REQUEST FOR CEO ENDORSEMENT/APPROVAL · * Excluding Agency Fee and Project Preparation D. GEF RESOURCES EQUESTED BY AGENCY (IES), FOCAL REA S) AND COUNTRY IES N/A E. CONSULTANTS WORKING

Submission Date: July2010

Re-submission Date: October 2010

Re-submission Date: December November 2010

PART I: PROJECT INFORMATION

GEFSEC PROJECT ID: 3742

GEF AGENCY PROJECT ID: GF/EGY/09/XXX

COUNTRY(IES):ArabRepublic of Egypt

PROJECT TITLE: Industrial Energy Efficiency (IEE)

GEF AGENCY(IES):UNIDO

OTHER EXECUTING PARTNER(S): Egyptian Environmental

Affairs Agency (EEAA)

GEF FOCAL AREA(s):Climate Change

GEF-4 STRATEGIC PROGRAM(s): CC-SP2

NAME OF PARENT PROGRAM/UMBRELLA PROJECT: N/A

A. PROJECT FRAMEWORK

Project Objective:

Facilitate energy efficiency (EE) improvements in the industrial sector (with focus on SMEs) through supporting the development of a national

energy management standard and energy efficiency services for Egyptian industry as well the creation of demonstration effects

Project

Components

Inv.,T

A or

STA2

Expected

Outcomes

Expected Outputs

GEF

Financing1

Co-Financing1

Total ($)

c=a+ b

$ (a) % $ (b) %

1.

National program

to define energy

benchmarks and

implement ISO-

compatible

Energy

Management

Standard (EnMS)

for industry

TA Supportive

policy

instruments

(EnMS,

benchmarks) for

delivering EE in

industry and

contribute to

international

competitiveness

1.1 EnMS developed and adopted

(compatible with ISO 50001 EnMS)

1.2Structure in place for measurement

and verification of compliance with

EnMS

1.3 Industrial energy database

developed and energy consumption

benchmarks developed

1.4 Participation in the development of

UNIDO guide on implementation of

ISO 50001, EnMS

1.5 Post-project action plan

460,000 17 2,200,000 83 2,660,000

2. Awareness

raising on

industrial EE

TA Widespread

awareness on EE

and energy

management

2.1 Peer-to-peer network established

(to assist companies in energy

management plan design and

implementation)

2.2 National information campaign on

the benefits of EE and energy

management

2.3 Monitoring and evaluation;

capturing knowledge on project’s

results

335,460 40 500,000 60 835,460

3. Technical

capacity

building on EE

services

A cadre is

available of

specialized /

certified energy

management and

3.1 Energy management training tools

developed and training provided

3.2 System optimization training tools


3.3 Equipment vendor training tools

579,540 44 750,000 56 1,329,540

REQUEST FOR CEO ENDORSEMENT/APPROVAL PROJECT TYPE: Full-sized Project

THE GEF TRUST FUND

Expected Calendar

Milestones Dates

Work Program (for FSPs only)

CEO Endorsement/Approval Jan. 2011

Agency Approval date Jan 2011

Implementation Start March 2011

Mid-term Evaluation (if planned) Aug 2013

Project Closing Date Feb 2016

system

optimization

experts


4. Access to

finance for EE

improvement

projects

TA Increased access

to financial

assistance for

implementing

EE projects

4.1 Awareness raised on sources of

financing for IEE (working with

existing financial institutions and

government sponsored incentive

programs)

4.2 Support existing financial

institutions and government- sponsored

incentive programs in the (technical)

evaluation of industrial energy

efficiency projects

345,000 32 750,000 68 1,095,000

5.

Implementation

of energy

management

plans and

system

optimization

TA State-of-the-art

energy

management

practices and EE

measures are

demonstrated

5.1 Energy management plans

formulated and implemented

5.2 Industrial systems assessed and

system optimization designed and

implemented

1,850,000 9 18,910,000 91 20,760,000

Project management 380,000 27 1,011,000 73 1,391,000

Total project costs 3,950,000 24,121,000 28,071,000 1List the $ by project components. The percentage is the share of GEF and Co-financing respectively of the total amount for the component. 2 Inv. = Investments, TA = Technical Assistance; STA = Scientific & Technical Analysis.

B. SOURCES OF CONFIRMED CO-FINANCING FOR THE PROJECT

Name of Co-financier

(source) Classification Type

Project

(USD) %*

EEAA Government In kind 1,110,000 6

EEAA Government Cash 15,000,000 62

FEI Private sector Cash 3,550,000 15

FEI Private sector In kind 1,400,000 7

IMC Government Cash 2,000,000 5

IMC Government In kind 700,000 4

Private sector Private sector Cash 361,000 1

24,121,000

100

* Percentage of each co-financier’s contribution at CEO endorsement to total co-financing.

** The EE investments and resulting CO2 emission are detailed in the UNIDO Project Document in Annex 5. The associated

investment is an estimated USD 18,910,000. Both EEAA (through the EPAPII program) and FEI will make financing

available in terms of soft loans for energy efficiency improvements, at a total amount of USD 18,550,000. The remainder has

been included in the co-financing table as ´private sector´ contribution of USD 360,000. In the end, since these are loans, the

private sector is the partner that would invest the full amount of USD 18,910,000. More details on co-financing are given in

Annex E of this CEO ER.

*** It should be noted that the organization EOS and IDA will co-finance, but with no signed co-financed letters, their

contribution has not been included as ´confirmed´ co-financing

C. FINANCING PLAN SUMMARY FOR THE PROJECT ($)

Project Preparation

a

Project

b

Total

c = a + b Agency Fee

For comparison:

GEF and Co-

financing at PIF *

GEF Grant 100,000 3,950,000 4,050,000 405,000 3,950,000

Co-financing

(Cash & Kind) 150,000 24,121,000

24,271,000

15,675,000

Total 250,000 28,071,000 28,321,000 405,000 19,625,000

http://gefweb.org/Documents/Council_Documents/GEF_C21/C.20.6.Rev.1.pdf

* Excluding Agency Fee and Project Preparation

D. GEF RESOURCES REQUESTED BY AGENCY(IES), FOCAL AREA(S) AND COUNTRY(IES)

N/A

E. CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:

Component

Estimated

person weeks

(GEF)

GEF

amount($)

Co-financing

($)

Project total

($)

Local consultants* 646 484,500 425,000 909,500

International consultants* 259 777,000 0 777,000

Total 905 1,261,500 425,000 1,686,000 *Details are provided in Annex C.

F. PROJECT MANAGEMENT BUDGET/COST

Cost Items

Total Estimated

person weeks

(GEF)

GEF

amount

($)

Co-financing

($)

Project total

($)

Local consultants* 440.0 250,000 313,000 563,000

International consultants* 0 0 0

Office facilities, equipment,

vehicles and communications**

110,000

663,000 773,000

Travel* 20,000 35,000 55,000

Total 440 380,000 1,011,000 1,391,000

* More details are provided in Annex C of this Request.

** Includes administrative support ($ 50,000), office equipment ($ 25,000) and miscellaneous ($ 35,000, including

communications, office supplies and unforeseen cost).

G. DOES THE PROJECT INCLUDE A “NON-GRANT” INSTRUMENT?yes no

H. DESCRIBE THE BUDGETED M &E PLAN:

Project monitoring and evaluation (M&E) will be conducted in accordance with established UNIDO and GEF

procedures. The Logical Framework Matrix in Annex A provides performance and impact indicators for project

implementation along with their corresponding means of verification. These will form the basis, on which the

project's M&E Plan will be built. Implementation of the M&E Plan will be undertaken by the project team,

EEAA and UNIDO.

The M&E procedure and budget allocation are described in Section G of the Project Document. The allocated

budget is USD 65,000. On top of this UNIDO will contribute USD 70,000 to cover the staff times and travel of

its staff to monitor and supervise the project implementation.

PART II: PROJECT JUSTIFICATION:

A. STATE THE ISSUE, HOW THE PROJECT SEEKS TO ADDRESS IT, AND THE EXPECTED GLOBAL ENVIRONMENTAL

BENEFITS TO BE DELIVERED:

The rate of industrialization in Egypt is reflected in rapid growth of the manufacturing sector and increased

energy consumption. Egypt has achieved an impressive real GDP growth rate (approximately 6.8% in 2007). The

imperative now is to ensure a stable supply of energy to meet future economic growth targets. It is expected that

the country will face a gap of 15% between energy supply and demand in the next decade. Specific energy

consumption is above international expectations for most industries in Egypt. In general, mainstream policies

focus on securing energy supplies at affordable prices to the energy consumers and fuel prices have traditionally

been heavily subsidized. The energy cost structure for Egypt's industries is slowly changing. In October 2007,

the Minister of Trade and Industry (MTI) announced plans to phase out electricity and gas subsidies for Egypt's

40 top energy intensive industries representing 70% of industrial energy consumption (mainly cement and

metallurgy) over a three-year period. This phase-out has been delayed, but the energy-intensive industries will

eventually be expected to pay market price. In addition, subsidies for non-energy-intensive industries will be

phased out in the future.

