Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 57459-PY

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$100 MILLION

TO

ADMINISTRACION NACIONAL DE ELECTRICIDAD (ANDE)

WITH THE GUARANTEE OF THE REPUBLIC OF PARAGUAY

FOR THE

ENERGY SECTOR STRENGTHENING PROJECT

October 25, 2010

Sustainable Development Department Country Management Unit for Argentina, Paraguay and Uruguay Latin America and the Caribbean Region This document is being made publicly available prior to Board consideration. This does not imply a presumed outcome. This document may be updated following Board consideration and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 4, 2010)

Currency Unit = Guarani (G) Guarani 4,920 = US$1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AMI Advanced Metering Infrastructure ANDE National Power Utility (Administración Nacional de Electricidad) CFAA Country Financial Accountability Assessment CMU Country Management Unit CPI Consumer Price Index CPS Country Partnership Strategy CSEE Supervisory Council for State Enterprises (Consejo Supervisor de Empresas

Públicas) DA Designated Account DPL Development Policy Loan EA Environment Assessment EPC Engineering, Procurement, Construction EMP Environmental Management Plan ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESU Environmental and Social Unit FM Financial Management FMA Financial Management Assessment FRR Financial Rate of Return GDP Gross Domestic Product GOP Government of Paraguay IDB Inter-American Development Bank IFA Integrated Fiduciary Assessment IFIs International Financial Institutions IFRs Interim Financial Reports IPP Indigenous Peoples Plan IPF Indigenous Peoples Framework IRLAPF Involuntary Resettlement and Land Acquisition Policy Framework ISDS Integrated Safeguards Data Sheet ISR Implementation Supervision Report JICA Japan International Cooperation Agency

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KfW German government-owned development bank M&E Monitoring and Evaluation MDGs Millennium Development Goals MF Ministry of Finance MIS Management Information System MOPC Ministry of Public Works and Communication (Ministerio de Obras

Públicas y Comunicaciones) NPV Net Present Value LCR Latin America and the Caribbean Region ORAF Operational Risk Assessment Framework PCB Polychlorinated Biphenyls PIU Project Implementation Unit POM Project Operational Manual RP Resettlement Plan RPF Resettlement Policy Framework SA Social Assessment SBD Standard Bidding Document SEAM Environment Secretariat (Secretaria del Ambiente) SEPA Procurement Plan Execution System (Sistema de Ejecución de Planes de

Adquisiciones) SGIDE Comprehensive Electricity Distribution Management System (Sistema de

Gestión Integral de la Distribución Eléctrica) SOE Statement of Expenditure TA Technical Assistance UMEP Public Enterprises Monitoring Unit (Unidad de Monitoreo de Empresas

Publicas) US$ United States Dollar VMME Vice-Ministry of Mines and Energy (Vice Ministerio de Minas y Energía) WB World Bank

Regional Vice President: Pamela Cox Country Director: Penelope Brook

Sector Director: Sector Manager:

Laura Tuck Philippe C. Benoit

Task Team Leader: David Reinstein /Michel Layec

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Table of Contents I.  Strategic Context ..................................................................................................................... 1 

A.  Country Context ............................................................................................................... 1 

B.  Sectoral and Institutional Context .................................................................................... 2 

C.  Higher Level Objectives to which the Project Contributes .............................................. 4 

II.  Project Development Objectives............................................................................................. 5 

A.  PDO .................................................................................................................................. 5 

1.  Project Beneficiaries ..................................................................................................... 5 

2.  PDO Level Results Indicators ...................................................................................... 5 

III.  Project Description ............................................................................................................... 5 

A.  Project components....................................................................................................... 5 

B.  Project Financing .......................................................................................................... 7 

1.  Lending Instrument ....................................................................................................... 7 

2.  Project Financing .......................................................................................................... 8 

C.  Lessons Learned and Reflected in the Project Design ................................................. 8 

IV.  Implementation .................................................................................................................... 8 

A.  Institutional and Implementation Arrangements .......................................................... 8 

B.  Results Monitoring and Evaluation ............................................................................ 10 

C.  Sustainability .............................................................................................................. 10 

V.  Key Risks .............................................................................................................................. 11 

VI.  Appraisal Summary ........................................................................................................... 11 

A.  Economic and Financial Analysis .............................................................................. 11 

B.  Technical .................................................................................................................... 13 

C.  Financial Management ............................................................................................... 13 

D.  Procurement ................................................................................................................ 14 

E.  Social .......................................................................................................................... 14 

F.  Environment (including Safeguards) .......................................................................... 15 

Annex 1: Results Framework and Monitoring.............................................................................. 16 

Annex 2: Detailed Project Description ........................................................................................ 18 

Annex 3: Implementation Arrangements ..................................................................................... 23 

Annex 4 Operational Risk Assessment Framework (ORAF) ....................................................... 35 

Annex 5: Implementation Support Plan ........................................................................................ 40 

Annex 6: Team Composition ........................................................................................................ 43 

Annex 7: Map ............................................................................................................................... 44 

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PAD DATA SHEET

Paraguay Energy Sector Strengthening Project

PROJECT APPRAISAL DOCUMENT

Latin America and the Caribbean

Sustainable Development Department Energy Unit

Date: October 25, 2010 Country Director: Penelope Brook Sector Director: Laura Tuck Sector Manager: Philippe C. Benoit Team Leader(s): David Reinstein Michel Layec Project ID: P114971 Lending Instrument: SIL

Sector(s): General Energy Sector (100%) Theme(s): Public Sector Governance (100%) EA Category: B

Project Financing Data: Proposed terms:

[ X] Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other:

IBRD Flexible Loan denominated in US dollars, with a variable spread, commitment-linked, level repayments, with an 8 year grace period and 27 years total maturity, and all conversion options. The Front End Fee will be paid from loan proceeds.

Source Total Amount (US$M) Total Project Cost:

Cofinancing: Borrower:

Total Bank Financing:

IBRD

IDA

New

Recommitted

US$ 125 US$ 25 US$ 100 US$ 100

Borrower: Administración Nacional de Electricidad (ANDE)

Responsible Agency: ANDE, Avda. España No. 1268, Asunción, Paraguay

Contact Person: Germán Fatecha

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Telephone No.: (595-021) 211-173 Fax No.: (594-021) 208-150 Email: german fatecha@ande.gov.py

Estimated Disbursements (Bank FY/US$ m)

FY 2011 2012 2013 2014 2015 2016

Annual 5 20 35 25 10 5

Cumulative 5 25 60 85 95 100

Project Implementation Period: April 2011 – June 2015 Expected effectiveness date: April 2011 Expected closing date: December 31, 2015

Does the project depart from the CAS in content or other significant respects?

○Yes No

Does the project require any exceptions from Bank policies? Have these been approved/endorsed (as appropriate by Bank management? Is approval for any policy exception sought from the Board?

○ Yes No ○ Yes ○ No ○ Yes No

If yes, please explain:

Does the project meet the Regional criteria for readiness for implementation?

Yes ○ No

If No, please explain:

Project Development objective The development objective of the Project is to increase the quantity and quality of the provision of electricity services by the Borrower, while improving the Borrower’s performance.

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Project description Component 1. Modernizing the Borrower’s Distribution Management System and Installing an Advanced Metering System for Large Consumers (US$ 25 million; IBRD US$ 20 million)

Component 2. Improving the Performance of the Transmission Network (US$ 96.25 million; IBRD US$ 77 million)

Component 3. Strengthening Paraguay’s Electricity Sector and the Borrower’s Institutional Capacity(US$ 3.5 million; IBRD US$ 2.75 million)

The loan will also finance the Front-End fee of $250,000.

Safeguard policies triggered? Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waters (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

Yes ○ No Yes ○ No Yes ○ No ○ Yes No Yes ○ No Yes ○ No Yes ○ No ○ Yes No ○ Yes No ○ Yes No

Conditions and Legal Covenants:

Loan Agreement Reference Description of Condition/Covenant

Date Due

Section 5.01 (a) The Coordination Agreement has been signed on behalf of the Borrower and the Ministry of Finance

Effectiveness

Section 5.01 (b) The Operational Manual has been adopted by the Borrower

Effectiveness

Section 5.02 The Additional Legal Matter to be covered in the legal opinion is that the Coordination Agreement has been duly authorized or ratified by the Borrower and the Ministry of Finance and is legally binding upon the Borrower and the Ministry of Finance

Effectiveness

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Schedule 2, Section I.A.1 The Borrower shall maintain at all times during Project implementation, an implementation team with terms of reference and resources satisfactory to the Bank, and competent staff in adequate numbers

Throughout Project implementation

Schedule 2, Section I.B.1 The Borrower shall enter into a Coordination Agreement with the Ministry of Finance under terms and conditions approved by the Bank

Sign by effectiveness; carry out during Project implementation.

Schedule 2, Section I.C.1 The Borrower shall carry out the Project in accordance with the Operational Manual

Adopt by effectiveness; carry out during Project implementation

Schedule 2, Section I.D.1 The Borrower shall carry out the Project in accordance with the provisions and recommendations of the ESMF, the two ESMPs dated October 2010 for Part 2.1 of the Project, and the ten site-specific ESMPs dated October 2010 for Part 2.2 and 2.3 of the Project

Throughout Project implementation

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I. Strategic Context

A. Country Context 1. Paraguay, a country of 6.7 million people and an area of 406,750 sq. km. nestled between Brazil, Argentina, and Bolivia, has known substantial economic growth over the last 5 years. After a deep financial and political crisis in 2002, GDP grew by 4.6 percent on average between 2004 and 2008, its strongest expansion since the 1970s. Paraguay’s rapid growth has been fuelled by rising domestic consumption and investment, and by a boost of exports due to high international commodity prices (especially in the agriculture sector)-- a crucial development as nearly 38 percent of Paraguay’s GDP is derived from trade and exports to Brazil and Argentina. Per capita GDP stood at US$2,350 in 2009. 2. Strong economic performance resulted in a substantial decline in overall poverty levels in Paraguay, from 49.7 to 37.9 percent between 2002 and 2008 and, to a lesser extent, in extreme poverty levels from 24.4 percent to 19.4 percent over the same period. However, despite recent economic growth, achieving the Millennium Development Goals (MDGs) by 2015 remains a considerable challenge for the country due to the isolation of rural populations (41.6 percent of total population in 2009), high population growth rates (2.37 percent in 2007), and the impact of the 2008 financial crisis, high food prices and declining incomes. Attaining the MDGs will require redoubled efforts to provide services to poor and marginal areas beyond the eastern region around the capital, Asunción. 3. The Global Financial Crisis coupled with a severe drought impacted Paraguay’s economy in 2008. Growth fell from 6.8 percent in 2007 to -3.8 percent in 2009. The Guarani rapidly lost a quarter of its value, and trade-related economic activity slowed down. In early 2009, the Government announced an Anti-Crisis Strategy which consists of a set monetary and fiscal policies including: (i) the injection of liquidity into the financial system; (ii) fiscal expansion to safeguard priority social and investment spending; (iii) the provision of financing to the productive sectors through the state-owned development agency; and (iv) the mobilization of financing including from the International Financial Institutions (IFIs) (about US$300 million) to provide adequate resources to combat the crisis. With the objective of buffering the economy from the global slowdown, the strategy is designed to allow the Government to continue reducing poverty and ensure employment even in today’s volatile economic environment. The Bank supports the Government’s program through a series of programmatic Development Policy Loans (DPLs).1

4. President Fernando Lugo, whose election ended 61 years of Colorado Party dominance, established the Government’s key priorities in the 2008-2013 Economic and Social Plan. The objectives of the Plan include hastening Paraguay’s transition to a modern economy by improving governance and reducing corruption, addressing the needs of vulnerable groups, and restoring growth in light of the effects of the global crisis. It also aims to strengthen the management of the country’s vast hydroelectric resources.

1 The Paraguay First Public Sector Programmatic Development Policy Loan (P113457) of US$100 million was approved on May 05, 2009.

