilize the VOPS without delay. In this
regard, it was agreed that the draft RfP and short list would be provided to the Bank no later than July 15,
2011 with the aim of mobilizing the consultant no later than October 2011.
Component B.3. Alternative Rural Electrification Delivery Model (Norad US$0.2 million and GEF
US$0.799 million): Provision of technical advisory services to MEM to: (a) promote alternative
renewable energy development and develop associated delivery models and financing mechanisms; and
(b) support small and medium enterprises in income generation that is linked to the use of the renewable
energy use.
AusAID funds will be used to find technical assistance for detailed project design, etc. to pilot up to four
biogas sites using pig manure. GEF resources could be used for the supply and installation of these four
biogas sites in addition to biomass sites. The team requested DOE to submit a plan for the use of Norad
funds for technical assistance under this component by July 31, 2011.
Component B.4 Rural Electrification Master Plan and Database (Norad US$0.1 million): Provision
of technical advisory services to MEM to: (a) maintain the rural electrification database; and (b) update
the rural electrification master plan.
DOE indicated its preference to use the local JV partner who did the original RE Master Plan and
Database to do the maintenance and update given the continuity of work and that it would require
significantly more resources for a new firm to carry out this assignment as they would need substantial
time to understand the approach and details of the renewable energy master plan for Lao PDR and
understand how the database is structured. It was agreed that DOE would submit a request for sole
source selection along with the draft terms of reference no later than July 15, 2011.
Component B.5. Organization Strengthening of MEM (IDA US$0.1 million and GEF US$0.02
million for incremental operating costs; Norad US$0.72 million): Provision of technical advisory
services to MEM: (a) to support the project management unit in the implementation of Part B of the
project; and (b) to establish and support the initial operation of a REFS to enable REF in its mandate.
The $100,000 of IDA and $20,000 of GEF resources is for incremental operating costs. The team
requested DOE to submit a proposal – including cost estimates, procurement timetable and brief
description – for the use of the Norad technical assistance funds under this component by July 31, 2011.
REP II Disbursement. As of May 29, 2011, the cumulative disbursement amounted to SDR 32,142
(US$50,000 equivalent) out of the total IDA Grant H5380 of SDR 12.6 million (0.26%). Only the
Designated Account of US$50,000 has been set up by DOE in January 2011 after the effectiveness of the
project since August 2010. A small amount of DA (US$50,000) will also be opened by EDL for small
payments of incremental operating costs.
Environment and Social Issues. See Annex 9 for details.
33
Annex 7: UPDATE May 30, 2011: Checklist of the IFC Loan Conditions for FIRST Disbursement
Condition (detailed in Section 4.01, page 36, in
Loan Agreement)
Party
responsible
Status Remarks/Next Steps
(a) Transaction documents: (i) IFC and (ii) IDA EdL Completed Documents completed and filed.
EDL suggested a Designated Account for IFC
disbursements to be opened at BCEL.
(b) Certificate of Incumbency/Authority
EdL Completed Document filed
(c) Authorizations- as listed in Annex
EdL, IFC Completed Document filed
(d) Legal opinions as to Lao law
EdL, IFC,
DFDL
Completed Document filed (issued by MOJ)
(e) legal Opinion as to English law IFC, A&O To be completed To work with A&O before the first disbursement
(f) Auditor’s certificate of compliance to Section 5.01
(c) of IFC loan agreement
EdL, E&Y To be completed To work with E&Y before the first disbursement
(g) IFC fees paid (mandate fee, commitment fee, and
front-end fee)
EdL Partially
Completed EDL to make payment, and submit related
evidences, for IFC fees and legal fees pending at
this stage.
(h) Legal fee and expenses reimbursement per Section
2.16 (b) (ii) and confirmation of payment up to $
US 50,000 cap.
EdL Partially
Completed EDL to make payment, and submit related
evidences, for IFC fees and legal fees pending at
this stage.
(i) Authorization of Auditors EdL, E&Y Completed Letter sent to E&Y and filed at IFC
(j) Certificate of Solvency (Schedule 4) EdL Document filed
(k) Appointment of agent (process server) EdL Completed Document filed
(l) Disbursement timetable EdL To be completed To work with EDL in coordination with IDA team
(m) DSRA per Section 5.01 (p) EdL To be completed EDL to send a letter to inform IFC about its
decision regarding the proposed bank where DSRA
will be established.