Energy efficiency has always been a low priority of the industry due to low energy prices supported by subsidies,

and preference for second-hand equipment. Given this culture of lack of regard for energy conservation, there

exist numerous barriers that stand in the way of financing and implementing energy efficiency options. The

following table presents an overview of these barriers and the action needed and proposed to be co-financed with

GEF support.

Barrier Option

Corporate decision making and management

Energy efficiency is not a core interest mission for most

companies and company strategies tend to focus on

output growth rather than cost management. Most

enterprises have a budgetary disconnect between capital

projects (equipment purchases) and operating expenses

(energy and maintenance, for example). Energy

efficiency projects reduce operating expenses, but

require capital for implementation. Corporate

accounting practices often place capital and operating

budgets under separate departments. An energy

management plan bridges the various decision-making

departments.

Provide assistance to industrial entities in their

implementation of the energy management plans, and

the verification and certification of compliance for the

50 entities through the assistance of the trained local

consultants.

Provide assistance in the national adoption of the ISO

Energy Management Standard, ISO 50001 (EnMS).

The capacity of the Egyptian Organization for

Standards and Quality (EOS), and other related

institutions will be strengthened to conduct necessary

verification and certification of compliance to the

EnMS

Related project output (see Table A)

Output 1.1 EnMS developed and adopted

Output 1.2 Structure for M&V in compliance with

EnMS

Output 1.4 Participation in EnMS guide development

Output 5.1 Post-project action plan

Lack of data for policy formulation

Energy intensity benchmarking within the industrial

sectors has not been established yet. Collection of

energy data is a time-consuming process and requires

resources to be provided on a continuous basis. In

particular, few specific data are available on the energy

consumption by the small and medium enterprises in

the country.

Systematic approach to to monitor, track and industrial

energy use at the national level for all sub-sectors, and

for all factory sizes -- micro, small, medium, and large

enterprises. This will allow the formulation of energy

use benchmarks for sub-sectors and/or type of industries

as a basis for informed decision-making in industrial

(energy) policy

Related outputs (see Table A)

Output 1.3 Industrial energy database and energy

benchmarks developed

Output 1.5 Post-project action plan

Output 2.3 M&E; knowledge sharing

Lack of awareness

Some industries may perceive energy efficiency

projects to be higher risk because of their high capital

requirements. There is hesitancy and misconception

about the technical risk and the perception that these

Widespread awareness campaigning targeting

management and decision-makers on the benefits of

industrial energy efficiency, addressing energy

management best practices, benchmarking for energy

efficiency and introducing the concept of the “systems

investments do not bring commensurate financial

returns, particularly when compared to the kind of

financial returns expected from other investment

options. Even when technical or energy managers

might be convinced, top management in a company

(with investment decisions to make in non-energy

areas) may not be aware of the potential of energy

efficiency in (long-term) cost reduction.

approach” to energy efficiency optimization as well as

the impact in terms of costs-benefits, efficiency

improvement and competitiveness and environmental

impacts (such as climate change).

Related output (see Table A)

Output 2.1 P2P network established

Output 2.2 National info campaign

Output 2.3 M&E; knowledge sharing

Output 4.1 Awareness raised on finance sources

Lack of capacity to design, evaluate and implement EE

management and optimization

Lack of familiarity with the range of energy efficiency

technologies and processes, and energy conservation

investment best practices as well as the under-

appreciation of financial benefits from energy

conservation investments are primarily responsible for

the high risk perception among industrial enterprises..

Industrial energy-consuming equipment purchase

decisions tend to focus on components, not on systems.

When processes and equipment change over time,

inefficiencies in term of energy use compound and

reoccur. In addition, local suppliers of energy

efficiency related finance, equipment and expertise

have limited experience and skills in marketing their

products to industrial decision-makers.

Capacity building of energy efficiency service providers

(private/public), focused on energy management and

systems optimization in industry and to support

investments in energy efficient technologies and

operation. Trained experts can work as plant energy

managers or energy management consultants to assist

industry entities in the implementation of the standard,

whereas the trainees of system optimization can become

technical specialists on energy system optimization, such

as specialists on motor/fan, pumping, compressed air,

steam, and process heating system optimization. The

trainees on energy management standard can also assist

the Egyptian authorities involved in verification and

certification of standard compliance.

Related project outputs (see Table A)

Output 3.1 Energy management training

Output 3.2 Systems optimization training

Output 3.3 Vendor training

Output 4.2 Technical assistance to finance institutions or

schemes

Output 5.1 Energy management plans implemented

Output 5.2 Demonstration projects implemented

With these GEF interventions, it is expected that Egypt, in particular its industry, will reduce the energy

consumption compared to business as usual, resulting in correspondent GHG emissions reductions; detailed

estimations are provided later in this Request.

B. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH NATIONAL AND/OR REGIONAL

PRIORITIES/PLANS:

The current subsidies are an unaffordable burden on the national budget in Egypt. This has led to the

widespread debate in the entire society about entire subsidy system, in particular energy subsidy, to the recent

policy shift on energy subsidies by the Ministry of Trade and Industry, and to the increase of energy price, in

particular the sharp increase in diesel oil price in the recent years. All of these provide a unique opportunity to

support energy efficiency in industry as a coping mechanism for managing the increase in energy prices. This

project is complementary to government efforts to direct a portion of the resulting new revenues to support

energy efficiency in industry.

The Energy Efficiency Improvement and Greenhouse Gas Reduction Project (EEIGR) was a nationally project

executed by the Egyptian Electricity Holding Company (EEHC), Ministry of Electricity and Energy (MoEE)

and supported with a grant from the Global Environment Facility (GEF) with the United Nations Development

Program (UNDP) as the main GEF-implementing agency during 1999-2009. The project succeeded in raising

the level of awareness on the needs and benefits of energy efficiency within Egypt’s national energy policy.

Consequently, EE has moved closer towards the top of the political agenda. In the end, sustainability of

standards, codes, tariffs and other EE measures depend on high-level decision in the Government on their

adoption and enforcement. The activation of the Supreme Energy Council (SEC), which is hosted by the

Cabinet of Ministers, several policy measures that the project proposed and require inter-ministerial

coordination can find their way to adoption and enforcement in future.

A small donors group has been established on energy efficiency to coordinate activities and links with the

Supreme Energy Council and with EEAA. The discussion have resulted in two energy efficiency initiatives that

will be submitted to GEF for support, this one with UNIDO (on Industrial Energy Efficiency) and another

project with UNDP (on improving the energy efficiency of lightening and building appliances).

Egypt has been involved in implementing several ISO standards. For example, as of 2006, Egyptian industry

had registered nearly 2000 ISO 9001 certifications and 380 ISO 14001certifications. Prior experience, albeit

limited, with similar industrial management standards (quality and environment) is already available in the

country, which could facilitate the development and implementation of the energy management standard.

C. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH GEF STRATEGIES AND STRATEGIC PROGRAMS:

On the basis of the “Focal Area Strategies and Strategic Programming for GEF-4”, dated July 25, 2007, the

project is in compliance with GEF’s strategic program (SP) # 2 “Promoting Energy Efficiency in the Industrial

Sector”.

D. JUSTIFY THE TYPE OF FINANCING SUPPORT PROVIDED WITH THE GEF RESOURCES:

The financing support provided by the GEF to this project is a grant to cover the incremental costs of the project

for technical assistance (TA) activities (awareness creation, capacity building and institutional strengthening),

thus providing an enabling environment for raising the portfolio of industrial energy efficiency at the national

level. The project will not support a ‘non-grant’ mechanism directly, given the fact that various sources of

funding are available. Instead, the project will raise awareness on existing sources of funding as well as provide

technical inputs to existing financial programs or institutions in project evaluation on an as-needed basis.

E. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES:

The proposed project builds on and is complimentary with the USAID's ECEP Project and the UNDP/GEF

Project EEIGGR, which initiated capacity building for energy efficiency in industry. Together with the UNIDO-

sponsored ENCPC1, the organizations and individuals involved in these earlier initiatives can provide linkages

to clients and to co-financing for implementing of recommendations of system assessments or implementation

of energy management plans.

The activities will be closely coordinated with the co-financing partners:

Egyptian Pollution Abatement Project, EPAP II, 2006-2012, which has a fund of about USD 160 million,

provided by the WB, the European Investment Bank, JBIC, and the French Development Agency, to

provide soft loan to support industrial pollution abatement projects, including projects in energy efficiency

improvement. This loan could be tapped by industrial entities to invest in their EE projects resulted from the

GEF project intervention; EPAP II is managed by EEAA that has pledged to make USD 15 million

available for soft loans under Component 5 for energy efficiency activities in the participating companies.