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B. Sectoral and Institutional Context 5. The electricity sector plays an important role in Paraguay’s economy as it benefits from one of the best hydrological endowments in the world which constitutes a clear advantage in the country’s effort to diversify its economy. Current installed power generation capacity stands at over 8,766 MW, nearly five times Paraguay’s peak demand of 1,810 MW (2009), and a large share of it is exported to Brazil and Argentina. A significant share of its large hydroelectric generation capacity comes from the Parana River, located at its Southeastern border, which provides abundant water for the operation of the Itaipú, Yacyretá, and Acaray hydroelectric power plants.2 Revenues from electricity exports to Brazil and Argentina represent about 23 percent of total Government revenues and four percent of GDP. Access to cheap, abundant and clean hydroelectricity constitutes a clear advantage in the country’s efforts to gradually move into activities with high value-added such as manufacturing, agro-processing, metal and mechanical industries, or packaging. In the medium-term, the Government aims to further harness Paraguay’s abundant hydropower resources to generate economic benefits and to improve the country’s competitiveness. 6. The Vice Ministry of Mines and Energy (VMME), which reports to the Ministry of Public Works and Communications (MOPC), is the institution responsible for delineating sector policy and strategy (with the exception of tariffs and subsidies), for planning and monitoring, for setting technical regulations and quality of service standards, and also for developing new programs. Paraguay has no regulatory entity for the electricity sector. Public service tariffs including electricity tariffs are set by the National Economic Team, which consists of MOPC, the Ministries of Finance, Agriculture and Livestock, Commerce and Industry, and of the Central Bank. The electricity service is provided by the Administracion Nacional de Electricidad (ANDE), Paraguay’s state-owned power utility. ANDE purchases most of its electricity from the two bi-national hydroelectric plants of Itaipú, and Yacyretá, and is in charge of generation, transmission and distribution of electricity within the country.3 7. The Government’s strategy aims to develop an efficient electricity sector within the existing institutional framework and to benefit from abundant hydroelectric resources. The limited size of the market, the abundant power available to Paraguay from the Itaipú and Yacyretá plants, and the presence of the two bi-national generating entities result in limited scope for independent private generators to invest in Paraguay’s electricity sector. The Authorities are therefore focused on seeking an efficient management of the sector within a public sector framework, and on transforming ANDE into a modern, efficient and financially sustainable public sector enterprise. 8. The Government recognizes the need for institutional strengthening of the energy sector and plans to increase efficiency, reduce distribution and transmission losses, optimize the purchasing agreements with the bi-national generators, introduce more transparency and efficient management practices in ANDE, and progressively decentralize the company’s decision making

2 Itaipú has an installed capacity of 14,000 MW and is owned and operated by the Itaipú bi-national entity co-owned with Brazil; Yacyreta an installed capacity of 3,100 MW and is owned and operated by the Yacyreta bi-national entity co-owned with Argentina; and Acaray has an installed capacity of 250 MW and is owned and operated by ANDE, the public power utility. 3 Two small concessionaires operate in the Central Chaco region and for the city of Villarrica.

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to its regional managers. To address the sector’s institutional weaknesses: (i) the Ministry of Finance and ANDE are negotiating a three-year performance contract with quantitative and qualitative indicators aimed at improving the utility’s performance; and (ii) an action plan is being developed jointly by the Ministry of Finance and the VMME to strengthen the role of the VMME with respect to energy policy, strategy and program formulation, and to its regulatory and oversight capacities. Through its Institutional Strengthening Component (Project Component 3), the Project will also support the development of an institutional assessment of the electricity sector and the implementation of its key recommendations, and the strengthening of ANDE’s operational capacities. 9. Energy issues are a key priority for the Government as it seeks to transform ANDE into an efficient and financially sustainable public sector enterprise. In January 2010 Congress approved an Emergency Plan as a response to the increased outages and voltage fluctuations of the summer of 2009-2010 (December–February). The Emergency Plan of US$80.5 million includes the purchase and installation of low voltage transformers, equipment to enhance reactive compensation, generators, and fuel acquisition. In addition, ANDE’s structure was reorganized with changes in key senior management positions: commercial, financial and technical. 10. ANDE submitted a 10-year Master Plan (2009-2018)4 built upon three broad objectives: (i) reducing power losses in distribution and transmission; (ii) expanding transmission system capability; and (iii) enhancing the company’s efficiency and revenues by increasing the exporting capacity of ANDE to neighboring countries. A priority investment of the Master Plan is the Itaipú-Asunción 500 kV transmission line being prepared by the Itaipú Binational entity with concessionary financing from Brazil via Mercosur’s Structural Funds (FOCEM),5 and with an expected commissioning date of early 2013. The Master Plan is expected to cost about US$1.3 billion6 with relatively little financing secured. Mobilizing financing including commercial financing is therefore a critical issue. The proposed Project finances priority investments of the Master Plan. It represents about one year of required investments. 11. Although the country is a major electricity generator and exporter, its domestic consumption per capita remains low at 1,000 kWh/year (about one third of the consumption levels of Brazil and Chile). According to ANDE, electricity demand is expected to increase by about 9 percent per year over the medium term corresponding to an additional 160 MW per year, driven mainly by an increase in the residential and commercial demand. The projected growth in electricity demand exacerbates the challenges faced by ANDE’s electric system: lack of network capacity to increase supply, low quality of service, large system losses, and relatively low collection rates. 12. Despite its large generation capacity, Paraguay’s electricity service provision lags in quality and reliability, with high system losses and no reliable system to meter them. System losses have increased steadily over the last 10 years, from 21 percent in 1999 to 34 percent in 2005

4 The Master Plan is available on ANDE’s website at http://www.ande.gov.py. 5 It was initially considered for World Bank and European Investment Bank Financing. 6 Total investment requirements over the 2009-2018 period are estimated at US$1.3 billion, out of which generation investments are estimated at US$280 million, transmission investments at US$763 million, and distribution investments at US$266 million. An update of the investment requirements is under preparation by ANDE.

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(well above the 13.5 percent weighted average for the Latin America and Caribbean Region). The loss reduction program financed by the Inter-American Development Bank (IDB)7 and launched in 2006 has had limited success, as the 2009 estimated total losses remained high at 34.5 percent. Transmission losses are estimated to be about 10 percent and distribution losses estimated to be 24.5 percent (split equally between technical and non-technical distribution losses). However, these are estimates as ANDE has no reliable system to meter losses at different voltage levels and geographical locations and no remote metering. ANDE’s current target to further reduce system losses in 2010 to 32 percent is a modest goal. Reducing losses relatively quickly and significantly is imperative but presents considerable technical and financial challenges which will require additional efforts and resources. 13. Electricity service provision also faces significant outages and voltage fluctuations. The current maximum capacity of the transmission system, estimated by ANDE to be 1,700 MW, has been reached (in 2009 peak demand reached 1,810 MW). In 2009 customers saw 16.9 interruptions for an average of 11.4 hours per interruption. These outages are due to the fact that transmission assets are operating close to their thermal technical limits causing shutdowns of the system whenever there is a shock. Warm summer weather, heavy rains or thunderstorms regularly result in the activation of the transmission lines protection devices and in interruptions. In addition to outages, the long distances from the generating plants to load centers (of about 300 kms.) result in voltage fluctuations that have negatively impacted economic operators and households in the main load centers. Additional transformation and reactive compensation capacity to support ANDE’s transmission network is therefore critical to avoid a supply crisis and prevent the further deterioration of the quality and reliability of the electricity service.

C. Higher Level Objectives to which the Project Contributes 14. The higher level objective of the Project is to increase the quantity and the quality of electricity services in Paraguay and to strengthen the performance of the public utility responsible for the provision of electricity services in Paraguay. In so doing the Project will contribute to the fulfillment of three of the GOP’s high-level objectives which are included in the World Bank’s Country Partnership Strategy (CPS) for 2009-20138 with Paraguay: poverty reduction, sustainable growth, and improved governance. The Project is also in line with the Government priorities to support the sustainable development of the electricity sector as stated in the Economic and Social Plan of 2008-2013. A key element of the CPS strategy and of the Government’s objectives is to modernize the country's infrastructure and improve the delivery of public services, in particular in the electricity sector.

7 The IDB financed National Electricity Administration Multiphase Power Transmission Project (US$105 million for Phase I) aims to meet growing demand for electricity by expanding and upgrading the transmission grid, reducing loss levels, and supporting actions to modernize ANDE. Over the 2006-2011 period, the IDB-financed project includes a 220 kV transmission line (198 kms), two 66 kV transmission lines (35 kms), the replacement of about 220,000 meters, and the diagnostic of ANDE’s environmental and social management system (SIGAS), as well as improvements to ANDE’s financial corporate management. The loss reduction program amounts to US$26.5 million. 8 Country Partnership Strategy, Report No. 48087-PY, discussed by the World Bank Board of Executive Directors on May 5, 2009.

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II. Project Development Objectives

A. PDO 15. The development objective of the Project is to increase the quantity and quality of the provision of electricity services by the Borrower, while improving the Borrower’s performance.

1. Project Beneficiaries 16. The Project direct beneficiaries will be Paraguay’s residential, commercial and industrial electricity consumers in the public and private sectors as it will improve the quantity and quality of the service and improve ANDE's performance. Improved distribution and transmission networks would have the following effects on households, businesses and industry: (i) improve the quantity of electricity delivered as more transformation and reactive compensation increases the amount of energy available for commercial and productive uses and decreases the system's average interruption duration; (ii) improve the quality of the electricity service by reducing outages and by increasing the voltage profile and thus the lifetime of the appliances; (iii) improve customer satisfaction through a state-of-the-art customer management system; and (iv) contain costs through reducing losses and improving private collection performance. Indirect benefits will be related to improving the overall economic performance of the country as the Project seeks to meet the increasing demand for electricity services in Paraguay.

2. PDO Level Results Indicators 17. Project progress will be measured through the following performance indicators:

a. reduction in distribution losses through a state-of-the-art distribution management system and advanced metering;

b. increase in electricity delivered to the consumers through increase in transformation capacity; and

c. increased quality of service through a reduction in power supply interruptions and improvements in average voltage drops through increased transformation and reactive compensation capacity.

III. Project Description

A. Project components 18. The cost of the proposed Project is estimated to be US$125 million (including contingencies, taxes and duties applicable to ANDE) of which US$100 million would be provided by IBRD. The proposed Project would involve three components: the first Component aims at providing ANDE with a state-of-the-art Electricity Distribution Management System to enhance the quality of its service, and the strengthening of the metering system to reduce losses

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and improve the utility's performance; the second Component supports the implementation of priority transmission investments in substations and the installation of reactive compensation to increase the quantity and quality of electricity supplied; and the third Component aims at strengthening ANDE’s capacity in investment planning and project preparation and at improving the sector and ANDE's performance and transparency. 19. Component 1: Modernizing the Borrower’s Distribution Management System and Installing an Advanced Metering System for Large Consumers. (Total cost: US$25 million; IBRD financing: US$20 million). This component includes:

a. Installation of a state-of-the-art integrated distribution management system (Sistema de

Gestión Integral de la Distribución Eléctrica – SGIDE) integrating technical and commercial operations through a turn-key contract procuring hardware, software, database set-up and maintenance, including the installation of the following functional modules: (i) planning, projects and works of the distribution system; (ii) supervisory control and data acquisition operating system and the corresponding remote terminal units; (iii) maintenance, including the provision of training of the Borrower’s staff in the use, maintenance and upgrading of the integrated distribution management system; (iv) technical and non-technical distribution losses; (v) client support (call center); and (vi) implementation of an incidence recording and management system.

b. Installation of a 66kV and 23kV advanced metering system which allows remote consumption metering and disconnection or reconnection of the Borrower’s large customers.

20. The activities to be carried out through this Component complement the IDB’s US$26.5 million loss reduction program that focuses on replacing meters mostly at the residential level.

21. Component 2: Improving the Performance of the Transmission Network (Total cost: US$96.25 million; IBRD financing: US$77 million). This component will provide resources to support:

a. Construction of new substations below the existing transmission lines (excluding

transmission line investments9), including: (i) the construction of a new 220/23kV substation in the area of Barrio San Pedro in the Paraguayan District of Guajayvi; and (ii) the construction of a new 66kV substation in the Paraguayan District of Minga Porá.

b. Extension of about ten (10) existing substations including the expansion of the transformation capacity of said substations (excluding transmission line investments).

9 Given the physical locations of the Project substations relative to the existing transmission lines, no investment in transmission lines is anticipated.

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c. Installation of reactive compensation at the Guarambaré substation in the Paraguayan Central Department.

22. Component 3: Strengthening Paraguay’s Electricity Sector and the Borrower’s Institutional Capacity (Total cost: US$3.5 million; IBRD financing US$2.75 million). This Component will provide resources to support:

a. Improvement of the performance of the electricity sector and in particular, the

Borrower, through: (i) the carrying out of an independent institutional assessment of the legal framework, the organizational structure and operational procedures of the electric sector in Paraguay; (ii) the development of a resulting action plan (acceptable to the Bank and to the Ministry of Finance); and (iii) the implementation of the key priorities established in the action plan, all in a manner acceptable to the Bank and to the Ministry of Finance.

b. Institutional strengthening of the Borrower’s capacity in investment and project planning and implementation, through, inter alia: (i) strategic advice to the Borrower’s Presidency on managerial decisions that will enhance its performance; (ii) strategic support from international consultants with successful experience in the implementation of a distribution management system during the first three years of implementation of Component 1 of the Project; (iii) strengthening of the Borrower’s environmental and social unit through provision of best practices and methodologies, and capacity building to ensure oversight of substation investments under Component 2 of the Project; and (iv) strengthening of the Borrower’s financial and asset management practices, its internal auditing unit, and provision of external auditors for the Project.

