World Bank Documentdocuments.worldbank.org/curated/en/336381559329428583/pdf/Dis… · Task Team Leaders: Karen Bazex, Rahul Kitchlu Public Disclosure Authorized Public Disclosure

The World BankElectricity Network Reinforcement and Expansion Project (ENREP) (P119893)

REPORT NO.: RES35740

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF

ELECTRICITY NETWORK REINFORCEMENT AND EXPANSION PROJECT (ENREP) AND ENREP (AF)

APPROVED ON MAY 29, 2012 AND MAY 27, 2016

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

ENERGY AND EXTRACTIVES GLOBAL PRACTICE

AFRICA REGION

Regional Vice President: Hafez M. H. GhanemCountry Director: Carolyn Turk

Senior Global Practice Director: Riccardo PulitiPractice Manager: Sudeshna Ghosh Banerjee

Task Team Leaders: Karen Bazex, Rahul Kitchlu

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ABBREVIATIONS AND ACRONYMSAF Additional Financing Ci-Dev Carbon Initiative for Development DBE Development Bank of EthiopiaDDO Deferred Drawdown OptionEA Environmental Assessment EEP Ethiopian Electric PowerEEPCO Ethiopian Electric Power Cooperation EEU Ethiopian Electric UtilityELEAP Ethiopian Electrification ProgramENREP Electricity Network Reinforcement and Expansion ProjectERP Enterprise Resource PlanningESME Energy Small and Medium Enterprises Trust FundFM Financial ManagementFY Fiscal YearGIS Geographic Information SystemGoE Government of EthiopiaGWh Gigawatt HourHH HouseholdsIDA International Development AssociationIFRS International Financial reporting StandardsIPF Investment Project FinancingIPP Independent Power Purchase km KilometerkV KilovoltkWh Kilowatt HourLV Low VoltageMFI Micro finance Institution MoF Ministry of Finance MoWIE Ministry of Water, Irrigation and EnergyMV Medium VoltageMW MegawattNEP National Electrification ProgramNPV Net Present ValueO&M Operations and MaintenanceOHS Occupational and Health SafetyPDO Project Development ObjectivePPE Personal Protective Equipment PSE Private Sector EnterpriseRAP Resettlement Action PlanRPP Revenue Protection ProgramSAIDI System Average Interruption Duration Index,SAIFI System Average Interruption Frequency IndexSDR Special Drawing RightsSHS Solar Home SystemSoE Statements of ExpenditureTF Trust FundToR Terms of Reference


UEAP Universal Electricity Access Program US$/USD United States DollarWFA WBG Finance and Accounting


Click here to enter text.

BASIC DATA

Product Information

Project ID Financing Instrument

P119893 Investment Project Financing

Original EA Category Current EA Category

Partial Assessment (B) Partial Assessment (B)

Approval Date Current Closing Date

29-May-2012 30-Jun-2019

Organizations

Borrower Responsible Agency

Federal Democratic Republic of Ethiopia Development Bank of Ethiopia,Ethiopia Electric Power

Project Development Objective (PDO)

Original PDOThe Development Objectives of the Electricity Network Reinforcement and Expansion Project are to improve reliability of the electricity network and to increase access to electricity services in Ethiopia.OPS_TABLE_PDO_CURRENTPDOSummary Status of Financing

Ln/Cr/Tf Approval Signing Effectiveness ClosingNet

Commitment Disbursed Undisbursed

IDA-58140 27-May-2016 15-Jun-2016 31-Aug-2016 30-Jun-2019 200.00 35.03 162.22

IDA-51260 29-May-2012 12-Jun-2012 04-Jan-2013 30-Jun-2019 200.00 180.93 2.71

TF-A2302 27-May-2016 15-Jun-2016 31-Aug-2016 30-Apr-2019 5.00 5.00 0

Policy Waiver(s)

Does this restructuring trigger the need for any policy waiver(s)?No



I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING

A. Project Background and Rationale for Restructuring

1. The Electricity Network Reinforcement and Expansion Project (ENREP, P119893) in the amount of IDA Credit SDR 129.2 million (US$200 million equivalent) (Cr. Num. 5126) was approved by the World Bank Board on May 29, 2012, with an original closing date of December 31, 2017 and became effective on January 4, 2013. An Additional Financing (AF) to ENREP (P155563), in the amount of IDA Credit SDR 142 million (US$200 million equivalent) (Cr. Num. 5814) was approved on May 27, 2016 and became effective on August 31, 2016, extending the closing date of the original credit until June 30, 2019. In addition, under Part 3 of the ENREP AF, the Government of Ethiopia received a US$5 million Grant (“the Grant”) from the Small and Medium Enterprise Energy Support in Sub-Saharan Africa Grant (ESME, TF0A2302) which is fully disbursed. The Project Development Objectives (PDO) are to improve reliability of the electricity network and to increase access to electricity services in Ethiopia. The project progress towards achievement of PDO has been rated Satisfactory, and implementation progress Moderately Satisfactory for the past 12 months.