(n) Receipt by IFC of documents: i). List of existing
liens [3.01 (k)]; ii). List of EdL’s Subsidiaries/
affiliates [3.01 (s)]; iii). List of financial debt [3.01
(l)]
EdL Completed Documents filed
34
Annex 8: REP II Key Result Indicators
Objectives and indicators Baseline
2009
Target values Actual values
Year 1 Year 2 Year 3 Year 4 2010 2011 2012 2013
Development objectives
I. Number of households electrified 0 2,000 14,000 25,000 37,700 0 0
II. EdL Financial Performance
-Rate of return on revalued assets <1%
1%
2%
3%
4% 1%
-Debt service coverage ratio >1.3 times >1.3 times >1.3 times >1.3 times >1.3 times
1.69
-Self-financing ratio
>15% >15% >15% >15% >15% 35%
-Months of account receivables from
Government agencies
20 months
15 months 8months 5months <3months 11 m
o
*
10.31 as
of June 1,
2011
Result Indicator for each Component
A. EdL component
-Length of MV and LV lines
-No. of households connected**
-System loss
-Measurable increase in awareness and
adoption of EE technologies
0
200 Km 500 Km 800 Km 1,209 Km 0
0
0 9,000 17,000 27,700
>13%
13% <13% <13% <13% 10.92%
10.55%
10 GoL
agencies
under
REP I
10% of
central
GoL
agencies
20% of
central
GoL
agencies
50% of
central
GoL
agencies
80% of
central
GoL
agencies
10% of
central
GoL
agencies
B.MEM Component
-No. of households electrified
-No. of rural electrification projects with
financial support of REF
0
2,000 5,000 8,000 10,000 0 0
0 0 1 2 3 0 0
*2009/2010 accumulated gov’t arrears 94,121 divided by (total bill 101322/12) = 11.14 months
**Of the 27,700 target, about 19,700 households will be connected through grid extension subprojects and 8,000 through P2P
35
Objectives and indicators Baseline
2010
Target values Actual values
Year 1 Year 2 Year 3 Year 4 2010 2011 2012 2013
Global Environmental Objectives
I. a).Measurable increase in awareness
50 GoL
agencies
60% central
GoL
agencies; 50
large
industrial
and
commercial
consumers
in Vientiane
100% central
GoL agencies;
100 large
consumers in
Vientiane
I b).Adoption of EE technologies and
practices by consumers
No
customers
25 GoL
agencies; 2
largest
hospitals
50 GoL
agencies.; 4
hospitals; 4
large
commercial
consumers
0
II. Reduction of EdL’s distribution system
loss
13% 12% 11% 10.92
%
10.55%
III. Newly installed renewable energy
generation capacity
0MW 0.12 MW 0.30 MW 0
IV. Cumulative CO2 emission reduction 0 t CO2 e About
100,000 t
CO2 e
About 300,000
t CO2 e
0
36
Annex 9: REP I and II - Environmental and Social Review – May 2011
Part A. On Grid installation implemented by EDL
Environment
As a follow up to the actions plan in the AM dated September 2010, EDL submitted to the World Bank
progress report of the Safeguard Implementation under REP I. The safeguard report confirmed no
significant safeguard issues for the on-grid sub-projects which have been implemented in the seven
southern provinces and (ii) summarized lessons learned by EDL management and technical staff who
participated in the study tour at EGAT in Thailand and NT 2 in Lao PDR respectively in April and May
2010. However, the report did not identify how many on-grid sub-projects that required EMPs based on
Environmental Screening datasheet (in accordance with ESSF or current safeguard operational manual).
EDL agreed to submit to the World Bank a list of on-grid subprojects which use house-keeping measures
and prepared EMPs by June 30, 2011.