B. Project Financing

1. Lending Instrument

23. The IBRD Loan to ANDE, with a payment Guarantee from the Republic of Paraguay, is proposed to be US$100 million, and ANDE’s financial contribution to the Project to be US$25 million. Allocation and source of financing for each component is described in Table 1 below. The Project is scheduled to be completed within 5 years (April 2011- June 2015). ANDE, together with the Ministry of Finance, has selected an IBRD Flexible Loan denominated in US dollars, with a variable spread, commitment-linked, level repayments, with an 8 year grace period and 27 years total maturity, and all conversion options. The Front End Fee will be paid from loan proceeds.

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2. Project Financing 24. Allocation and source of financing for each Project Component is described in Table 1 below.

Table 1: Estimated Project Cost and Financing (US$ million) (1) Component IBRD ANDE Total

Component 1 – Modernizing the Borrower distribution management system and installing an advanced metering system for large customers

20.00 5.00 25.00

Component 2 – Improving the performance of the transmission network

77.00 19.25 96.25

Component 3 – Strengthening Paraguay’s electricity sector and the Borrower’s institutional capacity

2.75 0.75 3.50

Front-End fee (2) 0.25 0.25

Total 100.00 25.00 125.00

(1) Includes contingencies and taxes/duties applicable to ANDE (2) Front-end fee of 0.25 percent of the IBRD loan amount

C. Lessons Learned and Reflected in the Project Design

25. The Project design has benefited from the Bank’s experience with similar power projects in other countries, as well as from recent project experience in Paraguay.10 The specific lessons incorporated into Project design reflect the importance of a comprehensive approach to power sector improvements, including investments and institutional strengthening at the utility and also at the sector planning, regulatory and oversight levels. The following lessons have been incorporated in the Project design: (i) the need for strong implementation agencies with adequate capacity to ensure on-time implementation, which often requires support from external consultants providing advice on strategic and technical issues, as well as on best practices; (ii) the need for strong political will and commitment, as well as external communication campaigns to ensure ownership and support for the investment, the loss reduction programs, and to allow utilities to gain social legitimacy; (iii) the need for integration of social and environmental requirements into contract design and project implementation; and (iv) the need for adequate implementation monitoring and evaluation systems and capabilities. IV. Implementation

A. Institutional and Implementation Arrangements 26. The Project will be implemented by the electricity state-owned enterprise (ANDE) with oversight from the Ministry of Finance. In ANDE overall Project implementation coordination will be provided by the General Planning and Corporate Policy Directorate (Dirección de Planificación General y Política Empresarial), located within ANDE's Presidency (Presidencia). ANDE will assume fiduciary responsibilities for all the activities financed by the Bank Loan, will produce the requisite interim and annual project reports and financial statements, and will rely on its operational departments and other units to implement, coordinate and monitor the 10 Water and Sanitation Sector Modernization Project (P095235), approved on April 14, 2009. Sustainable Agriculture and Rural Development Project (P088799), approved on January 29, 2008.

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Project. The Ministry of Finance will monitor Project's overall implementation, including inter alia oversight of reporting and monitoring activities, as well as coordinating the execution of the institutional assessment of the electricity sector and the implementation of its key recommendations. A Coordination Agreement satisfactory to the Bank and delineating the respective roles and responsibilities of Ministry of Finance and of ANDE will be signed. 27. Through its General Planning and Corporate Policy Directorate (Dirección de Planificación General y Política Empresarial) ANDE will be responsible for the implementation and reporting on the Project's three components. ANDE's Implementation Team will include inter alia a Project Manager from the General Planning and Corporate Policy Directorate coordinating the activities and the staff of this Directorate, liaising with the stakeholders and experts from ANDE’s relevant departments and units including but not limited to: (i) environmental and social experts; (ii) procurement specialists; (iii) financial management specialists; and (iv) specialists in the areas of transmission, distribution, investment control, commercial transactions, finance and accounting, information technology and legal matters. 28. Implementation of the Distribution Component (Component 1) which will impact directly or indirectly many departments of ANDE will be carried out with the support of a working group, led by the Distribution Sub-Directorate (part of the Technical Directorate) and including representatives from the Commercial Directorate, the Loss Reduction Unit, the Information Technology Directorate, and the General Planning and Corporate Policy Directorate. An international consultant with experience in implementation of state-of-the-art distribution management systems will assist ANDE in the implementation. The implementation of the Transmission Component (Component 2) will be led by the Transmission Sub-Directorate of the Technical Directorate and will include support from the Procurement and Contracts Administration Unit, the other technical units, and from the Environmental and Social Unit in particular, to ensure that the environmental and social requirements are included in the bidding documents and contracts, and that the implementation of the Environmental and Social Management Plans is satisfactory. The implementation of the Institutional Strengthening Component (Component 3) will be carried out by ANDE's units benefitting from the Component's activities, such as the Distribution Sub-Directorate, Financial and Commercial Directorates, and the Environmental and Social Unit; ANDE's General Planning and Corporate Policy Directorate will coordinate implementation. However, the sector assessment and the implementation of the resulting key recommendations to improve the electricity sector performance and increase the transparency and accountability of the sector, whose scope goes beyond that of ANDE, will be coordinated by the Ministry of Finance, and a multi-agency task-force will be constituted. To support ANDE senior management, an advisor to ANDE's Presidency will also provide strategic advice. 29. During Project preparation, Financial Management (FM) risks have partly been addressed by the Bank team through review of ANDE's key FM staff CVs and by a two-day training on Bank fiduciary practices. In addition, FM risks will be mitigated during implementation by: (i) supporting ANDE's internal audit unit to monitor implementation of the new internal control model; (ii) strengthening ANDE's fixed asset safeguarding policies and procedures (technical advice will be provided to gradually improve the effectiveness of the entity's control over its

10

property and plant); and (iii) involving ANDE's internal audit unit in auditing Project transactions as part of its annual work planning.

30. ANDE will operate a Designated Account (DA) in US dollars to be opened in the Central Bank of Paraguay (BCP) where advances of funds will flow from the Loan account. As expenditures are incurred, funds from the DA will be transferred to ANDE's general account in local currency from which payments for eligible expenditures will be made. Special commitments and direct payments to contractors and suppliers may also be used for disbursements.

B. Results Monitoring and Evaluation 31. Monitoring and Evaluation (M&E) of Project activities will be the responsibility of ANDE, as the implementing entity, in coordination with the Ministry of Finance. Comprehensive monitoring and evaluation arrangements, consistent with Bank guidelines and requirements for measurement and evaluation, will be carried out. Key performance indicators and M&E arrangements are specified in Annex 1. In addition, the Bank will carry out twice a year Project reviews and supervision. The reports to be prepared by the implementing entity, ANDE, will include: (i) Interim Financial Reports (IFRs); (ii) quarterly reports provided by ANDE in coordination with the Ministry of Finance; and (iii) independent annual financial audits of the Project and of ANDE’s financial statements. The Bank will also carry out a Project mid-term review.

C. Sustainability 32. The Project is designed to strengthen in a comprehensive manner the technical and financial performance of ANDE as it covers the areas of distribution and transmission losses, customer management, the transmission system, and ANDE's planning, implementation and monitoring capacities. The Project is expected to help ANDE demonstrate to its customers and the Government that it can improve its performance, which will be relevant to an eventual tariff adjustment discussion.11 Sustainability of the Project outcomes will also depend on the overall governance environment for the power sector, a high priority given the ongoing negotiations of the performance contract between the Government and ANDE. It is expected that the performance contract will be signed by early 2011, once both parties agree on the three remaining quantitative indicators (level of losses, collection rates, and return on assets), which will contribute to the sustainability of the Project's outcome. The commitments of the Ministry of Finance and ANDE’s management to delineate and implement key recommendations to increase the overall performance of the power sector and to provide strategic advice to ANDE's Presidency are expected to help further sustain the improvements anticipated under the Project.

11 Tariffs have not been adjusted since March 2002. The adequacy of tariff levels going forward will be a function of several factors, including ANDE’s ability to reduce losses and the value of Paraguay’s currency (see discussion on ANDE’s Financial Condition and Performance on paragraph 37).

11

V. Key Risks 33. The proposed Project faces risks related to the relatively weak energy sector institutions responsible for oversight, policy planning and regulatory functions. To mitigate this risk, Component 3 provides resources for institutional strengthening through the implementation of key recommendations to address critical weaknesses in the electricity sector and to provide strategic advice to ANDE's senior management (Presidencia). In addition the Government is negotiating a three-year performance contract with ANDE aimed at improving the utility’s governance and performance, and has delineated an action plan to strengthen the Vice-Ministry responsible for Energy (VMME). 34. Another risk is related to ANDE's implementation capacities as the utility is currently implementing corporate changes as well as a large investment program. To mitigate this risk, the Project provides resources for: (i) strategic support from international consultants experienced in the implementation of distribution management systems (Component 1); (ii) strengthening ANDE’s planning unit, in particular the Environmental and Social Unit, through access to consultants, best practices, methodologies and technologies, and training to ensure oversight of transmission investments (Component 3); and (iii) strengthening ANDE’s financial management practices, in particular with respect to asset management practices and internal auditing (Component 3).

VI. Appraisal Summary

A. Economic and Financial Analysis Project Economic Analysis 35. The Project net economic benefits for Paraguay (namely, the Project Net Present Value (NPV) @ 10 percent and the Economic Rate of Return (ERR)) have been estimated for the distribution component (Component 1) and for the transmission investment component (Component 2).12 As shown in Table 2 below, the ERR for the Project is estimated to be 37, and is respectively 28% and 41% for the distribution and for the transmission component. The sensitivity analysis demonstrates that the Project’s economic viability is very robust. In a Low Case scenario, the Project’s economic rate of return is 21 percent, with respectively 22 percent for the distribution component, and 19 percent for the transmission component. More details on the economic analysis are available in the Project files.

12 As the Project is part of ANDE’s overall transmission Master Plan, the ERR of the Master Plan was also estimated. The 24 percent ERR (for the base case) demonstrates the high economic benefits expected from the transmission investments.

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Table 2: Summary of Economic Analysis Investment Project

Distribution

(Component 1) Transmission

(Component 2) Scenario Unit Base Case Low

Case Base Case Low Case Base Case Low Case

NPV@10% $million 495 218 41 29 454 164 ERR % 37 21 28 22 41 19 (*) The Low Case Scenario combines an increase of 20 percent in Project costs together with a decrease of 20 percent in additional electricity to be provided by the investment, and an increase of 20 percent in the foregone value of electricity sold to Brazil. Project Financial Analysis 36. The Project’s incremental impacts on ANDE’s finances were also assessed and a summary of the financial analysis is provided in the following Table 3. Overall, it is estimated that the Financial Rates of Return (FRRs) are respectively 24 percent for the Project, and 21 percent and 25 percent for the distribution and for the transmission components. In the “Low Case Scenario”, the FRRs will be respectively 15 percent for the Project, and 17 percent and 14 percent for the distribution and transmission components. The Project should therefore have significant positive impacts on ANDE’s financial viability and profitability.

Table 3: Summary of Financial Analysis Investment Project

Distribution

(Component 1) Transmission

(Component 2) Scenario Unit Base Case Low

Case Base Case Low Case Base Case Low Case

NPV@10% $million 190 78 19 13 235 65 FRR % 24 15 21 17 25 14 (*) The Low Case Scenario combines an increase of 20 percent in Project costs together with a decrease of 20 percent in additional electricity to be provided by the investment, and an increase of 20 percent in the electricity purchase price from Itaipú Binational.