Similarly, effective linkages will be established with related assistance in the field of energy and environment:

EC-supported the Industry Modernization Programme (IMP), given the search for cost-reduction and

improvement in overall plant performance in view of enhancing competitiveness on both the local, regional

and international markets. IMC, which implement this Programme is also a counterpart of the GEF project.

1 The Egyptian National Cleaner Production Center (NCPC) is a joint initiative between UNIDO and Ministry of Trade and

Industry (MTI)

UNCT Joint Programme on Climate Change Risk Management in Egypt, total budget of USD 4 million

financed by the MDG Spanish Funds and implementation period, 2008-2010. The introduced system

optimization approach and capacity built under the project will significantly facilitate the implementation of

the Joint Programme, in particular the achievement of Outcome 1: Mainstreaming GHG Mitigation and

CDM into National Policy and Expanding Access to Finance Frameworks, where both EEAA and UNIDO

are among the implementing parties. Companies, which will implement EnMS and identify EE improvement

projects under this GEF project, shall also be invited to attend training under the Joint Programme to learn

about methodologies to develop CDM projects, and participate in other relevant activities.

The project will also coordinate with the UNDP/GEF project on improving the energy efficiency of

lightening and building appliances. Joint awareness raising, training, and policy advices could be conducted.

Other donors, such as the GTZ (training in the field of cleaner production), KfW and the French Development

Agency (AFD) are positioning themselves in the field of energy efficiency and the project’s activities will be

coordinated with these donors once their activities will be initiated. As elaborated in Output 4.2, Component 4

of the Project Document, the project will provide training to local bank personnel, who are selected by KfW and

AFD to manage their credit lines.

During the project implementation, representatives from EPAP, UNCT Joint Programme on CC, KfW, AFD,

etc. will be invited at meetings of the Project Steering Committee, and technical working groups meetings,

when appropriate, to ensure there is no overlap in activities and synergies between these projects and

programmes. Furthermore, EEAA is also the agency responsible for the implementation of EPAPII, the Joint

Programme on CC and KfW credit lines will ensure the coordination and cooperation. Also, the PMU would

cooperate and coordinate the activities that require cooperation with these.

F. DISCUSS THE VALUE-ADDED OF GEF INVOLVEMENT IN THE PROJECT DEMONSTRATED THROUGH

INCREMENTAL REASONING:

Past efforts and baseline development

Egypt has already had substantial experience with donor-supported initiatives to promote industrial energy

efficiency. These include:

UNIDO's project on industrial energy efficiency initiated in 1983 with the Tabbin Institute for Metallurgy

Studies, TIMS. This project led to the USAID Energy Conservation and Environment Programme (ECEP) in

cooperation with the Federation of Egyptian Industries (FEI), TIMS and the Development Research and

Technological Planning Center, DRTPC, Cairo University. Most of the energy efficiency experts in Egypt

are connected in some way to the ECEP, which operated from 1988-98. Unlike what is being proposed by

this new UNIDO/GEF project, the focus of the Programme was conducting rapid energy audits (1-2 days),

awareness building, and highly subsidized demonstration projects split between the public and private

sectors.

The Ministry of Trade and Industry in cooperation with the EU-funded Industrial Modernization Program

launched an initiative to conduct Preliminary Energy Surveys (PES) in the industrial sector. The survey

gathered and analyzed data which are available from walk-through audits. The Program targets to conduct

about 400 audits. So far more than 150 such audits have been done by local consultants without using

sophisticated measuring instruments and no training provided. Rate of implementation of the proposed

improvement measures has been very low.

In 2005, UNIDO supported the development of the Egyptian National Cleaner Production Center (ENCPC)

under the Ministry of Trade and Industry. Still in its start-up phase, the Center already has a core staff in

place, including eight cleaner production experts. Additionally, it has both the appropriate governmental

affiliation and management focus to provide value for this project, especially in partnership with the FEI and

other key organizations.

The GEF/UNDP project Energy Efficiency Improvement and GHG Reduction (EEIGGR) is a nationally

executed project through the Egyptian Electricity Holding Company that is scheduled to be completed soon.

The project intended to conduct 200 energy audits from 1999-2003, but only achieved a 10% project

implementation rate. The focus of the project was on the development of energy service companies

(ESCOs), which resulted in an ESCO model that focuses on a few technologies (power factor improvement

and efficient lighting) that are relatively easy to implement with short payback period rather than the

technically more challenging work of energy management and system optimization envisioned in this

proposal. In addition, none of the national initiatives have made explicit efforts to directly engage industrial

managers in a process of changing organizational behavior to support continuous improvement for energy

efficiency. The fact is a number of local EE consultants have been trained but the demand for their services

has been very low.

Energy efficiency has always been a low priority of the industry due to low energy prices supported by

subsidies, and preference for second-hand equipment. Given this culture of lack of regard for energy

conservation, there exist numerous barriers that stand in the way of financing and implementing energy

efficiency options, as already elaborated in great detail in Section A, Part II of this document:

Energy efficiency is not a core interest mission for most companies and company strategies tend to focus on

output growth rather than cost management. Most enterprises have a budgetary disconnect between capital

projects (equipment purchases) and operating expenses

Energy intensity benchmarking within the industrial sectors has not been established yet.

Lack of familiarity with the range of energy efficiency technologies and processes, and energy conservation

investment best practices as well as the under-appreciation of financial benefits from energy conservation

investments are primarily responsible for the high risk perception among industrial enterprise. There is

hesitancy and misconception about the technical risk and the perception that these investments do not bring

commensurate financial returns, particularly when compared to the kind of financial returns expected from

other investment options.

EOS and the industry lack of awareness about and implementation capacity for the Energy Management

Standard, ISO 50001.

No training materials available and no training courses offered on energy system optimization.

Limited funding sources for EE investment are available, and disbursement rate has been very low, due to the

barriers described earlier. In the absence of the project’s interventions, institutional capacity to implement

innovative EE measures will remain limited, participation of private investors and ESCOs will be delayed,

while information dissemination on EE financing and practices will remain limited. Industrial emission growth

has been 5% over the past 15 years (Second National Communication). As some efficiency improvements

would take place anyhow, and assuming annual growth of industrial energy consumption at 4%, emissions

would increase from 41,082 ktCO2 (2009) to 73,986 ktCO2 in 2024

Alternative GEF scenario:

Building on the efforts of industrial energy efficiency promotion undertaken in the EEIGGR project, GEF

support is requested to provide institutional, organizational, technical assistance to the Egyptian implementing

partners and implementing awareness campaigns, train staff and assist in identifying, designing and showcasing

energy efficiency options in industry. The introduction of the Energy Management Standard (EnMS) is one of

the most cost effective ways to improve energy efficiency and address global climate change. The adoption and

promotion of a national energy standard along with capacity building of enterprises and institutions by means of

showcasing system optimization and energy efficiency improvements in demo projects will be very cost

effective in transforming the industrial energy efficiency markets. This combination of supply and demand side

activities will promote sustainability in the long run.

With the GEF integrated interventions, it’s expected that the project outputs will be produced at the end of the

project as mentioned in the logframe, which will result in accelerating the implementation of energy

management systems, a pool of local energy system experts, high awareness by industry on the needs and

benefits of EE, more EE funds, and streamlined procedures. All these are expected to result in significant

increase in number of companies implement EnMS, improve the managerial and operational procedures and

invest in EE improvement projects, which would not be achieved without the support of the GEF project.

Implementation of ISO 50001 will not only impact on the industry, but also on other sectors of the economy:

commercial, transport, buildings, etc.

With a GEF grant of USD 3.95 million, it is expected to result in annual energy savings of 1,277 GWh per year

and corresponding greenhouse gas emissions reductions of 291.6 ktCO2 annually. Assuming a lifetime of 10

years for the energy efficiency technology and energy efficiency equipment, they project yields a cumulative

emission reduction of 2,916 kilotons of CO2 (ktCO2) over a 10-year period. These preliminary estimates of

energy savings are based on the number of factories that will implement EnMS, energy assessment and system

optimization projects as a result of the direct and indirect impacts of the project at the end of implementation and

5 years afterward, and the average energy savings in each case per factory.

Using a bottom-up approach and assuming a conservative market penetration replication factor of ‘three’, this

implies indirect emission reduction of 333 ktCO2 and indirect cumulative emission reduction of 8,749 ktCO2.

Another approach is to look at the above-mentioned baseline scenario and how much can be reduced in a more

aggressive (project-supported) alternative scenario. Applying a causality factor of 40% (modest, but substantial)

gives an upper limit to indirect emission reduction impacts of 44,801 ktCO2. Details emission reduction

calculations are presented in Annex 5 of the UNIDO Project Document.