House-Keeping Measures and EMP for on-grid investments. EDL branch office monitored and worked
closely with the contractor and EMU to ensure no serious disturbance to the environment and villagers
occurred during civil work activities and the record of damages (trimmed or cut trees for installation
clearance). The installation of all the on-grid distribution was within the existing right of ways and had
no effects on any known environmentally sensitive areas. This was evident through the on-grid site visits
in Champrasac province. Minimal damage on villagers’ crops and trees during the civil work activities --
such as installing poles and stringing conductors-- were managed by the contractor with the agreed house-
keeping measures. The mission discussed with EDL’s Environmental office regarding the incorporation
of either house-keeping measures or EMP in bidding and contract documents for the current and future
on-grid sub-projects (e.g. under REP I and II). EDL is requested to share with a copy of any recent on-
grid contract to the World Bank for verification or inputs for appropriate clause related to house-keeping
measures or EMP.
Safeguard Capacity Building. Under REP I, the ESL consultants provided basic safeguard training on the
preparation, monitoring, and reporting of safeguard instruments (such as EMP and RAP) to EDL staff at
central and provincial branch offices) in April 2010. The training proceedings was shared with the World
Bank safeguard specialists during the mission The mission discussed with EDL’s Environmental Office
on how to improve the TORs for the Safeguards Capacity Building under REP II’s A.5 . Component
(financed by NORAD). EDL will use the fund to hire a team of national and international safeguard
consultants (i) to deliver safeguard training courses based recommended in the safeguard training needs
assessment in 2008 and (ii) to assist staff of EDL’s Environmental Office and branch offices in planning,
preparing, and monitoring the implementation of safeguard instruments. EDL expected to have the
Safeguard Consultants on board by September 2011. The World Bank safeguard specialists agreed to
send written comments to EDL within one week after the mission. EDL will submit the revision of the
TORs by June 30, 2011 for review and approval by the World Bank.
37
Safeguards Operational Manual. EDL submitted to the World Bank its draft Safeguards Operational
Manual before the mission. The World Bank safeguard specialists clarified the status of and discussed
with EDL on how finalize the Safeguards Operational Manual . The World Bank safeguard specialists
agreed to send to EDL the written comments within one week after the mission. EDL will then finalize and
send the final Safeguards Operational Manual for the World Bank record, likely before end of the 2011.
The mission encouraged EDL to apply the Safeguards Operational Manual for all REP’s sub-projects and
other Rural Electrifications financed by other sources.
Social
All civil works under REP I that may have negative effects on private assets or the livelihood of local
population have been completed. The mission was also informed no negative social impact occurred due
to the off-grid program. According to the Safeguard Progress Report submitted by the EdL environment
and social unit, 30,466 households in seven provinces were affected under 67 subprojects financed by the
REP I. In total, 4,585m2 of land had been affected, and more than 1 million trees had been reportedly cut
or damaged6. Under the REP I AusAid Additional Financing, it is expected that about 8,900 households
would be impacted, with the size of land affected estimated at 990m2 and the number of trees cut at about
9,000.
According to the progress report, all affected people were willing to voluntarily contribute their land or
trees, given the large benefit from being connected to the grid and the limited negative impacts. The
report also mentions that the project supported the rehabilitation of primary schools, hospitals, temples,
and so on, with the value of such in-kind contribution estimated at about 247 million LAK. Therefore no
affected households were compensated for the negative impact. The mission noted, however, that the
progress report is not clear if impacts are minor at the household level too – the report seems to lump
together both private and public land in the total size of affected land, and the data on the number of
affected trees may include forest land that belong to the public too. In order to verify that no household
was significantly and negatively impacted without due compensation under the project, the mission
agreed with EdL that the size of impact on private assets will be separated from impact on the
publicly owned assets in the revised final report and submit it to the Bank by June 10.
EdL developed a log book, according to the template developed in the Social Operational Manual, in
which the environment and social specialist of the provincial project implementation units, under the
support of the environment and social department of the EdL HQs, recorded the size of the land acquired,
the number and types of trees affected, and other impacts. Some extracts of impacts recorded in the log
bookare attached to the Aide Memoire. A summary of impact was also developed at the provincial level.
The mission was informed that formal agreements were also developed for signature by relevant
households which describe the detailed list of impacts. The mission considers this is a very good practice
which could be used by other ministries implementing projects entailing minor impacts. The mission
requested to share with the task team the sample of filled inventory of impacts as well as sample
signed agreements for record and sharing with other projects and ministries.