ANDE Financial Condition and Performance 37. ANDE’s financial condition is currently sound. For fiscal years 2008 and 2009, ANDE’s net financial results were respectively US$91 million and US$71 million, with total revenues respectively of US$410 and US$465 million. The average tariff was US$65/MWh and the average generation costs about US$21.3/MWh reflecting the relatively low costs of Itaipú’s power and other generation sources such as Yacyreta and Acaray. 38. A large investment program has been delineated by ANDE and the Government that will provide the additional electricity required by the economy and the population and increase the quality of service. Efforts are also underway to maximize the benefits from Paraguay’s large hydroelectric potential, while keeping electricity tariffs at competitive levels. Financing of the investment program is a key issue. ANDE’s latest financial projections indicate that its key financial ratios may deteriorate under the following circumstances: (i) retail tariffs are not adjusted regularly to track any deterioration in the value of the Guarani as most of ANDE’s costs (investment and debt servicing, purchase of power from the bi-national entities of Itaipú and Yacyretá) are paid principally in US dollars; and (ii) ANDE’s’ distribution and collection performance does not improve significantly -- the 2009 transmission and distribution losses are estimated to be 34.5 percent and collection performance 70 percent in part because of public sector arrears. Through the implementation of the distribution management system and the

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transmission investments, the Project directly supports distribution loss reduction and increased private collection rates. The Government and the utility are also currently negotiating a set of quantitative (covering inter alia losses, collection performance with private and public customers, financial profitability, etc.) and qualitative indicators that will provide the framework to regularly monitor the evolution of ANDE’s financial performance.

B. Technical 39. The proposed Project presents no unusual construction or operational challenges. The Project will be implemented in accordance with internationally accepted technical criteria and standards. The technical parameters and estimated costs for each Project component have been discussed with ANDE. The equipment and technology proposed for the distribution management information system (SGIDE) and for the metering system are well known and proven, so are the construction and operation technologies for the transmission networks. 40. ANDE is experienced in the preparation of technical and contractual bid specifications (in particular for transmission investments), in the evaluation of bids, and in construction supervision. However as: (a) ANDE does not have experience with World Bank procurement guidelines, fiduciary and other requirements; (b) several investment programs are under preparation or execution; and (c) it is critical to quickly and effectively implement such investments, ANDE's Project team will be supported by: (i) an international consultant experienced in implementation of state-of-the-art distribution management systems; and (ii) during the first two-years of implementation, the Bank team will provide direct support to ANDE, in particular regarding procurement, financial management and environmental and social safeguards.

C. Financial Management 41. ANDE has broad experience with the implementation of internationally-funded operations,13 however it has not yet implemented a World Bank-financed project. To address this, a specific training workshop on the Bank’s FM procedures was delivered to ANDE’s operational line department staff to be involved in Project implementation. Internal audit staff also attended the training. 42. The FM functions will be carried out by ANDE’s line departments following their administrative procedures within the entity’s internal control framework. The FM assessment done during Project preparation noted that the letter of the 2008 external auditors on internal control reported several internal control weaknesses mainly related to fixed assets safeguards. As a risk mitigation measure, Component 3 includes activities to strengthen ANDE’s internal controls including safeguarding of property and plant (asset management), internal auditing, and the provision of external auditors for the Project. In addition, the expanded scope of external audit reports will include an opinion on the eligibility of expenditures, on the adequacy of the control procedures and the correct use of the Loan funds, and on the compliance with the financial provisions of the legal agreements. An audit of the Project’s transactions will also be

13 Notably JICA, IDB, and KfW.

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included as part of ANDE’s internal audit department annual work plan, covering the Project implementation period. 43. In addition to standard covenants on project audits and interim financial reports, submission to the Bank of ANDE’s annual audited financial statements as a continuous revenue-generating entity is required for this Project. Project FM monitoring will be performed through comprehensive on-site supervision twice a year, review of interim financial reports and audited financial statements reviews. If deemed necessary, a review of red flags to prevent fraud and corruption will be conducted.

D. Procurement 44. An in-depth assessment of ANDE’s procurement capacity was carried out by the Bank team and a detailed action plan was prepared to address all risks identified, as discussed in Annex 3. While important steps have been taken to strengthen the country's procurement system, there are areas that need timely and additional measures to lessen risks related to the Project. The agreed corrective measures are: (i) aggregating contracts in a few packages using single responsibility type of contracts when feasible, which will be subject to Bank prior review; (ii) ANDE will employ the SEPA (Sistema de Ejecución de Planes de Adquisiciones) for all Project related procurement; (iii) inclusion in the Loan Agreement of the Special Procurement Provisions; and (iv) ANDE Project staff will attend procurement training delivered by the Bank. Details are provided in Annex 3.

E. Social 45. The Project responds to the long-standing requests of key stakeholders (Paraguay’s residential, commercial and industrial electricity consumers, national and local Governments) to increase the quantity and quality of ANDE’s electricity services. 46. Several main socially positive Project impacts can be highlighted; (i) increased quantity and quality of electricity services available in Paraguay, increased efficiency in the management of the transmission and distribution networks, containment of costs notably by reducing technical and non-technical losses; (ii) improvement in electricity services in seven departments of Eastern Paraguay, where electricity is a key constraint to social and economic development; and (iii) mainstreaming of social and environmental management in the design and implementation of the sub-projects. 47. The main social concern about potential social negative impacts, related to the construction of two new substations and increased transformer capacity in about 10 existing substations, has been addressed through: (i) the selection of relatively small-scale investments with only temporary impacts and the selection of sites with low social sensitivity; and (ii) the Project communication and information plan led by ANDE with support from the Ministry of Finance and advice from the Bank. 48. Draft Environmental and Social documentation was respectively disclosed by ANDE in Paraguay and filed in the Bank’s Public Information Center and its webpage (Infoshop) prior to

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Project Appraisal on August 9-10, 2010 for the Environmental and Social Framework (ESMF), on September 13-14, 2010 for the Environmental and Social Management Plans (ESMPs including Resettlement Plans14) of Minga-Pora and Barrio San-Pedro substations, and on September 26-28, 2010 for the Environmental and Social Management Plans (ESMPs) of the ten existing substations. This documentation was re-disclosed on October 15, 2010 to reflect comments and provide clarifications. 49. Required mitigation measures complying with Bank guidelines and national laws will be incorporated into the contracts with oversight from ANDE. The two new substations will be alongside the existing transmission lines. Consequently no transmission line investments are contemplated by the Project. To proactively manage possible changes during the 5-year implementation period an Environmental and Social Management Framework (ESMF), including an Indigenous Peoples Framework (IPF) and an Involuntary Resettlement and Land Acquisition Policy Framework (IRLAPF) has also been disclosed by ANDE and by the World Bank on October 15, 2010. Consultations consistent with national regulations and Bank’s Policies have been carried out with the participation of, among others, the Environment Secretariat (SEAM), indigenous NGOs, local municipalities and residents. Additional Safeguards information is provided in Annex 3.

F. Environment (including Safeguards) 50. Project investments, which include the construction of new substations and increasing capacity in existing substations,15 should pose only small-scale direct and reversible environmental impacts. The primary impacts are associated with noise, dust, traffic, and worker safety during the construction phase. In addition, aspects such as electro-magnetic fields and Polychlorinated Biphenyls (PCBs) used in transformers were considered as part of the Environmental Assessment (EA) process. Existing transformers in the Project substations do not have PCBs nor will the new equipment financed through the IBRD Loan. The capacity and procedures of ANDE have been reviewed with respect to PCBs; measures to improve environmental management, including improved PCB management, are supported by the IDB Program under implementation. The proposed Project will also strengthen ANDE's Environmental and Social Unit by providing access to best practices in design and implementation. 51. As noted in para. 48 above, environmental assessments and management plans were prepared and disclosed by ANDE in Paraguay and filed in the Bank's Public Information center and Infoshop prior to Project Appraisal, and re-disclosed on October 15, 2010.

14 For small land acquisition of two hectares for the Barrio San Pedro substation and of one hectare for the Minga Pora substation. 15 The new substations will be alongside the existing transmission lines and consequently no transmission line investments are contemplated in the Project.

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Annex 1: Results Framework and Monitoring Paraguay – Energy Sector Strengthening Project

Project Development Objective (PDO):

The development objective of the Project is to increase the quantity and quality of the provision of electricity services by the Borrower, while improving the Borrower’s performance.

PDO Level Results Indicators* C

ore Unit of

Measure Baseline

2010

Cumulative Target Values** Frequency

Data Source/ Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.) YR 1 2011

YR 2 2012

YR3 2013

YR 4 2014

YR5 2015

Indicator One: Reduction in distribution losses

%

23 - - 22.5 21.5 20.5 annual ANDE’s reports

ANDE Reduction in distribution losses due to SGIDE and Installation of Advanced Metering System

Indicator Two: Reduction in service interruption

Hours/ year

36.3 __ __ 34 32 29 annual ANDE’s reports

ANDE Hours per service interruption at the metropolitan level

Indicator Three: Increased energy supplied in the Transmission Network

GWh

0 __ __ 599 625 977 annual ANDE’s reports

ANDE Increased energy supplied to the network by the Project substations

Indicator Four: Increased quality of service (improved voltage profile)

Number of days per year

90 __ __ - 30 30 annual ANDE’s reports

ANDE Number of days /year for which voltage level is below accepted minimum

Indicator Five: Direct Project Beneficiaries

■ Number of persons

(000)

1.191 __ __ 1.265 1.291 1.317 annual To be provided by

ANDE”s Project

Coordination Unit based on

ANDE’s reports

ANDE Number of people directly benefitting from the Project.

INTERMEDIATE RESULTS

Intermediate Result (Component One): Modernization of ANDE’s Distribution Management System and Installation of Automated Meter Infrastructure (AMIs) for Large Consumers

Intermediate Result indicator One: Installation of SGIDE

% 0 Firm selected to install the SGIDE

Updated database and installation of IRMS and call center module

Installation of losses and SCADA/RTU module

SGIDE system

operational

- annual ANDE’s reports,

supervision missions

ANDE Installation and operation of the Distribution Management System (SGIDE)

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Intermediate Result indicator Two: Advanced Metering System (AMIs) installed

number 0 - 265 530 795 1,060 annual ANDE’s reports,

supervision missions

ANDE Installation of AMIs metering systems, of which ten AMIs of 63 kV.

Intermediate Result (Component Two): Transmission Investments

Intermediate Result indicator One: Increased installed transformation capacity

MVA cumulative

0 - - 203 426 - annual ANDE’s reports,

supervision missions

ANDE Additional transformation capacity in the Project’s substations.

Intermediate Result indicator Two: Increased reactive compensation capacity

MVAr

0 - - - -120/300 -120/300 annual ANDE’s reports,

supervision missions

ANDE Additional compensative reaction capacity through the Project

Intermediate Result (Component Three): Institutional strengthening of ANDE

Intermediate Result indicator One: Institutional assessment of the electricity sector16

__ Consultants selected

Study completed

Initiate implementation of key recommend

ations

Complete implementati

on of key recommenda

tions

annual ANDE’s reports,

supervision missions*

ANDE

16 While the collection of data for intermediate result of the institutional assessment of the electricity sector is the responsibility of ANDE, Ministry of Finance will monitor the implementation of the assessment.

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Annex 2: Detailed Project Description

Paraguay – Energy Sector Strengthening Project 1. The Project development objective is to increase the quantity and quality of the provision of electricity services by the Borrower, while improving the Borrower’s performance. The Project involves the following three components: the first Component aims at providing ANDE with a state-of-the-art Electricity Distribution Management System to enhance quality of its service, and at the strengthening of the metering system to reduce losses and improve the utility's performance; the second Component supports the implementation of priority transmission investments in substations and the installation of reactive compensation to increase the quantity and quality of electricity supplied; and the third Component aims at strengthening ANDE’s capacity in investment planning and project preparation, and at improving the sector and ANDE's performance and transparency. Financing for each Project Component is described in Table A2.1 below.