G. INDICATE RISKS, INCLUDING CLIMATE CHANGE RISKS, THAT MIGHT PREVENT THE PROJECT OBJECTIVE(S)

FROM BEING ACHIEVED AND OUTLINE RISK MANAGEMENT MEASURES:

The main risks to the effective implementation of the proposed GEF project are related to:

Risk Rating* Mitigation

Limited number of candidates

interested in training

L UNIDO, EEAA, and stakeholders will be proactive to create

interest and source qualified and interested candidates.

No immediate demand of

services for trained experts

M The integrated approach adopted by the project is expected to

mitigate this risk by combining the training with concrete

possibilities to apply the new skills in conducting energy audits,

supporting the actual project preparation and providing other

services for the targeted industrial clients.

Demonstration projects are

delayed, limiting the

opportunity to disseminate

success stories and develop

case studies

M The concept of demonstration projects can be developed so “small”

achievements and initial process optimizations also qualify. The

objective is to encourage dialogue and sharing of knowledge.

Lack of effective

coordination between various

partners involved and with

other EE programs

L Proper coordination will be sought through the Project Steering

Committee and ad-hoc working groups per sector or theme can be

set up as needed, bringing in other partners and beneficiaries

Only a few companies make

use of ISO 50001

M If the project fails to work in collaboration with the industry, then

the Project Steering Committee (PSC) must intervene and put in

place rectifying measures. Hence representatives from industries

are important members of the PSC. The Project will work closely

with EPAP II, KfW and AFD as well as local banks to ensure

adequate financial resources for companies to access for their

EnMS implementation. Awareness raising activities have been

planned to stimulate industry’s interest in the standard.

Incentive and financial

support systems are

insufficient, especially for

SMEs

L Financial institutions will be encouraged to learn more about

industrial energy efficiency savings potential; and companies will

be made aware of the financing opportunities through the training

defined in Output 3.1.

* L = low risk; M = medium risk; H = high risk

H. EXPLAIN HOW COST-EFFECTIVENESS IS REFLECTED IN THE PROJECT DESIGN:

The following table provides a summary of cumulative CO2 emission reduction attributed to the project

intervention. Detailed GHG benefits calculations are in Annex 5 of the project document.

Particulars

Quantity

(cumulative

million tons of

CO2)

Remarks

Direct CO2emissions

reduction 2.92

From implementation of EE measures (energy management

plan, system optimization and investment in EE measures)

Direct Post-Project CO2 0 N/A

Indirect CO2 8.75 – 44.8 Market transformation (RF = 3); GEF CF = 0.4

Cost-effectiveness USD 0.08-0.34

per tCO2

GEF contribution divided by direct and indirect emissions

reduction

PART III: INSTITUTIONAL COORDINATION AND SUPPORT

A. INSTITUTIONAL ARRANGEMENTS:

An inter-agency agreement will be signed between EEAA and the participating counterparts (i.e. EOS, FEI, &

IDA) for each component for division of roles and responsibilities in the inception phase of the project

In accordance with the above mentioned project implementation arrangement, this Interagency Agreement aims

to set the following implementation arrangements between EEAA and Ministry of Trade and Industry through

(EOS, FEI, IDA):

1. EEAA is the agency responsible for the project implementation, as described in Annex 1 to the Project

Document

2. The Steering Committee is formed as described in Annex 1 of the Project Document and it will meet semi-

annually. MTI is represented in the Steering Committee by one member of its staff.

3. The project implementation and coordination activities will be primarily carried out by a Project

Management Unit (PMU), which will be formed in EEAA as described in Annex 1 of the Project

Document.

4. The MTI (EOS and IDA) and EFI will be represented by a member of its staff to facilitate the work on the

project. This member of staff will maintain his/her office in MTI, but will participate in weekly

coordination meetings with the PMU or on an as-needed basis.

5. A Project Working Group (WG) will be formed between EEAA and MTI, headed by the designated PMU

staff, to carry out the following activities:

- Review the draft and final reports prepared by the consultant for component (1) activities related to

ISO 500001.

- The MTI representatives will supply the PMU with the necessary data and information to facilitate the

implementation of the activities

- It will be made up of 4 members (1 of each organization).

B. PROJECT IMPLEMENTATION ARRANGEMENTS:

EEAA will designate a senior official as the National Project Director (NPD), to ensure that the project

implementation is fully in line with the Government priorities and strategic guidance, and local inputs and

participation in the project implementation are in time and adequate. The NPD shall have adequate authority

and knowledge within the Government to get necessary support from all the local project partners to perform

his/her duties under this project, in particular to ensure that the project is supporting Egyptian efforts.

A Project Steering Committee (PSC) will be established at the inception of the project to provide strategic

guidance on the project implementation, and to facilitate the coordination of various Government authorities,

institutions and the industries.

To ensure sustainability, strategic relevance and appropriate national coordination, a Project Steering

Committee (PSC) will be established with the participation of the key stakeholders. The PSC will meet every

six months, unless required for ad-hoc meetings, with the mandate to:

Approve progress reports, including the inception report.

Approve and provide strategic guidance for the work plan for the coming six months

Approve major changes in the project document in terms of outcomes, outputs, and budgets.

Take initiative to ensure sustainability and avoid duplication of activities

Take initiative to mobilise all relevant stakeholders and partners

Provide recommendations to the project in terms of relation to specific priorities not foreseen at the

time of writing this project document.

The Project Steering Committee will have a number of permanent members and the option to invite ad-hoc

experts. The permanent members will include:

EEAA (with 3 members, including the NPD, Industrial Department Manager and Energy Unit

Manager)

Ministry of Industry and Trade(with 3 members, including representatives from EOS, IDA)

Egyptian Federation of Industry

Ministry of Electricity, responsible for providing information and data related to the fulfillment of the

project outputs (1 member)

Ministry of Petroleum (1 member)

Ministry of Investment (1 member)

UNIDO.

The project implementation will be managed on a daily basis by the Project Management Unit. In addition

to the Project Manager (PM), the PMU will have an Administration and Finance (A&F) Assistant and a

Technical Assistant as well as support staff provided by the counterpart organizations. One of the two

Assistants will be selected to act as the Deputy Manager when the PM is absent. These three posts will be

filled through competitive processes, and paid by the project. Adequate numbers of technical experts in

different disciplines and project management experts/consultants with expertise in project, finance, energy,

legal matters, etc. will be associated on a longer-term or short-term basis depending upon the work load.

Short job descriptions for the various positions/assignments are enclosed as an Annex to the CEO

Endorsement Sheet. Requirement of additional support staff for fieldwork will be assessed and experts will

be engaged on contract/assignment basis as per requirement.

The role of the main stakeholders involved in project implementation is described in the table below:

Egyptian

Environmntal

Affairs Agency

(EEAA)

Raise awareness on sources of finance for energy efficiency (such as

existing government sponsored incentive programs)

Establish peer-to-peer network to assist companies in energy management

plan, design and implementation

Conduct a national information campaign on the benefits of energy

efficiency and energy management

Conduct monitoring and evaluation of project results

Develop energy management training tools

Provide energy management and systems optimization training

Develop training tools for equipment vendors

Provide training and build capacity of equipment vendors

Develop post-project action plan

Industrial

Development

Authority (IDA)

Provide general industrial data and statistics

Provide industrial production and consumption data

Develop the industrial energy database

Develop the energy consumption benchmarks

Egyptian

Organization for

Standardization and

Quality (EOS)

Develop Energy Management Standards (EnMS) compatible with

ISO50001

Develop Measurement and Verification structure for the developed EnMS

Develop training tools for equipment vendors

Provide training and build capacity of equipment vendors

Federation of

Egyptian Industries

(FEI)

Participate in the awareness raising on sources of finance for energy

efficiency (such as existing government sponsored incentive programs)

Participate in the assessment of industrial systems

Participate in the design and implementation of system optimization audits

Industrial

Modernisation

Centre (IMC)

Participate in the development of UNIDo guide on implementation of

ISO5001, EnMS

Participate in the development of training tools for equipment vendors

Participate in providing training and building capacity of equipment

vendors

Participate in the assessment of industrial systems

Participate in the design and implementation of system optimization audits

PART IV: EXPLAIN THE ALIGNMENT OF PROJECT DESIGN WITH THE ORIGINAL PIF:

Apart from re-positioning, and editing the text of the various outputs in the project framework, a main re-alignment

from the original project design as presented in the PIF has been in re-budgeting. Budget and CO2 emission

calculation have been estimates in the PIF, but in a rudimentary way and has been more precisely estimated during

the PPG phase:

Component 1: the new co-financing is now at USD 2.2 million. About $ 2 million co-financing for output

1.4: implementation of EnMS in 200 entities...””, as estimated in the PIF is moved to Component 5, output

5.1. Output 1.3: Peer-to-peer network is moved to Component 2 in the CEO ER. In return, there is a

commitment by IMC to commit USD 2 million for the execution of quick energy audits in able to get the

necessary information to update the database on energy use in companies

Component 2: The co-financing is now at $ 500,000, higher as in the PIF, because of moving output: Peer-

to-peer network as explained above.