6 The mission considers and EdL agrees that this number is very high, which may either lump together privately
owned and publicly owned trees, or could simply be wrong. EdL agreed to check the record and get back to the task
team.
38
For REP II, the mission noted the current good practice employed by the EdL can be further expanded by
strengthening voluntary donation processes and the documentation of informed consent. As noted above,
it is not clear if negative impacts are minor for all households and voluntary donations are thus justifiable.
It is not clear either if all households agree to forfeit their entitlements and donate assets with full
knowledge of their entitlements. The mission agreed with EdL that a clear threshold and simple
checklists be developed to ensure that impacts are indeed minor for all cases of voluntary donation
and that informed consent by affected people is clearly established and documented. The mission
recommended EdL to refer to some of the good practices that EdC recently introduced under the Bank
supported projects, and agreed to provide detailed description of what should be addressed in the checklist
in the comment to the draft Safeguards Operational Manual before the mission.
The mission observed very positive social impacts due to improved access to electricity in rural areas. As
mentioned above, schools and other public facilities were rehabilitated under the Project. The mission
also noted some instances of business growth following project implementation. The mission strongly
recommends an impact evaluation of off-grid and on-grid electrification among project beneficiaries
which will help showcase the positive impact of the project.
Part B. Off-grid component by MEM/DOE
Potential environmental safeguard issues of off-grid investments under REP I and II are limited to mainly
issues related to used and out-of-order batteries for SHS and safety of Pico-hydro technology. The
environmental and safety issues could be addressed through good housekeeping system (e.g. disposal
arrangement of used batteries with the SHS supplier, VOPS and awareness campaign program activities.
The batteries’ recycling is arranged by VOPs and its sub-contractor, PESCOs, in particular to collect
used/out of order batteries from households and send to a specialized company for recycling purpose.
PESCOs developed a one-page trouble shooting principles –including the do and don’ts of used batteries-
-for educating to the villagers prior to installing SHS to each household. DOE will send a copy of the
one-page trouble shooting principles to the World Bank for record purpose.
It was not clear on the disposal arrangement of broken or unused SHS panels. DOE was requested to
report to the World Bank on its arrangement or agreement with the SHS supplier regarding used or
unusable SHS panels in the next support mission in late 2011.
Safeguard capacity Building. DOE staff benefited from the basic environmental safeguard training
organized by EDL’s Environmental Office under REP I’s Safeguard Capacity Building component. The
mission discussed with DOE to integrate environmental and safety mitigation measures (defined in the
feasibility study of Pico and Mini hydropower in its bidding and contract documents. More safeguard
capacity building will be provided through the REP II’s safeguard consultants in order to ensure that DOE
staff has necessary capacity and skills to prepare and oversee the planning and implementation of the off-
grid investments.
Safeguards Operational Manual. DOE has translated the final ESSF in Lao and disclosed it in the country
and the World Bank’s Infoshop in October 2010. DOE has not submitted to the World Bank for review
39
and inputs the Safeguards Operational Manual for off-grid component. DOE agreed to update the World
Bank on development of its Safeguards Operational Manual for off-grid component by June 30, 2011.
Attachment: sample inventory of impact
Lao Peoples’ Democratic Republic
Peace Independence Democracy Unity Prosperity
Summary report on Social and Environment work of REP I
Village: Sokbo, District: Xabangfai, Province: Khammouane
1. Propose:
To implement the Khammouane province’s Social and Economic development plan
To complete the REP I construction plan
To reduce the impact to the Social and Environment
2. Social and Environment impact:
Khammouane province’s EdL (as project) has allowed the construction company (Electricity
construction State Enterprise, Khammouane province branch) to construct the 20KV and 0,4 KV
on-grid electricity and set up …….as REP I contract.