Table A2.1: Estimated Project Cost and Financing (US$ million) (1) Component IBRD ANDE Total

Component 1 – Modernizing the Borrower distribution management system and installing an advanced metering system for large customers

20.00 5.00 25.00

Component 2 – Improving the performance of the transmission network

77.00 19.25 96.25

Component 3 – Strengthening Paraguay’s electricity sector and the Borrower’s institutional capacity

2.75 0.75 3.50

Front-End fee (2) 0.25 0.25

Total 100.00 25.00 125.00

(1) Includes contingencies and taxes/duties applicable to ANDE (2) Front-end fee of 0.25 percent of the IBRD loan amount

Component 1 – Modernizing the Borrower’s Distribution Management System and Installing an Advanced Metering System for Large Consumers (Total cost: US$25 million including contingencies and taxes; IBRD financing: US$20 million) 2. Reducing distribution and technical losses on a sustainable basis is a key objective for improving the efficiency of Paraguay’s electric system and ANDE’s financial performance. ANDE’s transmission and distribution losses are very high (34.5 percent in 2009). Replacing ANDE’s antiquated systems by a state-of-the-art integrated distribution management system will provide a high degree of knowledge and control about the technical and commercial parameters of the networks, as well as permit a more efficient management of its customers and of the services ANDE provides. This activity will also complement and strengthen the efforts financed by IDB (US$26.5 million) that include: (i) meter replacements at the residential level, (ii) improvement of the collection rate, (iii) capacity building to monitor non-technical losses, and (iv) customer regularization. In addition to reducing losses, this system should improve the quality of service for end-users and reduce costs. Expected improvements include a decrease in: (i) the duration and frequency of outages and service interruptions, (ii) non billed electricity, and (iii) the turnaround time to address customer issues. It is also expected that ANDE will increase

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its operational efficiency by benefitting from opportune and reliable information about system conditions, and up-to-date information to improve private revenue collection. This Component includes the following two Sub-components:

a. Sub-component 1.1: Installation of a state-of-the-art integrated distribution management system (Cost US$20.0 million including contingencies and taxes, IBRD $16.0 million) including the installation of a state-of-the-art Integrated Distribution Management System (Sistema de Gestión Integral de la Distribución Eléctrica- SGIDE) integrating technical and commercial operations through a turn-key contract procuring hardware, software, database set-up and maintenance. This system would allow: (i) on-line management of the client database; (ii) effective management of service orders, including registration of all activities performed at the customer level, such as service interruption, reconnection, metering replacement and new connections; (iii) customer service (call) center and improved Incidence Recording and Management System (IRMS), to enable ANDE to better respond to client service concerns by automating the detection of distribution faults and ensuring the quality of power supply; (iv) automatic daily monitoring of the company’s activity at the field; (v) management of the commercial cycle (i.e. meter reading, billing and payment) including billing error detection, automatic management of delinquent account conditions and fraudulent behavior, associated service interruptions and punitive actions; and (vi) monitoring of ANDE’s energy balance, including evolution of losses and related strategic planning. This sub-component includes the installation of the following functional modules: (i) planning, projects and works of the distribution system; (ii) Supervisory Control and Data Acquisition (SCADA) operating system and the corresponding Remote Terminal Units (RTU); (iii) maintenance including training of ANDE staff in the use, maintenance and upgrading of the SGIDE; (iv) technical and non-technical distribution losses; (v) client support (call) center; and (vi) implementation of an incidence recording and management system. It will be implemented as a turn-key-contract including training.

b. Sub-component 1.2: Installation of a 66kV and 23kV advanced metering system

(Cost: US$5 million including contingencies and taxes; IBRD US$4 million). The objective of this sub-component is to significantly and sustainably reduce non-technical losses in ANDE’s large customers through the installation of an advanced metering system for 66kV and 23kV that includes Advanced Metering Infrastructure (AMIs) to allow remote consumption metering and disconnection or reconnection of large consumer customers (industrial, commercial and residential customers). This sub-component includes inter alia the installation of Advanced Metering Infrastructure (AMIs), electronic modem, compact voltage and power transformers, and secondary conductors. The installation of this metering system will enable ANDE to meter the three electricity phases of large consumers, rather than metering two phases and estimating the third phase as it currently does. It is expected that the utility will improve its information database and private revenue collection.

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3. The activities to be carried out through this component complement IDB’s US$26.5 million loss reduction program that focuses on replacing meters mostly at the residential level.

Component 2- Improving the Performance of the Transmission Network (Total Cost: US$96.25 million including contingencies and taxes; IBRD financing: US$77 million) 4. ANDE prepared in 200817 an ambitious US$1.3 billion Integrated Master Plan to develop and strengthen its transmission infrastructure in order to meet the expected increase in peak demand, improve system reliability and reduce the high transmission losses (estimated to be 10 percent of generation). The proposed Project will provide resources to support the implementation by ANDE and its contractors of key transmission investments in substations 18. 5. Using technical, environmental and social screening criteria, ANDE has identified three groups of priority investments: (i) construction of new substations; (ii) extension of existing substations; and (iii) installation of equipment to enhance reactive compensation. These investments should allow ANDE to meet increasing domestic electricity demand within industry service standards, improve the quality of service (reduction of outages, voltage drops, etc.), reduce transmission losses, reduce operations and maintenance costs, and strengthen and stabilize the transmission network. The Project will provide resources to execute the following three Sub-components. 19

a. Sub-Component 2.1: Construction of new substations (Cost: US$10.3 million; IBRD

$8.4 million) including the: (i) construction of a new 220/23 kV substation in the area of Barrio San Pedro; and (ii) construction of a new 66 kV substation at Minga Pora. The new substations will be alongside the existing transmission lines and consequently no investment in transmission lines is contemplated.

b. Sub-Component 2.2: Extension of about ten existing substations (Cost: US$52.85 million; IBRD $41.1 million) including the expansion of the transformation capacity for a list of ten (10) existing substations (this activity does not contemplate any new transmission line investments); and

c. Sub-Component 2.3: Installation of Reactive Compensation (Cost: US$33.1 million; IBRD $27.5 million) at the existing Guarambaré substation.

6. The Project will provide resources to execute engineering, procurement and construction (including the financing of EPC contracts) for the commissioning of the new substations and the installation of reactive compensation (points a and c above). Regarding the extension of the

17 ANDE is currently updating its transmission master plan. 18 It is expected that the 500 kV transmission line between the Itaipú hydroelectric plant and the capital, Asuncion, will be in service in 2013. Preliminary work has been initiated with financing provided by Brazil via Mercosur’s Structural Funds (FOCEM). 19 Given the physical locations of the Project substations relative to the existing transmission lines, no investment in transmission lines is anticipated.

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existing substations (point b above), the IBRD Loan will finance the acquisition of the equipment using ICB procedures, and the on-site works and installations will be done through national bidding processes and by ANDE. Component 3 – Strengthening Paraguay’s Electricity Sector and the Borrower’s Institutional Capacity (Total cost: US$3.5 million including contingencies and taxes; IBRD financing US$2.75 million) 7. The objective of this Component is to improve the sector and ANDE's performance and transparency, and to strengthen ANDE’s capacity in investment planning, project preparation, and implementation. It includes the following two Subcomponents:

a. Sub-component 3.1: Improvement of the performance of the electricity sector through the implementation of key recommendations for the improvement of the performance of the electricity sector (Cost: US$1.5 million; IBRD: US$1.25 million). This sub-component provides resources for the implementation of key recommendations comprising priority actions for improving the performance of the electricity sector and in particular of ANDE. The priority actions will be developed through a comprehensive assessment of the performance of Paraguay’s electricity sector, including ANDE and key stakeholders. This sub-component comprises: (i) an independent and integral institutional assessment of the electricity sector, covering the legal framework, the organizational structure and operational procedures of the electric sector in Paraguay; (ii) the development of recommendations to improve the performance of the electricity sector to be set out in an action plan; and (iii) the implementation of the key recommendations established in the action plan. It will delineate actions and priorities to improve ANDE’s performance with regards to governance, management, legislation, and transparency of the electric sector, including key operational, commercial, financial, fiduciary, and customer service activities of the company. The sub-component will include resources required for the implementation of the key priorities set out in the assessment. The study will be coordinated by the Ministry of Finance and an inter-agency task-force will be established; a Coordination Agreement delineating the roles and responsibilities of the Ministry of Finance and ANDE in this regard will be signed between the two parties.20

b. Sub-component 3.2: Institutional strengthening of the Borrower’s capacity in investment and project planning and implementation. (Cost: US$2 million; IBRD: US$1.5 million). This sub-component seeks to strengthen ANDE’s capacities in strategic and investment planning and project preparation and implementation, and in reporting and evaluation. This sub-component includes the financing of a full-time consultant to provide strategic advice to senior management (ANDE’s Presidency) on managerial decisions that will enhance the utility’s performance. It will also include inter alia the following activities: (i) strategic support from international consultants with successful experience in the implementation of a distribution management

20 ANDE will be responsible for fiduciary requirements and compliance for matters regarding procurement and financial management.

22

system through the first three years of implementation of Component 1; (ii) strengthening of ANDE’s Environmental and Social Unit through provision of environmental and social consultants, best practices and methodologies, and capacity building and training by experienced social and environmental specialists (either Bank staff or consultants) to ensure oversight of transmission investments under Component 2; and (iii) strengthening of ANDE’s financial and asset management practices, its internal auditing unit, and provision of external auditors for Project accounts.

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Annex 3: Implementation Arrangements

Paraguay – Energy Sector Strengthening Project 1. Project implementation institutional arrangements 1. The Project will be implemented by the electricity state-owned enterprise (ANDE). The Ministry of Finance will monitor Project overall implementation, including inter alia oversight of reporting and monitoring activities. The Ministry of Finance will have a role in the technical aspects of Component 3.1 of the Project and in the monitoring of the overall operations of the Borrower, including Project implementation. The roles and responsibilities of the Ministry of Finance and of ANDE will be delineated in a Coordination Agreement signed by both parties. 2. Overall coordination of Project implementation will be provided by the Director of the General Planning and Corporate Policy Directorate (Dirección de Planificación General y Política Empresarial), located within ANDE's Presidency (Presidencia). This Directorate coordinated Project preparation. ANDE will ensure compliance with the Project Operations Manual (POM), will assume fiduciary responsibilities for all the activities financed by the Bank Loan, will provide the requisite reports including interim and annual progress reports and financial statements, and will draw on its line technical and operational departments to implement, coordinate and monitor the Project. 3. The Borrower shall maintain, at all times during Project implementation, an implementation team with terms of reference and resources satisfactory to the Bank, and competent staff in adequate numbers including, inter alia, a Project manager from the General Planning and Corporate Policy Directorate (DPGPE) who shall be responsible for coordinating Project activities and liaising with the Project stakeholders and the Borrower’s relevant departments or units, including but not limited to: (i) environmental and social experts; (ii) procurement specialists; (iii) financial management specialists; and (iv) specialists in the areas of transmission, distribution, investment control, commercial transactions, finance and accounting, information technology and legal matters. 4. Construction and installation will be undertaken by contractors under Engineering, Procurement and Construction (EPC) or supply contracts, and by ANDE. Contractors will be selected through international competitive bidding as well as through public national competitive bidding (NCB) following Bank procurement guidelines. 5. To address specific implementation risks, particularly with respect to the implementation of the distribution management system, an experienced consultant will assist ANDE during the detailed specifications, the selection of the contractor and implementation. Resources will also be available to ANDE’s senior management for strategic advice, to design and implement the required performance improvement strategy and corresponding measures, and to monitor the implementation of the environmental and social management plans.

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2. Financial Management and Disbursement Arrangements 6. The Financial Management (FM) Assessment concluded that the FM arrangements in place, along with additional mitigating measures that contribute to an enhanced fiduciary framework for the Project, meet minimum Bank requirements. The risk after the implementation of the proposed mitigation measures is considered moderate. However, the overall project FM risk is maintained as Substantial which corresponds to a Medium I rating of the ORAF risk rating scale. The adequacy of implementation and effectiveness of the mitigation measures will be evaluated during FM supervision and Project FM risk will be reassessed accordingly. 7. FM Mitigation Measures are as follows:

a) Project Preparation: A specific training workshop on Bank’s FM procedures and disbursements was delivered to ANDE staff and the operational line departments to be involved in Project implementation. Internal audit staff attended the training as well. b) Project Implementation will: (i) support ANDE’s internal audit unit in monitoring the implementation of the standard internal control model; (ii) help ANDE’s effort in strengthening its fixed asset safeguarding. Technical advice will be provided in order to gradually improve the effectiveness of the entity’s control over its property and plant; (iii) involve ANDE’s internal audit unit in auditing Project transactions as part of its annual work plan; and (iv) expand the annual financial audit scope to include an opinion on the eligibility of expenditures submitted for reimbursement, the adequacy of the control procedures and the correct use of the Loan funds.

8. Budgeting Arrangements. ANDE is outside the GOP FMIS (SIAF). ANDE submits aggregate information on budget execution and payment arrears to the General Accounting Directorate (DGC) of the MF on a monthly basis. Given ANDE’s financial autonomy, its budget information is shown in a separate line and is not included in the MF budget. 9. Accounting and Financial Reporting. Project transactions will be recorded in ANDE’s accounting software, where a specific set of accounts will be prepared to reflect sources of funds and uses by disbursement category and Project activity. The accounting software allows recording of multi-currency transactions. Draft annual financial statements will be prepared and will be included in the Operational Manual. In addition, ANDE will prepare semi-annual Interim Financial Reports (IFRs) for monitoring and evaluation purposes that will be part of the Project progress reports. ANDE will submit to the Bank its annual audited financial statements.