Component 3: The co-financing is now valued at USD 750,000. This is in line with lowering the GEF

contribution. A large amount of GEF grant and that of co-financing were moved from this component to

Component 5, as in the PIF , costs estimated to be paid for the local consultants, who will provide services

to the plants relating energy management or system optimization, was included in the capacity building

costs. Now those costs are included the demonstration costs of Component 5of the CEO ER.

Component 4: The co-financing is now at $ 750,000. $ 3.0 million was indicated in the PIF as co-financing,

foreseen from the amount the Minister of MTI announced in 2007 to place the revenue from gradual cutting

of the energy subsidy to the 40 largest industrial energy consumers to a fund to support EE improvement.

However, the subsidy cutting has not taken place yet, partly due to the financial crises. Instead, in the

project preparation phase, detailed discussions have been carried out with EEAA and other stakeholders.

EEAA has signed agreements with local banks and a number of donors (AFD, WB, EIB) to administer the

EPAPII soft loan scheme, with a value of about USD 160 million, destined for environmentally sound

project with industry. In the framework of the proposed GEF project, EEAA commits itself to making

available the amount of USD 15 million for energy efficiency improvements and/or investments associated

with the demo projects of Component 5. It has been foreseen that the forthcoming credit lines of KfW and

AFD will be benefited from the improved capacity building under this Component.

Component 5: significant increase of co-financing in this component to compare to the PIF, is due to the

shift of implementation energy management plans, as explained above, and increase in expected investment

amount in each of demonstration projects and implementation of EnMS, based on the survey results

conducted during the PPG phase. The industries investment in energy management and energy efficiency

optimization has been estimated at USD 18.9 million. To be able to make these investments, both EEAA

(through EPAPII) and FEI have committed to making available soft loans up to USD 18,550,000.

PART V: AGENCY(IES) CERTIFICATION

This request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for

CEO Endorsement.

Agency

Coordinator,

UNIDO

Signature

Date

(Month, day,

year)

Project Contact

Person

Telephone

Email Address

Dimitri

PISKOUNOV

Khac-Tiep

NGUYEN

+43-1-26026-3086

[email protected]

Note: these have to signed !!

LIST OF ANNEXES

Annex A Project Results Framework

Annex B Responses to project reviews at PIF clearance

Annex C Consultants to be hired for the project using GEF resources

Annex D Status of implementation of project preparation activities and use of funds

Annex E Details on co-financing

14

CEO Endorsement Template-December-08.doc 09/22/20159:37:57 AM

ANNEX A: PROJECT RESULTS FRAMEWORK Applicable GEF Strategic Objective and Program: To promote energy-efficient technologies and practices in industrial production and manufacturing processes

Applicable GEF Expected Outcomes: Improved energy efficiency of industrial production

Applicable GEF Outcome Indicators: Efficiency of industrial energy use (energy use / $ GDP); GHG emissions from industry (tons CO2 eq/ $ GDP); and $/ t CO2eq

Indicator Baseline Targets

End of Project

Source of

verification

Risks and

Assumptions

Project Objective

To facilitate energy efficiency

improvements in the industrial

sector (with a focus on small

and medium enterprises)

through supporting the

development of a national

energy management standard

and energy efficiency services

for Egyptian industry as well

as the creation of

demonstration projects

A) Average number of

investment and

resulting energy

savings increased

Technical energy

savings potential

in industry

estimated at

around 15-30%.

Electricity

consumption of

37,045 GWh

(2009)

Investment in EE

technology and processes of

USD 18.9 million (energy

management, system

optimization and

implementation of EE

measures and

demonstration), resulting in

energy savings of 1,277

GWh per year (energy and

fuel)

Number of companies

having ISO-certified)

energy management plans

and doing

As given

under the

various

Outcomes

Surveys

Willingness of

industry to invest

B) Direct and indirect

emission reduction GHG emissions

from industry

were around

41,082 ktCO2 in

2009

Direct emission reduction

(associated with above-

mentioned energy savings)

of 291.6k tCO2 p.a. and

(assuming an average 10-

year life of energy

investment), 2.91

MtCO2cumulatively

Cumulative indirect

emission reduction due to

project’s capacity building

and TA activities over

ranging from 8.75 MtCO2

(bottom-up approach) to

44.8 MtCO2 (top-down)

As given

under the

various

outcomes

Willingness of

industry during and

after the project

Outcome 1

Supportive policy instruments

(EnMS, benchmarks) for

1) Status of adoption of

National Energy

Management Standard

No EnMS defined EnMS adopted and

promulgation of EnMS

Guidelines issued for

Official

publication

EnMS user

Government-level

support to define

and promulgate

15


delivering EE in industry and

contribute to international

competitiveness

(EnMS)

(output 1.1)

implementation of EnMS guide

Progress

report

EnMS

2) Status of M&V

structure

(output 1.2)

N/A Accreditation of EnMS

experts and EnMS

recognition scheme

established

Energy reporting structure

in place

3) Comprehensiveness of

energy-related

databases

(output 1.3)

Basic energy

consumption data

gathering

2 training and follow-up

events on information

supported by project

Information on energy use

of about 1,000 industries is

updated and expanded and

put in the databases

Data input

format

Database

output and

statistical

reports

Progress

report

Willingness of

industries to

provide such data

(which sometimes

can be considered

confidential)

4) Availability of

benchmark data

(output 1.3)

Benchmark data

are available for

some sectors

2 information and follow-up

events on benchmarking

supported by project

Benchmark data are

available per sector and size

of industry and made

available on the web info

portal

Web portal

Progress

report

Seminar

presentations

Sufficient sectoral

and technology

data can be

gathered to be able

to define

benchmarks

5) Status of UNIDO guide

on ISO 50001

implementation

(output 1.4)

Work in progress Egyptian representatives

have participated in

formulation of the guide

Mission and

progress

reports

UNIDO

Guide, final

version

Willingness to

participate

6) Status of post-project

action plan

(output 1.5)

N/A Final project report

consolidating the results and

lesson learnt from the

implementation of the

project, as well as post-

project strategy

Action plan

Project report

Willingness of

implementing

agencies and

partners to work

together in future

Outcome 2

Widespread awareness on EE

and energy management in

industry

7) Status of networking

amongst industrial

decision-makers

(output 2.1)

No formal or

informal network

existing

Peer-to-peer network

established (to assist

companies in info exchange,

energy management plan

Minutes of

meeting

Progress

reports

Willingness to

network within

industry or

subsectors amongst

16


design and implementation) decision-makers

and managers

8) Status of national

information campaign

(output 2.2)

Some awareness

created by

previous projects,

such as USAID,

EEIGGR, etc.

Number and quality of info

materials developed and

type of media (radio, TV,

documentaries, newspaper;

leaflets, booklets)

Info campaign developed on

energy management, system

optimization and EE in

industry in general

150 companies participating

recognition scheme

established for participating

companies

Decision makers are

informed through 9-18

events (workshops,

seminars, meetings)

attended by at least 300-600

industry owners and

managers on EE industry

Information

materials

Progress

reports

Support given by

media in Egypt

9) Improved

information services

(output 2.2)

Some info

available on

project websites

and that of

institutions

Upgraded and inter-linked

websites (e.g. of EEAA,

MIT, ECPC, etc) to provide

integrated info on EE

Project newsletter

Web sites

Project

newsletter

Implementing

agencies coordinate

the content of their

websites on EE

aspects

10) Monitoring and

evaluation carried

out and knowledge

captured

(output 2.3)

N/A Monitoring (quarterly and

annually)

Mid-term and final

evaluation

Audit reports

Number of case studies,

lessons learned from (inter-)

national sources and number

of brochures and booklets

Regular

project

progress

reports

Evaluation

reports

Reports,

booklets,

brochures on

EE

Adequate

documentation,

reporting and filing

of documents

Outcome 3

A cadre is available of

specialized / certified energy

11) Enhanced awareness

in industry on energy

management and

Insufficient

awareness

Energy managers, energy

service providers and other

technical staff are trained at

Presentation

at events

Project

Willingness of the

targeted public to

benefit from the

17


management and system

optimization experts energy auditing

(output 3.1)

10-15 events (workshops,

seminars, courses) attended

by 200-450 people at

various places in Egypt on

energy management

progress

report

Project

website

training and

supporting

materials


in industry on

systems optimization

(output 3.2)

Technical

capacity and

awareness needs

improvement

Energy managers, energy

service providers and other

technical staff are trained at

10-15 events (workshops,


by 200-450 people at

various places in Egypt on

systems optimization, and

EE technologies


in industry on

systems optimization

(output 3.3)

Technical

capacity and

awareness needs

improvement

Managers and technical staff

from vendors trained at 3-6

events (workshops,


by 260-180 people

Outcome 4

Increased access to financial

assistance for implementing

EE projects


on sources of IEE

financing

(output 4.1)