This would be impacted to people’s property, where is the on-grid electricity passed zone, such
as: trees, land… as detail below:
No. Owner’s
name
Type of lands Type of Trees (amount) Remark
Rice
farm
Garden Building forest reserved Coconut mango Jack
fruit
tamarind kepok
Yes no yes no yes no yes no yes no
01 Mr. Ta 1 1 5
02 Mr.
Bounthan
1
03 Mr. Dom 1
04 Ms. Vieng 1
05 Mr. Somsy 1 1 9
06 Ms. Hou 1
07 Mr. Sone
08 Mr. Air 1 3 1 1
09 Ms. Yeng 1 1 1
10 Ms. Soun 2 2
11 Mr.
Bountieng
1 2 2 1
12 Mr. Deng 1
13 Ms. War 1
14 Ms. Lai 1 1
15 Mme. Bou 1 1 1
16 Mr. Tar 1
17 Mr. Phomma 3 2
18 Ms. Thom 1 4 3 1
40
Annex 10: Field Notes from Site Visits in Champasak Province, May 26 and 27, 2011
The Team carried out field visits on May 26 and 27, 2011 to villages in Champasak province electrified
under REP I and REP I-AusAID additional financing on-grid, P2P and off-grid components, as well as to a
target village to be electrified on-grid under the REP II. Champasak and Attapu PESCO SHS warehouse
was visited as well in order to evaluate possible improvements.
A WB fiduciary team formed by Mr. Chanvongnaraz Khamphet (Procurement Specialist), Ms. Malarak
Souksavat (Financial Management) and Mr. S. Sisomphone (Consultant) joined the field visits as part of
the integrated fiduciary team for the Lao PDR portfolio. A summary of the main points is provided
below.
General information about Champasak province electrification was provided by EdL branch. Seventy-
nine percent of villages and 77.6% of households in the province have been electrified as of April 2011.
The highest household electrification rates are in Pakse district (100%) and the lowest in Paksong district
(57%) and Moonlapamok district (58.7%). The largest consumer category is residential, comprising 43%
of electricity billed and 47% of bills collected. Average energy losses have decreased from 18.8% in 2006
to 12.7% in 2010. Champasak province is supplied by two hydropower plants and purchases electricity
from the Thai grid in the dry season.
Key findings
(a) SHS being portable is highly appreciated as it allows families to carry the system with them when moving to live in the huts in the rice fields for six months a year in the dry season.
(b) SHS are used as well for recharging small batteries directly, sometimes selling this service. (c) Villagers that charge their batteries through the installed SHS are collateral beneficiaries do not
have to travel to the nearest town for this purpose and they are charged 1,000 Kip instead of 5,000 Kip, getting to save 4,000 each time.
(d) Main uses of electricity are for lighting and for cell phones recharging. And for water pumping when having access to the grid.
(e) Some SHS repayments collectors keep the repayments when not paid their agreed good performance bonus. PESCO is strongly advised to avoid these situations.
(f) Main cause of SHS withdrawal seems to be the HHs connection to the grid, 15%-20% of the units were withdrawn because of not working. When the withdrawn taking place, just the panel is removed. Non-working units are used as a source of spare parts.
(g) A capacity building necessity on testing and fixing SHS was identified in order to VEMs and PESCO staff to be able to deal properly with the withdrawn units.
(h) Most of P2P beneficiaries found repayments affordable. (i) In the P2P village visited two different EdL staff collect monthly the P2P payments and electricity
bills, an opportunity for optimization was identified. (j) EdL representatives were pointing that female-headed households and families with disabled
members are giving priority to access to the P2P program. (k) Main productive developed uses of the electricity are: water pumping, use of small machinery
for furniture’s production and welding machines for construction. (l) Previous source of electricity was mainly diesel generators, environmental benefits are evident.
41
(m) Access to the grid and SHS is meaning high savings for the beneficiaries, being around half of the amount of money they used to spend on diesel. When selling their old generators beneficiaries get 30% or more of the originally invested money.
Rural Electrification project component related: SHS
Site visited no.1: Bontkair Village, near Pakse city
44SHS installed. Electrified under SPREE I since 2007.
HHs pay 87.5USD in 10 years; 20.000 Kip/month (USD 2.5); including the installation and the wiring.
Chief of the Village each the one collecting the SHS repayments. He records the payments in a logbook along with the signatures of the beneficiary and himself. It takes him 10 days a month to visit the HHs with SHS for finishing the re-collection task, once sometimes the families are absent or not have the money available.