10. Internal Control and Internal Auditing. ANDE’s organizational structure and internal procedures will be used to process Project transactions. These procedures were reviewed to verify that an adequate segregation of duties exist among ANDE’s staff who approve operations, process transactions and make payments. Specific procedures relating to Project operations are included in the Operational Manual (OM). The internal audit function in ANDE is the responsibility of the Internal Audit Department (IA - Auditoria Interna). IA reports to the President of ANDE and is also under the oversight of the Office of the Executive’s Internal Audit (AGPE). The internal audit function is to some extent undermined by organizational

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limitations and lack of well-trained human resources. Besides, there is no audit manual other than customary procedures which are not standardized or in line with sound international practices. It has therefore been concluded that the internal audit function needs to be strengthened, which will be supported under the activity on strengthening of financial asset management, procurement and internal and external auditing included in Component 3. 11. Flow of Funds and Disbursements Arrangement. To facilitate Project implementation ANDE will operate a Designated Account (DA) in US dollars in the Central Bank of Paraguay (BCP). Funds will flow from the Loan account to the BCP account since this is mandatory for projects in Paraguay. Funds from BCP will be transferred to ANDE’s general account in local currency, as expenses are incurred, through mainstreaming budget execution processes after a Request for Transfer (STR) is submitted to the MF for approval. STRs are submitted by ANDE based on Project financial needs. ANDE’s treasury will be in charge of Project payments. Funds deposited into the DA as advances will follow the Bank’s disbursement operating policies and procedures described in the Disbursement Letter. Withdrawals from the Designated Account will be made solely made for payments of eligible expenditures. 12. The recommended ceiling for advances to the DA that is deemed sufficient to cover the highest point of disbursements period for the Project is US$ 3 million until disbursements reach US$ 5,000,000 and US$ 8 million thereafter. 13. Figure A3.1 below describes the proposed flow of funds.

Figure A3.1: Proposed Flow of Funds

Loan Funds

World Bank Ministry of Finance (MF)

Loan Account

DA in BCP (US$)

General Account. BNF (Gs).

Payments for works; goods and consultants’

services.

ANDE Funds

Direct Payments

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14. Disbursement Methods. Loan proceeds will be withdrawn by ANDE using the advance method with supporting documentation based on Statements of Expenditures (SOEs). Special commitments and direct payments to suppliers from the Loan Account will be used as well. 15. Disbursements by expenditure category are provided in table A3.1 below.

Table A3.1:- Disbursements per Expenditure Category

Disbursement Category Amount of the Loan Allocated (in USD)

Percentage of Expenditures to be financed

Component 1: Goods, works, consultants’ services, non-consultant services and training

20,000,000 100

Component 2: Goods, works, consultants’ services, non-consultant services and training

77,000,000 100

Component 3: Goods, consultants’ services, non-consultant services and training

2,750,000 100

Front-end Fee 250,000 Front-end fee of 0.25 percent of the IBRD loan amount. See

also para. 23 of PAD main text.

TOTAL AMOUNT 100,000,000

3. Procurement 16. A detailed assessment of the agency’s capacity to implement procurement was conducted on July and December 2009. A summary of this assessment is provided below. 17. Organization and Staffing. The Project will be implemented by ANDE, which is the decentralized autonomous entity vested with legal personality responsible for electricity generation, transmission and distribution services in Paraguay. It was established by Law # 966 in 1964. ANDE follows national procurement regulations established by Law # 2051/03. 18. The assessment confirmed that ANDE has adequate capacity for implementing the Project. It is satisfactorily staffed, both in terms of quantity and quality. ICT equipment, office space, furniture and vehicles were found adequate. Its organizational structure is adequate and comprehensive. Project implementation activities will be undertaken by ANDE’s line departments. ANDE operates a well-conceived procurement Management Information System (MIS); however, it needs some technological upgrading and updates. 19. ANDE has experience in the implementation of internationally-funded operations21 including two ongoing operations with IDB and JICA amounting to around US$200 million,

21 Multi-phase Power Transmission Program financed by IDB US$69, 5 million loan 1835/OC-PR USD. Iguazú Hydropower Plant Construction Project financed by JICA Loan PG-P15 ¥ 21.402.000.000.

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which are comparable in terms of technical complexity to the Bank Project. However, ANDE has not yet implemented World Bank-financed projects. 20. Procurement documents pertaining to IDB financed contracts were reviewed and found of good quality. Moreover, they demonstrated ANDE’s experience with respect to procurement matters. Nevertheless, the Bank found several opportunities for improvement in the drafting of the bidding documents, which were shared with ANDE staff. 21. Country Procurement Assessment. A CPAR prepared under the leadership of IDB was conducted in 2006 based upon the indicators developed by the OECD/DAC-Issue # 4.22 It assessed the capacity of the public sector procurement system based on 12 baseline indicators with their respective compliance/performance indicators. This 2006 assessment concluded that the country risk was high due to weaknesses in control environment and in market practices. Since 2006 however the country strengthened its institutions to enhance the procurement environment. 22. Integrated Fiduciary Assessment (IFA). The joint FM-PR assessment carried out in 2008 has shown some limitations of the Government to execute budgeted investments. Since 2008 however, Paraguay has shown important improvements on this aspect as evidenced by the December 2009 report on Budget Execution of the Financial Report (Ejecucion Presupuestaria del Informe Financiero), the successes of the Ministry of Public Works and Communications in implementing forecasted investments, and the creation by ANDE of the domestic letter of credit. The 2008 IFA established that: (i) there is a rigid relationship between the Annual Contracting Plans, and the Budget, and adjustments require slow procedures; and (ii) procedures for confirming budget availability are relatively slow and cumbersome; although permitted, there is little delegation of authority for contract processing, which usually generates delays. 23. Procurement Risk. All Project goods, works and services will be procured by ANDE. Preliminary screening by Bank specialists indicates that while ANDE’s capacity to do so in a transparent manner based on track record may be adequate, there is Medium I23 risk due the country’s past context. 24. Corrective Measures. The corrective measures that have been agreed are: (i) aggregating contracts in a few packages, using single responsibility type of contracts when technically feasible, which will be subject to Bank prior review; (ii) the Bank will deliver a presentation on its Anti-Corruption policies during Project Launch; (iii) use of the procurement Special Provisions listed in the Loan Agreement; (iv) the implementing agency (i.e. ANDE) will employ SEPA (Sistema de Ejecución de Planes de Adquisiciones) for all Project activities; (v) ANDE will modernize its procurement MIS in a manner satisfactory to the Bank during the first year of project implementation; and (vi) Project staff will attend procurement training delivered by the Bank.

21 The "Methodology for Assessment of National Procurement Systems (version 4)" was published in July 2006 under the auspices of the joint World Bank / OECD Development Assistance Committee (DAC) Procurement Round Table initiative. 23 Medium I: Medium risk driven by Impact.

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25. Normative Framework. Procurement for the proposed Project will be carried out in accordance with: (i) the World Bank’s “Guidelines: Procurement under IBRD Grants and IDA Credits” and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”, both published in May 2004 and revised in October 2006 and in May 2010; (ii) the “Guidelines On Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits”, dated October 2006 as amended in May 2010; (iii) the provisions stipulated in the Loan Agreement; and (iv) the stipulations of the Operational Manual. The general description of various items under different expenditure categories are described below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Implementing Agencies and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 26. Procurement of Works. ANDE provided a Project Procurement Plan dated October 1, 2010. Some works procured under this Project would follow a “single responsibility” approach; hence, the “Supply and Installation of Plant and Equipment”, Standard Bidding Document (SBD) approach will be used. Works in substations will be bid following the “slices and package” approach described in paragraph 2.4 of the Procurement Guidelines. ICB procedures will be followed for all contracts estimated to cost US$3,000,000 or above. Implementation will seek to aggregate contracts in a few packages, using single responsibility type of contracts when technically feasible, which will be subject to Bank prior review. Packages amounting below US$3,000,000 in aggregate may be procured using NCB. The Bank’s SBD for ICB and SBD for NCB will be used.

27. Procurement of Goods. Goods procured under this Project would include: (i) the supply and installation of the distribution management system (SGIDE); (ii) the supply of electrical equipment (including transformers, metallic structures, metering systems, cables, etc.), and (iii) the supply of small office equipment (computers, etc.). The SBD will be used for the supply and installation of information systems and for the supply of transformers. ICB processes will be followed for all contracts estimated to cost US$250,000 or above. Packages below US$250,000 in aggregate are not foreseen; if necessary, they may be procured using NCB. As some of the Project needs are specialized, shopping and direct contracting may be used. The Bank’s SBD for ICB and SBD for NCB will be used. 28. Procurement Selection Methods for Goods, Works and Non-Consultant Services. In addition to ICB, the following procurement methods listed in Table A3.2 below will be used for procurement of Goods, Works and Non-Consultant Services.

Table A3.2: Procurement Methods for Goods, Works and Non-Consultant Services

Procurement Method (a) National Competitive Bidding(b) Shopping (c) Direct Contracting

29. Selection of Consultants. Consulting Services to be financed under the Project would include engineering, strategic and operational advice, training, and other services required by

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ANDE to construct and commission the substations, consultant services to prepare bidding documents for the supply and installation of the SGIDE and the substations, institutional strengthening of ANDE, financial auditing, financial management strengthening, etc. These services would be rendered either by individual consultants or by consulting firms. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Consulting Firms will be selected following QCBS or LCS, while individuals will be selected through the comparison of 3 CVs. In addition to QCBS, the following procurement methods listed in Table A3.3 below will be used for procurement of Consultant Services.

Table A3.3: Procurement Methods Consultant Services Procurement Method (a) Quality-based Selection (b) Least Cost Selection (c) Selection based on Consultants’ Qualifications(d) Single-source Selection (e) Procedures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the

Selection of Individual Consultants(f) Sole Source Procedures for the Selection of Individual Consultants

30. Training. Training would include expenditures (other than those for consultants’ services) incurred by the Borrower to finance logistics for workshops, meetings and seminars, and reasonable transportation costs and per-diem of trainees and trainers (if applicable), training registration fees, and rental of training facilities and equipment. The procurement would be done using NCB and Shopping procedures as discussed below. Direct Contracting (paragraph 3.6 of the Procurement Guidelines) may be used: (i) for the payment of registration fees, up to a ceiling amount to be established annually in the Procurement Plan and (ii) for individual transactions amounting below US$200 up to an aggregate amount to be included annually in the Procurement Plan in accordance with local procedures. 31. Procurement Plan. The Project Procurement Plan (dated October 1, 2010) prepared by ANDE provides the basis for the procurement methods. Table A3.4 below provides a summary of the procurement packages for the first 18 months after Project effectiveness. The Plan was agreed between the Borrower and the Project Team during Negotiations and will be available at the SEPA www.iniciativasepa.org within 30 days of Loan Agreement signature. Moreover, updated Procurement Plans along with information on actual procurement execution will be disclosed to the public and civil society through the SEPA, which information concerning procurement progress will be updated on a monthly basis by the implementing agencies.

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Table A3.4: Summary of the Procurement Packages (first 18 months)

1 2 3 4 5 6 7

Ref. No.

Description Estimated

Cost US$

million

Procurement Method

Packages Domestic Preference

(yes/no)

Review by Bank

(Prior / Post)

1 Works, Goods and Services (EPC contracts) for: Installation of Distribution Management System (SGIDE), Construction of the new substations of Barrio San Pedro and Minga Pora, and installation of reactive compensation at Guarambare substation

55.38 ICB 3 No Prior

2 Goods: for ten existing substations, and for the advanced metering system .

42.45 ICB 2 No Prior

3 Works for extension of existing substations

4.19 NCB 3 Yes Prior

4 Consultant Services for sector assessment, implementation of SGIDE, management advisors, financial management and auditors

3.04 QCBS 6 Yes Prior

5 Consultant Services on environmental and social safeguards

0.37 Consultants’ Qualifications

2 No Post

6 Non-Consultant Services 0.084 Shopping 2 No Post 32. Frequency of Procurement Supervision. The capacity assessment has recommended biannual supervision missions to visit the sites, carry out Procurement Post Reviews (PPR) and recommend procurement ISR ratings. One in five contracts will by post-reviewed by the Bank. Based upon the finding of the PPRs and the proposed ratings, the Bank may determine the revision of the prior review requirements.