Sources of public

and private

funding support

available, but not

fully accessed

10-20 information and

consultation events on

financial mechanisms

supported by the project

attended by 200-600 people

Presentation

at events

Project

progress

report

Project

website

Willingness of the

targeted public to

benefit from the

training and

supporting

materials

15) Status of TA support

to existing financial

loan and credit

guarantee schemes

(output 4.2)

Existing schemes

do not provide

loans for EE in

industry due to

lack of technical

evaluation

capacity

Number of institutions

supported and number of

projects evaluated

Financial

institutions

leaflets and

reports

Evaluation

reports

Willingness and

need of financial

schemes to receive

TA support by the

project and/or

trained experts

Outcome 5

State-of-the-art energy

management practices and EE

measures are implemented and

demonstrated

16) Number and quality

of energy

management plans

implemented

(output 5.1)

Basic audit

capacity exists in

consulting firms;

few energy

management

plans except in

Standardized audit

procedures in line with

EnMS 50001

Pre-audits, energy

management plans and

operational improvements

Audit

assessment

report

Energy

management

plans

Selected companies

are willing to have

(pre-)audits and

EnMS

implemented

18


large industry made in 150 companies

(associated energy and CO2+

savings are given in

indicator A) and B)

ISO 50001-compliant

energy management plans

fully implemented in 50

companies

Project

progress

report

Project

website

17) Status of in-depth

assessment

conducted

(output 5.2)

N.A Detailed energy audits in 50

companies

Case studies

Audit reports

and feasibility

studies

Project

progress

report

Selected companies

are willing to have

detailed audits

18) Demonstration

projects designed

and developed

(outputs 5.2)

EE technologies

are implemented

in some sectors,

but needs to be

demonstrated to a

wider audience of

large and

especially SMEs

Demo activities designed

and implemented targeting

at 30 medium to large

enterprises (at about USD

0.5 million per company);

the associated energy and

CO2+ savings are given in

indicator A) and B)

Info exchange about demos

Case studies

Design and

financial

plans

Monitoring

reports

Project

progress

report

Project

website

Selected companies

are willing to

investment in EE

improvements,

based on

investment-grade

feasibility analysis

Macro-economic

environment is

conducive for

investments by

private sector

19


ANNEX B: RESPONSES TO PROJECT REVIEWS (from GEF Secretariat and GEF Agencies, and Responses to

Comments from Council at work program inclusion and the Convention Secretariat and STAP at PIF)

Response to GEF Sec Review of PIF, 9 September 2008

Comments UNIDO Response at CEO Endorsement

7. Is the global environmental benefit measurable?

The official methodology for the estimation of both direct and

indirect GHG benefits from the project needs to be

demonstrated.

Detailed in Annex 5 of Project Document

8. Is the project design sound, its framework consistent

sufficiently clear (in particular for the outputs)?

Outputs should be clearly defined and their volume should

correspond to the foreseen budget.

See section C.5 of the ProDoc and Table A of the GEF CEO ER

sheet

10. Is the project consistent and properly coordinated with

other related initiatives in the country or in the region?

The terms of the coordination with other projects in the country

should be carefully defined in order to avoid overlaps.

Coordination will take place with KfW and ENPAP 2 as part of

co-financing. Linkages will be established with EC (Industry

Modernization Program), AFD, GTZ and the UNCT Joint

Programme on Climate Change Risk Mitigation, as described in

section E of this CEO Request

15. Is the value-added of GEF involvement in the project

clearly demonstrated through incremental reasoning?

GEF involvement in terms of funding specific actions and their

outcomes should be described in detail in order to demonstrate

its exact added-value.

The incremental cost reasoning is explained in quantitative and

qualitative terms in the ‘incremental cost reasoning’ of this CEO

ER sheet.

Response to STAP Review of PIF, 17 March 2009

Guidance from STAP UNIDO Response

2. STAP supports the Industrial Energy Efficiency project in

Egypt. The Project’s objective is to facilitate EE improvements

in the industrial sector with a focus on energy intensive

industries as well as SMEs through the development of a

national energy management standard (EMS) and capacity

building for its implementation and enforcement and the

development of the financial incentives program. Project’s

emphasis is on energy system approach. The rationale for

combining energy intensive industries and SMEs together into a

single project is not clear, since barriers and strategies to address

them are likely to vary. STAP makes the following suggestions

that could be incorporated in the subsequent stages of

the proposal:

Barriers are not varying that much, although the weight of

barriers might differ between large industry and SMEs, and if so

this results in different strategy. For example, the barriers of

disconnection between capital cost and operating cost is

common to both large and small industry. Having an energy

management tries to bridge this disconnection. The

implementation does differ between larger factories that do have

resources to have fully ISO-50001 compliant and smaller ones

that do not but still should make a pre-audits and energy

management plans. Training activities also address this

difference, e.g.large companies could send their own energy

managers to attend the training, however, SMEs will get support

from the trained energy experts.

3. Rationale for selecting Industries: There is a need for

scientific criteria for selecting energy intensive

industries and SMEs for EE demonstrations. The criteria could

consist of multiple factors in addition to

mitigation potential, such as investment cost, cost-benefit ratio,

ease of overcoming the barriers,transaction costs, cost-

These, and other, criteria are incorporated in the main text

20


effectiveness of mitigation in ($/tCO2), replication potential.

Specific criteriashould be proposed for selecting particular

energy systems in particular industries. IPCC (2007)

hasconcluded that the carbon intensity of energy intensive

industries is declining and Egypt may not beexception to this

trend. If so, the rationale for selecting energy intensive

industries could be considered.

4. Component versus systems approach: There is a need for

cost-benefit analysis of investment with

CO2 emission reduction potential through component versus

system approach. System approach is notalways cost-effective

for the investor.

Usually investment costs can be grouped in the following

categories:

(a) Good housekeeping and system optimization efforts that

require small investments and have quick payback times (less

than half a year)

(b) Medium cost with payback times 0.5-1.5 yrs

(c) Higher cost with payback times > 1.5 yrs.

What ‘cost’ is depends on size of the industry. Simple system

optimization may not cost more than USD 10,000. Having a

management plans and good housekeeping /small changes may

cost $ 40,000 in small industry and half a million in large

industry. High cost investment maybe USD 1 million and

millions in large industry depending on sector and type of

technology

5. Barriers: A large number of barriers have been listed. There

is a need for a scientific analysis and

ranking of barriers. How the barrier of “lack of interest of

industries in investing in EE equipment” will be

addressed is critical to the success of the project.

A table has been made linking barriers with potential options

proposed to be support under the project. Lack of interest is

indeed critical. For example, lack of finance is a lesser barrier.

Funds are available (in fact, some are put as co-financing), but

the awareness on the need for investment and how to access

funding is lacking

6. Risk: How the risk of lack of interest of the industry in EE

and the incremental investment cost needed

for EE equipment will be addressed?

See table on ‘risks’

7. Baseline Scenario: STAP expects that project proponents will

present a baseline scenario and

quantitative incremental reasoning for GHG emission reduction

through implementation of EMS at the

CEO endorsement phase.

Details on incremental cost reasoning, baseline and alternative

scenario both in quantitative as well qualitative terms are given

in Annex 5 and Section F of the ProDoc

Response to GEF Council members’ comments of PIF at April 2009 Intersessional Work Program

Comments from the United States of America UNIDO Response

It is not clear from the PIF where the EE experts are to be

housed after they are trained. A “lead consultancy entity” for the

entire country can hamper the market to provide EE services

The trained EE experts are not defined to stay at any specific

institutions. They can be freelance consultants, energy managers

of any companies, etc. Two training institutions will be selected

to provide training during the project, and be strengthened to be

able to continue providing similar training courses after the

project completion to ensure sustainability.

Comments from Switzerland UNIDO Response

The proposed project seems to be biased to capacity building

and allocates small amount of project resources on financial

incentives

The project follows an integrated approach, offering support in

policy framework, awareness raising, capacity building, and

financing for EE, but the GEF contribution has to focus on

capacity building due to limited resources; Nonetheless, both

EEAA (through the ongoing programme EPAPII) and FEI

(through its environmental programme) have made available

USD 18,550,000 for soft loans, and the amounts have been

confirmed in co-financing letters. In addition, as indicated by the

21


e-mail from KfW, and discussed with AFD, their credit lines of

about € 50 million will be resources for industries to borrow for

EE investment.

Comments from France UNIDO Response

The PIF is very “theoretical” The full-fledged project document and the CEO ER are in more

detailed. In addition, UNIDO has consulted with the French

delegation and AFD on the issues raised and the CEO ER as

well as the PD provide the required answers.

Comments from Germany UNIDO Response

Shortage of resources for investment in EE projects, lack of

interest by industry in EE project investment

It’s envisaged that the integrated approach will improve the

implementation rate of the audits/assessments. Several financial

partners for EE investment will be working together with the

project to facilitate investment in EE projects. Their capacity

will be also strengthened by the project.