Source of income: agriculture. Monthly average earnings of the visited family: 500,000- 1,000,000 Kip (USD 62.5-125). They consume 5 ton of their own produced rice a year.
Sources of energy used previously: diesel burn, and car batteries that used to recharge in the village (5,000 Kip/recharge, USD 0.6)
Villagers that charge their batteries through the installed SHS do not have to travel to the nearest town for this purpose anymore, they are charged 1,000 Kip (USD 0.1) instead of 5,000 Kip (USD 0.6).
SHS Payments Fees inserted on the monthly payment (increased in 2010)
Type Payment upfront to PESCO (KIP)
Payment monthly by HH (KIP)
Monthly Payment to VEM* (KIP)
Monthly Payment to VEAC** (KIP)
Monthly Payment to PESCO (KIP)
50 Watt 160,000- USD 20
20,000 – USD 2.5
4,500- USD 0.6 1,000- USD 0.1 4,500- USD 0.6 30 Watt 160,000- USD 20
18,000- USD 2.25
20 Watt 160,000- USD 20
13,000- USD 1.6
*VEM, Village Electricity Manager. Person in charge to solve the technical problems.
** VEAC, Village Electricity Advisory Committee. Mediates in disputes and take decisions when needed.
SHS being portable is highly appreciated as it allows families to carry the system with them when moving to live in the huts in the rice fields for six months a year in the dry season.
Uses of electricity are for lighting and for cell phones recharging mainly. In the HH visited they use to charge people for recharging their batteries for 1,000 Kip each.
After the one –year warranty period, when batteries not working they get new ones in Pakse city for 700, 000 Kip (USD 87.5). PESCO provides thenm as well for 680,000 Kip in 5 payments of 136,000 Kip (~17USD).
It was expressed by another PESCO worker in charge of collecting the monthly payments that he is not giving the paybacks to PESCO since June 2010 as he did not get the bonus payment agreed.
A distribution line built by ECI just arrived to the village, the grid will be bought by EdL. Connection fee for this grid including the wiring and two lamps is 3,500,000 Kip (436 USD). A whole agreement has been set for connecting the village. Once connected the villagers expressed their desire to keep using the SHS when working in the rice fields. They plan to get pumps in order to improve their agricultural production, and later on invest on rising chicken with the benefits. They plan as well to get refrigerators and fans when connected.
42
Image 1: 50 W SHS, battery Image 2: Solar panel Image 3: Just arrived grid
Rural Electrification project component related: SHS
Site visited no.2: Champasak and Attapu PESCO SHS Warehouse
This PESCO providing service to Champsak and Attapu provinces has installed 2,000 SHS under SPRE
and REP I.
Withdrawal:
Main cause of withdrawal is due to HHs connecting to the grid, 15%-20% of the units were
withdrawn because of not working. Only 20 units were withdrawn because of beneficiary not
affording it, after a three months grace period.
Main cause of SHS break down store was overloading in those SHS installed under SPRE in 2003.
REP I SHS were identified as better quality as the ones provided under SPRE. Non-working units
are used as a source of spare parts.
When the withdrawn taking place, just the panel is removed.
A proper logbook recording of withdrawals is being filled with the following information: date of
installation, date of withdrawn, beneficiary name and unit number.
Withdrawn working units are placed in another beneficiary HH, being the re-payment payments
only the remaining ones up to 10 years.
A capacity building necessity on testing and fixing SHS was identified in order to VEMs and PESCO
staff to be able to deal properly with the withdrawn units. It is being studied y the team the possibility to
create a mobile training unit that will go once a year PESCO by PESCO testing and fixing the non-
working SHS and at the same time providing on-hands training, probably funded by Norad.
It was advised to this PESCO to take off all the parts of the SHS when withdrawn as they can be used as
spare parts.
43
Image 4: SHS in the warehouse Image 5: Non-working SHS being checked
Image 6: Financial Management Specialists checking the financial and inventory recordings
Rural Electrification project component related: P2P
Site visited no.3: Phiangdi Village, Four Thousand Islands
400HH, 86 HH connected trough P2P as part of the pilot project under REP I in 2009. All the connections and wiring were done within a month by ECI, Electric Company Installation, owned by EdL. ECI provided each P2P beneficiary family with two bulbs and a kettle.