4. Environmental and Social (including safeguards) 33. The Project physical investments consist of: (i) the construction of two new transformer substations, and (ii) increasing capacity in about ten existing substations. The locations of the two new transformer substations are in the rural agricultural sector of the departments of San Pedro (Barrio San Pedro) and Alto Parana (Minga Porá), and will require the purchase by ANDE of small parcels of private land, of not more than two hectares. Both substation locations are found within large mechanized farms in Eastern Paraguay relatively distant from the local populations. No critical natural habitats or forests are affected by the Project investments nor are pest management measures used in any of the operations of ANDE.

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34. The ten existing substations are located in different areas of the country; they were selected among the priority transformer substations of ANDE’s Master Plan that need to increase their capacity. The increase in capacity involves exchanging existing transformers or adding more transformers in ANDE’s existing properties. Some substations are within more densely populated urban areas. All works have been pre-screened by ANDE based on a typology for classification based on risk. They fall under the category of lower environmental and social risk. Based on this risk assessment the Project has been classified as a category B under OP 4.01 (Environmental Assessment) by the Bank. 35. Draft Environmental and Social documentation was respectively disclosed by ANDE in Paraguay and filed in the Bank’s Public Information Center and its webpage (Infoshop) prior to Project Appraisal on August 9-10, 2010 for the Environmental and Social Framework (ESMF), on September 13-14, 2010 for the Environmental and Social Management Plans (ESMPs including Resettlement Plans24) of Minga-Pora and Barrio San-Pedro substations, and on September 26-28, 2010 for the Environmental and Social Management Plans (ESMPs) of the existing substations. This documentation was re-disclosed on October 15, 2010 to reflect comments and provide clarifications. 36. Required mitigation measures complying with Bank guidelines and national laws will be incorporated into the contracts with oversight from ANDE. The two new substations will be alongside the existing transmission lines. Consequently no transmission line investments are contemplated by the Project. To proactively manage possible changes during the 5-year implementation period an Environmental and Social Management Framework (ESMF), including an Indigenous Peoples Framework (IPF) and an Involuntary Resettlement and Land Acquisition Policy Framework (IRLAPF) has also been developed. Consultations consistent with national regulations and Bank’s Policies have been carried out with the participation of, among others, the Environment Secretariat (SEAM), indigenous NGOs, local municipalities and residents.

37. All investments 25 pose only small-scale direct and reversible environmental and social impacts. The primary impacts are associated with noise, dust, traffic, and worker safety during the construction phase. Existing transformers in the Project substations do not have PCBs nor will the new equipment financed through the IBRD Loan. Environmental and Social Impact Assessments (ESIAs) including their respective Environmental and Social Management Plans (ESMPs) were prepared and re- disclosed on October 15, 2010 for the two new substations to be sited at Minga Porá and Barrio San Pedro, as well as for the ten substations that will be upgraded or their capacities expanded.

38. An assessment of the needs for Indigenous People Plans (IPPs) for the two new substations was performed which led to the conclusion that the preparation of IPPs was not required. The investments for the two new substations will contribute to improvements in the quality of the

24 For small land acquisition of two hectares for the Barrio San Pedro substation and of one hectare for the Minga Pora substation. 25 The new substations will be alongside the existing transmission lines and consequently no transmission line investments are contemplated in the Project.

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electricity service in specific areas nearby the Minga Porá and Barrio San Pedro substations. Electricity customers living in these areas, regardless of their ethnicity or vulnerability, will receive the benefits automatically through the transmission network. Indigenous People (IP), therefore, are not less likely to benefit from the Project as the result of their ethnic characteristics or vulnerabilities, and therefore the preparation of an Indigenous People Plan (IPP) is not required. 39. Aspects such as electro-magnetic fields and PCB’s, potential resistance by neighborhood residents regarding perceived danger from substations due to their associated electro-magnetic fields, possibility of causing fires, among others, inventory of occupancy of the right of way (ROW) of the associated lines of transmission of all substations, and presence of indigenous peoples in the sub-project’s area were considered as part of the ESIA process. The environmental and social management plans for the twelve substations have considered the measures to mitigate impacts during new construction or upgrading (henceforth referred to as construction) and monitoring for follow-up in regard to electro-magnetic fields. Environmental and socio-environmental mitigation measures include best practices for mitigating impacts during construction, restoration of construction sites, landscape considerations, and health and safety measures compatible with Bank/IFC standards and national law. 40. With regard to the Bank’s social safeguards, the Borrower has prepared two Resettlement Plans (RPs) focused on the land acquisition for the two new transformer substations of Barrio San Pedro and Minga Pora; they are included in the Environmental and Social Management Plans (ESMPs). For Minga Pora, the purchase of one hectare of land to construct the substation is additional to the ANDE property and is an anticipation of future expansion. Discussions with the owners are underway, and payments will be made in accordance with the requirements of OP 4.12, and prior to initiation of the works. The Social Assessment indicates that the Right-Of-Ways (ROWs) of the existing associated lines of both substations are not occupied. In one of the existing substations (substation Presidente Franco) there is some illegal occupancy (some of the ROWs have also illegal occupancy); this will be managed following the measures laid out in the environmental and social plans. Mitigation measures will be incorporated as needed into construction contracts under ANDE’s Environmental and Social Unit responsibility. 41. All documents comply with national environmental assessment legislation and Bank safeguard standards. All sub-projects will receive the no-objection from local municipal and departmental governments to allow presentation of the environmental documentation to the Secretary of the Environment (SEAM) for licensing the new facilities and for some of the existing substations that do not presently have them.26 Licenses will be acquired prior to any construction in accordance with national law. In addition, although Paraguayan Environmental law does not require RP for land acquisition among the measures to address social impacts, they have been included as integral part of the licensing documentation. 42. The IRLAPF has been prepared to guide resettlement or land acquisition plan preparation based on principles of the Bank’s OP 4.12 including inter alia: (i) inclusion and re-establishment of previous conditions regardless of the form of ownership or use given to the property;

26 For substations built before the issuance of law 294/93 a license was not required. ANDE is currently in the process of obtaining licenses for substations commissioned prior to the issuance of law 294/93.

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(ii) equity in the entitlement, equal treatment for all affected people; (iii) information to affected people in a clear, truthful and timely way on their rights and obligations; (iv) freedom of choice of the compensatory measure; and (v) assistance, compensation and payment when appropriate at cost reposition. 43. The IPF is based on the Bank’s OP 4.10, and was prepared based upon the distinct and unique cultural, social, and economic characteristics of Indigenous Peoples (IP) present or with collective attachment in sub-projects’ areas, including: (i) legal and institutional framework; (ii) summary of the social assessment; (iii) summary of consultations; (iv) a plan to ensure that previous, free and informed consultations are conducted for affected indigenous communities; (v) an action plan with necessary measures to ensure that IP obtain adequate social and economic benefits as appropriated or to prevent, reduce, mitigate or compensate negative effects; (vi) cost estimates and the financing plan for the IPP; (vii) a grievance procedure; and (viii) monitoring mechanisms of the IPP. 44. Disclosure and consultation on the Safeguard Instruments led by ANDE’s Environmental and Social Unit, in coordination with ANDE’s Communication Unit, have been carried-out broadly to ensure that the main stakeholders groups participated in Project preparation, among them representatives of national and local governments, industries, business, electrical contractors and local residents of the areas of influence of the identified subprojects. These consultations were consistent with the national regulations and the Bank’s Safeguards, and are documented in the specific instruments. They confirmed that the subprojects correspond to the long-standing requests of the consulted stakeholders. 45. Institutional Arrangements. ANDE’s Environmental and Social Unit will be responsible for oversight of all environmental and social management aspects during preparation, construction, and operation of the works funded by the Project. It would ensure compliance with all national and local laws, inclusion of environmental and social specifications in bidding documents, and contractor supervision in regard to compliance with safeguards and health and safety measures. 46. The proposed Project will also strengthen the environmental and social unit of ANDE (through Component 3) by increasing the human resources to ensure adequate oversight of the works and instruments of the Project, and by providing social and environmental consultants, training, equipment, and technical assistance. Aspects to be strengthened include: (i) improving knowledge on specific environmental issues such as PCB’s to complement current support provided by IDB; (ii) increasing preparation and supervision capacity to comply with environmental and social national regulations and international standards by developping specific manuals, terms-of-reference for environmental and social relevant issues such as technical specifications, studies for works, etc.; (iii) improving capacity in incorporating social dimensions in EA processes including social participation, inclusion of indigenous peoples in all stages of sub-project’s cycle; dissemination, consultation and claims and redress mechanisms, simplification of processes of physical or income displacement (involuntary resetlement) from identification through compensations; (iv) enhancing integration of environmental and social aspects in the procurement processes and contracts, and increasing capacity of supervision of their compliance; (v) increasing integration of communication plans into the national and local

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institutional systems; (vi) enhancing skills in measuring and monitoring the results of the activities; and (vii) improving sectoral knowledge, procedures and transaction costs in the process of environmental licensing according to the risk level of the works. 47. Management of Claims and Disputes is the responsibility of ANDE and will be channeled through two bodies, one internal and another of external mediation to the institution. Specific mechanisms will be located at the work sites, and in ANDE’s facilities in Asunción. Media will comprise a toll-free phone line, web sites, social monitoring of users, among others to receive claims and disputes. A systematic record will be kept of the date of reception and resolution of claims. All expenses incurred for the resolution of claims or disputes will be paid by ANDE. This system will be developed in detail once the Project is effective and will require the Bank’s acceptance. 48. The Project monitoring and evaluation system covers the environmental and social issues and impacts delineated in the safeguards’ instruments (the ESMF which includes an IPF and an IRLAPF, the ESMPs which include the RPs for Sub-component 2.1 of the Project, and the ESMPs for Sub-component 2.2) and includes the participation of the key stakeholders. Specific assessments of the environmental and social instruments will be undertaken during the mid-term Project evaluation and at Project completion. 5. Monitoring & Evaluation

49. ANDE maintains a good statistical system with sufficient data to monitor Project outcomes. Data on equipment installed throughout the country, electricity transported, sales, distribution and transmission losses, and reliability statistics (consumer level, transmission lines, transformers, etc.) will be provided by ANDE on an annual basis. 50. Project expected outcomes and intermediate results are provided in Annex 1. Project progress will be monitored by ANDE’s Project team relying on the information provided by ANDE regional offices and ANDE’s headquarters. During the early stages of the project implementation, progress monitoring will focus on progress of procurement activities against the agreed procurement plan, implementation of the agreed capacity building measures and of the measures related to environment and social safeguards. Starting in the second year of the Project monitoring will focus on progress in commissioning of sub-projects. The assessment on the improvement of the performance of the electricity sector and the execution of its key recommendations will be carried out by ANDE in coordination with the Ministry of Finance, which will also provide oversight for Project overall implementation.27

6. Role of Partners

51. Close coordination will be maintained with the IDB team responsible for the installation of distribution meters in their project. The Bank will closely coordinate with IDB to ensure their participation in the supervision of the modernization of ANDE’s distribution management system and the installation of the AMI system for large customers (Component 1).

27 ANDE will be responsible for fiduciary requirements and compliance regarding procurement and financial management.

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Annex 4

Operational Risk Assessment Framework (ORAF)

Negotiations and Board Package Version Paraguay – Energy Sector Strengthening Project

Project Development Objective(s) 

 The development objective of the proposed Project is to increase the quantity and quality of the provision of electricity services by the Borrower, while improving the Borrower’s performance.   

PDO Level Results Indicators: 

1. Reduction in distribution losses through a state‐of‐art distribution management system and advanced metering.2. Increase in electricity delivered to the consumers through increase in transformation capacity.3. Increased quality of service through a reduction in power supply interruptions and average voltage drops trough increased transformation and reactive compensation capacity.

  

Risk Category  

Risk Rating  Risk Description  Proposed Mitigation Measures 

Project Stakeholder Risks   

MI  Country Engagement with the Bank. Dialogue was difficult in the past and Bank assistance has been subject to long periods of limited lending or even suspension of new lending. 

The Bank maintains a solid engagement with the Authorities, both at the executive and the legislative level.  A communication plan, led by ANDE with support from the Ministry of Finance and advice from the Bank, has been prepared to ensure that the Senate and key stakeholders receive timely and comprehensive information on the Project that will be presented for   consideration. 

Implementing Agency Risks   

H  Implementation capacity and sustainability.  Implementing agency: (i) is currently implementing corporate changes as well as a large investment program which may limit its implementation capacity; and (ii) has not had a recent experience in WB project implementation. 

ANDE has received financial management training to prepare it for Project implementation, and to ensure they are familiar with Bank policies and guidelines. 

ANDE will be strengthened during Project implementation and will also be able to access 

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Ineffective internal control system over ANDE’s fixed assets as stated by the external audit report. 

external expertise as needed (international advisors and staff from utilities). 