Response to GEF Secretariat´s review of project documentation (5 November 2010)

Questions Comment DER, 5 November 2010

9. Is the project design sound, its

framework consistent & sufficiently

clear (in particular for the outputs)?

DER, November 5, 2010. The new documentation on co-financing is helpful and shows

more proper allocation by component. The commitment letters from FEI and IMC show a

stronger commitment from the industrial sector for supporting this project. The changes in

co-financing are significant:

- Component 1 at PIF was $3,700k in co-financing, first CEO ER was $50k, revised ER is

$1,150k

- Component 2 at PIF was $300k in co-financing, first CEO ER was $60k, revised ER is

$600k


$1,600k


$15,200k

- Component 5 at PIF was $4,235K in co-financing, first CEO ER was $18,960k, revised

ER is $4,100K

Component 4 remains confusing. Please clarify if this component should be shown as a

mixture of TA and Investment. If so, please clarify the proportion of investment that is

expected. The response implies that EPAPII funds for soft loans will not be used without

the GEF-UNIDO project for "supportive catalytic projects." However funding for EPAPII

is referred to as "parallel financing" in the Government of Egypt co-funding letter dated

October 1, 2010, meaning that EPAPII funding would not be influenced by this project.

Please clarify how the GEF funded project will be articulated with EPAPII, influence this

program and provide incremental benefits using the $15 million in co-financing for

Component 4.

UNIDO comment:

a) The co-financing figures have changes again to accommodate co-financing as could be

confirmed by co-financing letters, but in line with earlier comments and guidelines given

by GEF Sec.

The wording in the co-financing letter on co-financing and parallel financing is confusing.

What is meant here is that the whole amount EPAPII for soft loans (around USD 136

million) is parallel financing, meant for environmental projects in general (e.g. waste

water, clean technology, energy conservation. EPAPII is co-financed by various donors,

such as AFD, EIB, JBIC and WB. Since EEAA is the implementing agency of EPAPII, the

co-financing letter has to be interpreted as that of the EPAP amount for soft loans, EEAAII

commits that USD 15 million will be used for soft loans for investments for the demo

22


projects (Component 5) of the GEF project (or even additional projects). In other words,

out of the EPAPII, USD 15 million is earmarked as co-financing. The coordination and

incremental benefits between the GEF funded project and the EPAPII program are

explained in box 11 and 16 below.

DER, November 5, 2010. It is difficult to match the amounts specified in the co-financing

letters with the amounts shown in Table B of the endorsement request. Please clarify how

the amounts in Table B were developed and how they match with the co-financing letters.

Please provide co-financing letters for partners listed as EOS and IDA. In order to properly

identify co-financing by component, please provide a matrix which documents how much

co-financing (both cash and in-kind) goes to each component from each co-financing

partner.

UNIDO comment:

A detailed co-financing table is added as Annex E at the end of the new CEO ER. As until

now the co-financing letters of EOS and IDA could not be obtained, their co-financing

figures have been removed from the CEO ER and the PD.

DER, November 5, 2010. The explanation for component 5 in the revised CEO ER in Part

IV does not match the explanation on page 3 of the table "response to GEF secretariat

comments." One says there is double-counting, the other says there is no double-counting.

Please clarify.

UNIDO comment:

Part IV of the CEO ER has been revised. There is no double-counting risk, as the $ 15

million from EPAPII has been moved from Component 4 to Component 5 for investment

in demo projects.

Also, the targets identified in Annex A, Project Results Framework, for component 5.2 are

much more detailed than the expected outputs shows in section A, Project Framework.

Yet, the estimate of demo activities at 30 enterprises at $ 0.5 million per company does not

match the revised co-financing levels for component 5. Please clarify how many demos

are targeted and ensure that Section A and the results framework are consistent for all

components. Please clarify also if component 5 is a mixture of TA and Investment, and

how much of each.

UNIDO comment:

There was a mistake in putting the USD 15,000,000 commitment from EEAA for soft

loans in Component 4; these should have been in Component 5. The mistake has been

corrected and the Table in Section A has been adjusted accordingly. The financing need

for companies to invest in 30 demo projects (USD 18,910,000) now matches the financing

available. All the GEF budget under this Component will be TA only, and co-financing

will be both for TA and investment.

11.Is the project consistent and

properly coordinated with other related

initiatives in the country or in the

region?

DER, November 5, 2010. The description of coordination must be elaborated to clarify the

link between GEF funding and EPAPII (see box 9)

UNIDO comment:

Under Component 4, the capacity of local banks, which have signed agreement with

EEAA to administer the EPAPII soft loan will be strengthened (Output 4.2), and more

industries will know about this soft loan facility (Output 4.1). In addition all other project

Components are expected to significantly increase the number of industries looking for

investment for EE, and with EEAA also responsible for EPAPII programme, procedures of

EPAPII will be reviewed and if necessary could be streamlined to facilitate the access, in

particular from those industries which will receive support from the project.

16.Is the value-added of GEF

involvement in the project

DER, November 15, 2010. Consistent with the comment in box 9, please clarify how the

GEF funded project will provide

23


clearlydemonstrated through

incremental reasoning?

incremental benefits using the $15 million in co-financing for component 4 over and above

the baseline use of $15 million under the existing EPAP II program.

UNIDO comment:

Financing does not seem to be a problem in Egypt, with EPAPII and FEI funds available

as well as that of other donors (such KfW and AFD). There happens to be a luxury

problem; many donors, banks want to make funds available, but the capacity on how to

disperse and how to apply for the funds is lacking. The timing of the GEF project is very

opportune therefore; it will provide the technical assistance to strengthen capacity at the

policy-decision-making level (component 1), raise awareness on least-cost options in

improving energy efficiency (component 2), provide capacity building in the (relatively)

new areas of systems optimization and EnMS (component 3) and ensuring sustainability

by strengthening the capacity of industries as well as financial institutions and local banks

on EE investment and by looking at new sources of finance (component 4). In conclusion

the GEF funded project will significantly increase the rate of disbursement of the EPAPII

soft loan above the baseline.

22.Are the confirmed co-financing

amounts adequate for each project

component?

DER, November 5, 2010. As noted in box 9, the revised co-financing amounts are unclear.

Please clarify as requested in box 9.

UNIDO comment:

These have been clarified, see Section A, Part I of CEO ER form and response to

questions in box 9 above

Agencies’ response to Council

comments

DER, November 5, 2010. The Council comments are mostly addressed in the project

document. Questions from Council

member Switzerland related to co-financing still need to be addressed. Please respond to

clarification requests in Box 9.

UNIDO comment:

These have been addressed and highlighted in yellow in the corresponding box of the table

of the new CEO ER, as well as in responses relating to co-financing above, especially

relating to those under Component 4.

27. Is CEO Endorsement being

recommended?

No.

DER, November 5, 2010. To be confirmed.

The agency certification section, Part V, of the revised CEO endorsement request, is not

signed or dated. Please resubmit. Also, please respond to questions in boxes 9, 16, and 22.

UNIDO comment:

In the last submission there is a separate file with a scanned copy of the last page of the

CEO ER, which was already signed. In the new submission in addition to the CEO ER in

WinWord format, the entire ER with signature will be scanned and submitted.

Questions in box 9,16 and 22 have been addressed above.

24


ANNEX C: CONSULTANTS TO BE HIRED FOR THE PROJECT USING GEF RESOURCES

Position title $ / person Estimated Total Tasks to be performed

week person weeks (in US$)

National - Project management

Project manager 750 260 195,000

The Manager is responsible for day-to-day management and co-ordination; budgeting; forward planning; liaising with project participants and stakeholders; preparation and presentation of project status reports to the Project Steering Committee; preparing subcontractors terms of reference and contracts; supervision of contracts; and project execution of all tasks identified under the project specified in the Project Document

Technical Specialist (Programme)

350 100 35,000

The Programme Specialist will arrangement of logistics, including travel and organization of meetings/workshops, provide inputs in the training courses and take lead in the selection process of companies for auditing, EnMS and piloting the demonstration projects, including the fin al contractual arrangements; Provide substantive inputs to the manager consultants and stakeholders, as requested

Specialist Admin and Finance

250 80 20,000

The Admin & Finance Specialist will conduct annual financial audit of the project, produce the required statements as needed, keeps checks and balances in place to ensure proper use of finances under various heads and report the financial progress; and will be responsible for administrative and secretarial matters, and assist processing and reporting project incomes and expenditures.