Structure of P2P payments: 700,000 Kip-USD 87.5 (500,000 Kip-USD 62.5 cheaper than the standard one) to be repaid in 35 monthly repayments of 20,000 Kip-USD 2.5. No upfront money asked.
Average electricity bill of the beneficiaries visited was 10,000- 16,000 K.ip (USD 1.25-2). Two visited beneficiaries found the P2P re-payments and electricity bill affordable, but a third visited beneficiary, a lady heading her family with 4 children was staying is hard for her coping with her 15,000 Kip (USD 1.9) average electricity bill as her average monthly income rises up to 200,000 -300,000 kip (USD 25-37.5)a month from agricultural labor.
Two different EdL staff collect monthly the P2P payments and electricity bills, an opportunity for optimization was identified if coordinating the collections and being done by a single EdL staff.
EdL representatives were pointing that female-headed households and families with disabled members are giving priority to access to the P2P program.
44
Image 7: P2P bill and electricity bill of a beneficiary Image 8: team meeting a female headed HH beneficiary
Image 9: Female headed family beneficiaries
Rural Electrification project component related: On-Grid
Site visited no.4: Somren-Ok Village, Done Some Island, Four Thousand Islands
14,500 citizens, 266HH, 261 of them have been connected to the new grid, 5 HH could not afford the fee. Connections took place in April 2011 and were finished within the same month.
Average income per family is 417,000 Kip a month (USD52), coming from fishing, rice harvesting and livestock mainly.
Price of the connection, including the wiring was:
Meter type 3-9 Amps.: 1,500,000 Kip (USD187)
Meter type 5-20 Amps: 2,500,000 Kip (USD 312)
Main productive developed uses of the electricity are: water pumping, use of small machinery for furniture’s
45
production and welding machines for construction. They have now fans, refrigerators and televisions at home.
Previous source of electricity: diesel generators. The interviewed beneficiary stated that he sold his used generator for 8,000 Bahts (USD ~267), and he bought it for 13,000 Baths (USD ~433).
It seems to be blackouts take place 2 or 3 times a month.
Electricity bills of the schools and health centers in this just electrified island are paid by the village chiefs.
Electricity payments are collected by EdL once a month.
Beneficiaries wish they could have enough electricity supply for a big water pump to set in place an irrigation system. A generator based pump was running from 1978 to 2002 in the community thanks to an Indian loan, but finally they had to quit because they could not afford anymore the diesel.
Image 10: Beneficiary being interview Image 11: Extended grid
Image 12: Plugged refrigerator in a health center
Rural Electrification project component related: On-Grid
Site visited no.5: Hangkhon Village, Done Some Island, Four Thousand Islands
56HH, 30 of them have been connected to the new grid since early 2010..
Daily expenses on diesel for generators used to be 1l/night for a restaurant owner, 13,000 Kip (USD 1.6),
46
making 390,000 Kip (USD 48.75) a month to be covered with average monthly earnings of 500,000 Kip (USD 62.5). Connection to the grid has meant for them great shavings, once his average electricity bill is 200,000 Kip (USD 25). Interviewed sir stated that he is using mainly the shavings to provide better schooling for his six children now and in the future.
The interviewed beneficiary stated that he sold his used generator for 5,000 Baht (USD ~166), and he bought it for 16,000 Bath (USD ~533).
Main productive use of the electricity is for pumping water from the Mekong river, previously women used to carry it all the way to their homes. Women have now more time for other activities and are not so exhausted. They use electricity for plugging in appliances as T.V. and radios.
It seems to be blackouts when having heavy rains.
In this village, a volunteer collects the bill payments once a month and brings it to the district EdL manager. Image 13: Extended grid
Rural Electrification project component related: Target for On-Grid under REP II in 2012
Site visited no.6: Village in Done Some Island, Four Thousand Islands
Image 14: Potential beneficiary being interviewed
230 citizens, 36 HH, 16 HH could afford the connection fee if being under 3
million Kip (USD 375).
Current sources of energy: oil lamps and diesel generators.
This community does not provide with a borrowing system that could
facilitate the affordability of the connections.
They wish to be connected to the grid mainly in order to be able to have
water pumps.