The Project supports ANDE’s effort in strengthening its fixed asset safeguarding policies and procedures. 

The Project supports ANDE’s internal audit unit to monitor the implementation of a new internal control model (MECIP). 

ML  ANDE’s Corporate Governance.In trying to solve the energy crisis, ANDE’s structure was reorganized and senior management was changed. This may affect project implementation. 

The Bank places governance as one of the cross cutting themes being addressed in the: (i)  CPS; (ii) the Public Sector Programmatic DPL; and (iii) Non‐Lending Technical Assistance (NLTA) activities to be focused on reform actions related to State Owned Enterprises (SOEs) and Human Resources Management. 

The proposed Project will increase emphasis on the corporate governance and fiduciary agenda in ANDE and in the power sector through an integral assessment of the electricity sector, including governance and transparency issues, which will delineate key recommendations to be implemented during Project execution.   

H  Financial Management.  Government efforts have improved the perception of quality of governance, fiscal risk associated with State Owned Enterprises (SOEs).  However, the relative weaknesses of the control institutions as identified in the Integrated Fiduciary Assessment (IFA 2008) are still relevant in the country context.   

A FM mission (Dec. 2009) engaged in financial management training with the objectives of ensuring that systems are operational and of high integrity and that Bank FM policies and procedures are clearly understood.   

Semi‐annual on‐site financial management supervision will be undertaken. If deemed necessary a review of red flags will be carried out to prevent fraud and corruption.   

Regular audits will be undertaken and the scope of the Project audit  will be expanded to cover specific topics, in addition to standard financial audits. 

ANDE internal audit will participate in auditing Project transactions, as part of its annual work plan. 

The Project includes institutional strengthening 

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of ANDE’s financial and asset management practices, of its internal auditing unit, and the provision of external auditors for Project accounts. 

MI  Procurement.  All Project goods and services will be procured by ANDE.  Preliminary screening by Bank specialists indicates that while ANDE’s capacity to do so in a transparent manner based on track record may be adequate, there is medium risk due the country’s past context. 

A capacity building workshop was organized in early December 2009.  

The Loan Agreement includes the Special Procurement Provisions. 

The Bank will deliver an Anti‐ Corruption presentation during Project launch and will provide Bank procurement training to the implementing staff.  

The implementing agency (ANDE) will employ SEPA for all Project activities and aggregate contracts in a few processes using single responsibility type of contracts as feasible. 

Regular Project supervision by Bank specialists and as needed by local consultants and procurement audits will be will be carried out. 

Project Risks   

     

Design  

ML  Project Implementation Capacity. ANDE’s Planning Directorate has ongoing operations with other institutions and lately  faced frequent organizational changes. 

ANDE’s Project implementation capacity will be strengthened through the hiring of consultants to support Project implementation, in particular with respect to Component 1 and compliance with environmental and social safeguards. 

Most of the procurement will be done through International Competitive Bidding (ICB) to improve transparency, competitiveness, and to ensure timely Project implementation. 

ML  Distribution Investments.Effective and sustainable implementation of the modernization of the distribution management system (SGIDE). 

Project design includes support by international consultants with successful experience in implementing the modernization of distribution management systems. 

L  Transmission Investments. Fiscal soundness and sustainability of transmission package investments. 

On the basis of a preliminary evaluation, ANDE appears competent in managing its operational assets.  However, due to high transmission and distribution losses, a comprehensive loss 

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reduction program needs to be implemented expeditiously in parallel with transmission network investments. This will also ensure that the benefits of the IBRD supported investments are not offset by managerial losses. 

Social and Environmental 

 

MI  Social and Environmental Safeguards.The proposed Category B Project’s environmental risks would trigger Environmental Assessment (OP 4.01), Natural Habitats (OP4.04), Forests (OP 4.36), and Physical Cultural Resources (OP 4.11).  Social risks would trigger Involuntary Resettlement (OP 4.12), and Indigenous Peoples (OP 4.10).  Although ANDE has the capacity to manage environmental impacts, it is less experienced in social mitigation measures and compensation programs. ANDE may have difficulties in complying with the Bank’s safeguard standards. 

A first screening of ANDE Master Plan was done to prioritize sub‐project groups of high priority but of lesser environmental and social concern.   

Environmental and Social Impact Assessments, and Environmental and Social Management Plans for the transmission investments were prepared by specialized consultants under the supervision of ANDE’s Environmental and Social Unit (ESU) and the Bank’s social and environmental specialists. 

A Social and Environmental Management Framework for use in case of any change in investment locations or scope has been prepared and disclosed.  All high risk projects are screened‐out under the framework to maintain current project categorization. 

Capacity building and operational strengthening is included under Component 3 for ANDE’s ESU oversight including access to specialized consultants, training, and software and office equipment. 

The two land purchases envisaged by the Project (respectively 1 ha. for the Minga Porá substation and 2 has. for the Barrio San Pedro substation) will follow and comply with the Bank OP 4.12 requirements. 

Program and Donor  

L  Dilution of impact. The Project will represent only a small portion of the total investment program delineated in ANDE’s Master Plan. Other donors, notably the IDB, are investing in the sector. The Project’s success may be diluted or adversely affected by inconsistent policies. 

The Bank will provide added value through the Project, for example the contracting of internationally recognized consultants during the implementation stage focusing on institutional strengthening measures for ANDE.  

The Bank’s team has also coordinated with other donors, in particular regarding IDB’s ongoing loss reduction program. 

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Delivery Quality  

L  Monitoring and evaluation. Proper monitoring and evaluation is important to establish adequate targets to measure the success of the Project in achieving its development objective. 

As part of measuring progress towards achieving the Project’s objective, the team will use some of the indicators currently reported in ANDE’s and UMEP’s draft Management Agreement 

The Ministry of Finance will also monitor the Project indicators. A Coordination Agreement between the Ministry of Finance and ANDE will be signed. 

Overall Risk Rating at Preparation 

Overall Risk Rating During Implementation 

Comments 

Medium –I  Medium –I   

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Annex 5: Implementation Support Plan

Paraguay – Energy Sector Strengthening Project

Strategy and approach for Implementation Support 1. The strategy for Project Implementation Support (IS) by the Bank team reflects the nature of the Project and its risk profile. The strategy aims at making IS to the client more efficient while remaining focused on implementation of the risk mitigation measures delineated in the ORAF assessment. It is also an indicative and flexible instrument which will be revisited during Project implementation and as part of the Implementation Supervision Report (ISR) reviews and adjusted based on what is happening on the ground.

Overall Project Implementation. Ensuring a satisfactory implementation of the Project during the first 12 months will be critical. During that period the critical implementation areas are: Procurement particularly for major contracts, environmental and social safeguards, financial management, and Project information and communication.

Procurement. Procurement implementation support by the Bank will include:

(a) providing training to members of ANDE’s Procurement and Contracting Unit and to ANDE’s Project team; (b) providing detailed guidance on the Bank’s Procurement Guidelines to the Procurement and Contracting Unit; (c) reviewing procurement documents and providing timely feedback to the Procurement Unit; and (d) monitoring procurement progress against the Procurement Plan.

Environmental and Social Safeguards. The Bank team will closely supervise the

implementation of the agreed Environmental and Social Management Plans, will provide timely guidance to ANDE to address any issue and will monitor deviations from the planned investments and from the agreements.

Financial management. The Bank supervision team will: (a) provide training to

ANDE’s financial management unit and ANDE’s Project team; and (b) review the Project’s financial management system and its adherence to the Project Operational Manual, including but not limited to accounting, reporting and internal controls.

Information and Communication. A Project information and communication plan, led

by ANDE with support from the Ministry of Finance and advice from the Bank, has been prepared. The Bank will continue providing support to ANDE and the Ministry of Finance on Project information and communication.

Implementation Support Plan 2. Bank support regarding Project Procurement and Financial Management will be carried out through the Bank’s Buenos Aires office. Supervision of the implementation of the Project related social safeguards and of the information and communication plan will be carried out by the team members based in the Bank’s Paraguay office. Task team leadership, environmental and technical aspects will be managed from the Bank’s Headquarters. Formal supervision and field

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visits will be carried out semi-annually or as needed for satisfactory Project implementation. Detailed inputs from the Bank team are outlined below:

Technical inputs. Power engineering and other technical inputs (notably for distribution activities) will be required to review Request-for-Proposals and bid documents to ensure adequate technical specifications, fair competition and proper assessment of the bids technical and commercial aspects. During construction and commissioning, technical supervision will also be required to ensure that technical contractual obligations are met. The team’s power engineers will conduct site visits as needed and at least twice a year throughout Project implementation.

Fiduciary requirements and inputs. Training will be provided by the Bank’s financial

management specialist and by the procurement specialist before commencement of Project implementation. The Bank team will continue to help ANDE identify capacity building needs to strengthen overall Project implementation, in particular for financial management and procurement management. The team’s financial management specialist is based in the Bank’s Buenos Aires office allowing for timely support to ANDE. Formal supervision of financial management will be carried out semi-annually, while procurement supervision will be carried out on a timely basis as required by the Project.

Safeguards. Inputs from the Bank environment and social specialists will be essential,

though the Project’s social and environmental impacts are expected to be limited. Additional training will be provided on environment and social monitoring and reporting, and on best relevant practices. With respect to the social safeguards, supervision will focus on the implementation of the agreed plans (ESMPs) and of the framework (ESMF). Field visits to the substation sites will be carried out on a semi-annual basis. The Bank social specialist is based in Asuncion.

3. The main focus of implementation support is summarized below.

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Time Focus Resource Estimate Partner Role

First 12 months (SWs/year)

Procurement training (two sessions) Technical and procurement review of the bidding documents

Procurement specialist 2 SWs Power engineers and technical specialist (distribution) 6 SWs Procurement specialist 4 SWs

NA

FM training and supervision FM specialists 4 SWs

Social Safeguards – Supervision and Training Social specialist 4 SWs

Environmental Safeguards - Supervision and Training

Environmental specialist…. 2 SWs

Project Management and Project supervision coordination Communication/Information

TaskTeam Leader .. 8 SWs Communication Specialist 4 SWs

Months 13-60 (SWs/year)

Substations construction, implementation of the distribution management system, installation of the advanced metering systems, studies, etc.

Power engineer 4 SWs Distribution Management Specialist 2 SWs Procurement specialist(s) 2 SWs

NA

Environment and social monitoring & reporting

Environmental specialist ….. 4 SWs Social specialist 4 SWs

Financial management disbursement and reporting

FM specialist 4 SWs Operations officer 10 SWs

Task Leadership TTL 6 SWs

Note: SW – Staff-Week 4. Staff skill mix required is summarized below.

Skills Needed Number of Staff Weeks Number of Trips Comments

Environment specialist 4 SWs annually Field trips as required.

Social specialist SWs annually Field trips as required. Country office based

Power Engineer(s) and Distribution Specialist

6 SWs first year, then 4 SWs annually in the following years

Minimum two field trips.

Procurement 6 SWs annually Field trips as required.

Financial management specialist

2 SWs annually Field trips as required. Based in Buenos Aires

Task Team Leader 8 SWs annually Minimum two field trips

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Annex 6: Team Composition

Paraguay – Energy Sector Strengthening Project

World Bank staff and consultants who worked on the project:

Name Title Unit

David Reinstein Sr. Energy Specialist, TTL LCSEG Michel Layec Lead Energy Economist, co-TTL LCSEG Janina Franco Energy Specialist, Consultant LCSEG Leopoldo Montanez Sr. Energy Specialist LCSEG Lucia Spinelli Energy Specialist LCSEG Frederic Verdol Energy Specialist, YP LCSEG Francis Fragano Sr. Environmental Specialist LCSDE Nikolay Nikolov Operations Officer ECSS2 Graciela Sanchez Social Development and Civil

Society Specialist LCSSO

Pilar Larreamendy Sr. Social Development Economist LCSSO Jose Zevallos Sr. Social Development Specialist LCSSO Ruth Gonzalez Communications Associate LCREA Alejandro Solanot Financial Management Specialist LCSFM Jose Janeiro Sr. Finance Officer CTRFC Maria Lucy Giraldo Sr. Procurement Specialist LCSPT Andres Mac Gaul Sr. Procurement Specialist LCSPT Luis de la Plaza Bringas Lead Financial Officer BDM Pilar Gonzalez Senior Counsel LEGLA Iris del Valle Program Assistant LCSEG Philippe Durand Peer Reviewer AFTEG Pedro Antmann Peer Reviewer ETWEN Vladislav Vucetic Peer Reviewer MNSEG