Total 568 440 250,000



National - technical assistance

Energy databases and energy reporting experts

750 76 57,000

Strengthen existing databases on energy and industry in counterpart organizations and design energy benchmarking database, including development of required software and training of counterpart organization. Develop reporting format on data collection on energy consumption and production figures; Help establish end-use benchmarks for subsectors and size groups of industry from various firms in the country (outputs 1.2 and 1.3)

ISO 50001 Guide development

750 15 11,250

Expert to provide support to UNIDO ISO 50001 development (output 1.4)

Industrial energy policy

750 4 3,000 To document energy policies in other countries relevant for Egypt; To work with counterparts to produce industrial energy policy recommendations (output 1.5)

P2P network and sectoral networks

750 20 15,000

Organize P2P network and to provide advice on an as-needed basis on EE measures and technology applications in the various subsectors (such as iron & steel, cement, paper and pulp, textiles, food and other sectors) (output 2.1)

25


Experts on communication and publication; website

750 15 11,250

Develop a plan for media and outreach program as per the annual work-plan of the project; Develop the workshop material from the inputs of the area specialists; Develop outreach material and outreach program to disseminate the project objectives and programs; Develop and strengthen relationship with the private and other stakeholders; Advise on improvement of existing newsletters on EE topics; Design project newsletter; Establish and develop the project web-site and create ways to keep it updated and relevant to the targeted customers and project partners (output 2.2)

Training experts 750 95 71,250

Monitor, report and organize training and guidance to the local stakeholders on EnMS, energy management, systems optimization as well as EE technologies and processes; performance contracting; Capturing of lessons learned and best practices and their info dissemination; To organize and conduct workshops on the before-mentioned topics (outputs 3.1, 3.2 and 3.3)

Assessment and knowledge sharing

750 30 22,500 Advising for baseline and impact analysis; Capturing of lessons learned and best practices and their info dissemination (output 3.4)

Auditor 750 15 11,250 External auditing of the project (output 3.4)

Financial experts, public & private sectors

750 52 39,000 Help develop financial selection criteria and assist funding institutions in (technical) project evaluation; Provide training on financial engineering and industrial EE (output 4.1 and 4.2)

Energy management and auditing experts

750 158 118,500

Provide support to formulation of energy management plans; To evaluate results gathered to identify design and system optimization improvements; To advise on selection criterai and selection of industrial companies that want to participate in auditing and pilot demo programme; To assist in performance monitoring and evaluation of demo projects (outputs 5.1 and 5.2)

Industrial processes and technologies experts

750 166 124,500

To provide support to demos and provide training on industrial process design, process control, heat transfer and processes; To evaluate audit recommendations and support the design of demo project facilities and processes (outputs 5.1 and 5.2)

Total 750 646 484,500



International - TA

ISO EnMS experts; M&V and data collection

3,000 14 42,000

To collect info and summarize articles and other info on EnMS application in other countries; To assist in the creation of a EnMS programme and implementation of EnMS in industrial companies; To support accreditation of EnMS in selected companies (output 1.1)

Data collection and database design

3,000 14 42,000

To train local teams on M&V structure; energy data collection and strengthen existing databases on energy and industry in counterpart organizations and design energy benchmarking database, including development of required software and training of counterpart organization (output 1.2)

26


Database management and benchmarking experts

3,000 24 72,000

Strengthen existing databases on energy and industry in counterpart organizations and design energy benchmarking database, including development of required software and training of counterpart organization; Analyze data on energy and industrial production and technology figures received from various industries; To establish energy-use benchmarks and make comparison with benchmarks in other (e.g. EU) countries (outputs 1.2 and 1.3)

Industrial policy 3,000 6 18,000 To work with counterparts to produce industrial energy policy recommendations (output 1.5)

Communication and industry

3,000 20 60,000

Provide advice on an as-needed basis on EE measures and technology applications in the various subsectors (such as iron & steel, cement, paper and pulp, textiles, food and other sectors) to managers and decision-makers; Develop a plan for media and outreach program as per the annual work-plan of the project; Develop the workshop material from the inputs of the area specialists; Develop outreach material and outreach program to disseminate the project objectives and programs(outputs 2.1 and 2.2)

Energy management, auditing and system optimization training

3,000 49 147,000

Monitor, report and organize training and guidance to the local stakeholders on EnMS, energy management, systems optimization as well as EE technologies and processes; performance contracting; Capturing of lessons learned and best practices and their info dissemination; To organize and conduct workshops on the before-mentioned topics; To provide training to audit teams/ESCOs on energy audits of facilities, processes and equipment in industry as well as providing vendor training (outputs 3.1, 3.2 and 3.3)

Evaluation and impact analysis experts

3,000 12 36,000 Baseline formulation, impact assessment , information collection and report drafting (output 3.4)

ESCO, finance and evaluation experts

3,000 48 144,000

To evaluate current practices and risks concerning ESCOs in consultation with ESCOs, industry and financial institutions; provide corresponding training; provide advice to financial institutions on the techno-economic evaluation of EE project proposals; Assist projects in preparation of financial proposals and business plans for demo projects (outputs 4.1, 4.2 and 5.2)

Energy management, auditing and system optimization

3,000 30 90,000

To assist in the identification and implementation of EE measures and technologies and system optimization opportunities; To evaluate audit recommendations and support the design of demo project facilities and processes (outputs 5.1 and 5.2)

Industrial processes, engineering and design

3,000 42 126,000

To provide support to demos and provide training on industrial process design, process control, heat transfer and processes; To evaluate audit recommendations and support the design of demo project facilities and processes; To assist in industrial EE process design as well as the performance monitoring and evaluation of demo projects and implementation of management plans (outputs 5.1 and 5.2)

3,000 259 777,000

27


ANNEX D: STATUS OF IMPLEMENTATION OF PROJECT PREPARATION ACTIVITIES AND THE USE OF FUNDS

A. EXPLAIN IF THE PPG OBJECTIVE HAS BEEN ACHIEVED THROUGH THE PPG ACTIVITIES UNDERTAKEN.

The full project document and the CEO Endorsement Request have been prepared based on results of

various studies, consultations, surveys, assessment, etc. carried out during the PPG phase. New

approaches in energy efficiency: energy management systems and energy system optimization have

been introduced to stakeholders to raise their interest in the project activities, in particular the buy-in

attitude of the industry.

B. DESCRIBE IF ANY FINDINGS THAT MIGHT AFFECT THE PROJECT DESIGN OR ANY CONCERNS ON

PROJECT IMPLEMENTATION.

N/A

C. PROVIDE DETAILED FUNDING AMOUNT OF THE PPG ACTIVITIES AND THEIR IMPLEMENTATION

STATUS IN THE TABLE BELOW:

Project Preparation Activities

Approved

Implementation

Status

GEF Amount ($)

Co-

financing

($)

Amount

Approved

Amount

Spent To-

date

Amount

Committed

Uncommitted

Amount*

1. Baseline assessment Completed 20,000 20,000 - - 30,000

2. Counterparts and

stakeholders selection

Completed 10,000 10,000 - - 15,000

3. Detailed project design In progress 40,000 29,036 10,964 - 60,000

4. Determination of BaU

scenario, GEB/GHG

emissions reduction, IC

Completed 20,000 20,000 - 20,000

5. Consultation and

commitment confirmation

In progress 10,000 7,644 2,356 - 25,000

Total 100,000 86,680 13,320 - 150,000

* Uncommitted amount should be returned to the GEF Trust Fund. Please indicate expected date of refund transaction to Trustee.

28


ANNEX E: DETAILS ON CO-FINANCING

Comp 1 Comp 2 Comp 3 Comp 4 Comp 5 Management Total

BL.11 Int'l consultants 174,000 60,000 183,000 144,000 216,000 777,000

BL.17 Nat. consultants 71,677 26,250 105,000 38,250 243,231 250,000 734,408

BL.13 Admin support - - - - - 50,000 50,000

BL.15 Travel 54,454 18,900 59,640 43,380 79,938 20,000 276,313

BL.21 Subcontracts 39,152 80,000 - 23,500 1,000,000 - 1,142,652

BL.30 Training 77,000 63,000 224,000 87,500 451,500

BL.45 Equipment 17,500 3,000 - - 250,000 25,000 295,500

BL.50 Misc 26,217 19,310 7,900 8,370 60,831 35,000 157,628

BL 81 M&E 35,000 35,000

BL.82 IEval. 30,000 30,000 -

Total GEF 460,000 335,460 579,540 345,000 1,850,000 380,000 3,950,000

EAA 150,000 250,000 100,000 15,000,000 611,000 16,111,000

IMC 2,000,000 100,000 100,000 500,000 2,700,000

FEI and private 200,000 250,000 400,000 150,000 3,910,000 400,000 5,310,000

Co-fin 2,200,000 500,000 750,000 750,000 18,910,000 1,011,000 24,121,000

GRAND TOTAL 2,660,000 835,460 1,329,540 1,095,000 20,760,000 1,391,000 28,071,000

In-kind cash total

EEAA 1,110,000 15,000,000 16,110,000

IMC 700,000 2,000,000 2,700,000

FEI and

Private

1,400,000 3,550,000

361,000

5,311,000