2. The project is strategically important for Ethiopia, as it contributes to improving the delivery of electricity services in the country and expanding access in on- and off-grid areas, in line with the Government’s National Electrification Program (NEP 2018-2022). The project is also key for the Government’s energy sector reform program as it provides capacity building and tools to improve the performance of the two utilities, Ethiopian Electric Power (EEP) and Ethiopian Electric Utility (EEU). Since its effectiveness, the project has contributed to a significant decrease in frequency of service interruptions with EEP (as demonstrated by the corresponding indicator – see values in results framework), through grid rehabilitation and expansion investments. It has also supported the expansion of clean energy access to more than 1 million households through the establishment of an innovative credit line which promotes the distribution of off-grid energy products, with the participation of micro finance institutions and private sector enterprises, including female headed entities.

3. The project is implemented by the EEP, the EEU and the Development Bank of Ethiopia (DBE), through the following four components:

(a) Component 1: Reinforcement and expansion of electricity networks (US$190 million, out of which US$100 million under original credit, US$90 million AF).

(b) Component 2: Access scale up (US$120 million, out of which US$50 million under original credit, US$70 million AF).

(c) Component 3: Market development for renewable energy and energy efficient products (US$45 million, out of which US$20 million under original credit, US$20 million AF, US$5 million TF0A2302).

(d) Component 4: Modernization support (US$30 million, out of which US$10 million under original credit, US$20 million AF).

(e) US$20million were set aside for contingencies under the original credit.

4. The proposed restructuring is the second restructuring for this project. The first one, approved in April 2014, intended to reflect the unbundling of the national power sector by adjusting the Project Implementing Entity and fiduciary arrangements. The proposed restructuring would (i) extend the closing date of ENREP and AF (Cr. Num. 5126 and 5814) by two and half years (until December 31, 2021) to allow for implementation of key activities – this proposed first restructuring of the project would increase the total duration of the project to approximately nine years and a half; (ii) adjust costs between components and reallocate funds between categories; and (iii) modify results indicators, by streamlining indicators related to the credit line activities and adjusting end targets to reflect implementation progress,


and in particular the very good performance of the credit line. The extension will allow for the completion of ongoing activities, with the view to achieving the project’s higher objectives of strengthening of the grid (an essential condition for grid extension and densification), expansion of access to additional households on and off the grid, and improvement of operational and commercial performance of both the utilities, thus contributing to the sustainability of the electricity sector in Ethiopia. Management teams at EEU, EEP and DBE have shown strong commitment to the project, mobilizing teams and resources to address bottlenecks and speed up implementation, with constant support from the sector Ministry (Ministry of Water, Irrigation and Energy, (MoWIE)) and the Ministry of Finance (MoF). The team has developed an action plan with the Government, to ensure complete implementation of activities during the period of the proposed extension. B. Implementation status

5. All activities under the original credit (P119893) are substantially completed, with 94 percent of funds disbursed. Under the AF (P155563), 18 per cent of funds have been disbursed. All major procurement activities are almost completed, and disbursements should therefore start picking up. Delays in completion of bidding processes, difficulties in supervising large contracts and lack of coordination between EEP and EEU following their unbundling, which adversely affected project implementation, are now addressed. Going forward, remaining activities are supported by owners’ engineers and/or technical assistance, with no major new procurement process to be launched. Recent improvements in the utilities’ supervision of environmental and social (E&S) safeguards and financial management (FM) need to be sustained through capacity building support provided under ENREP and monitored very closely (see details in section below). In particular, the utility, with World Bank support, is providing training to staff and conducting safety audits regularly.

6. Progress on covenants. The project Interim Financial Reports (IFRs) and audited project financial statements have been submitted on time with acceptable quality by both DBE and EEP. EEP has shown progress in addressing entity audit findings and issues emanated from the split of the former bundled utility; it consequently obtained a clean audit opinion for its FY 2017 statements. In addition, internal audit units of both DBE and EEP audit the project at least once in a year. However, there have been delays in implementing the recommendation of the Just in time (JIT) study and in submitting entity audit reports to the World Bank, due to operational challenges.

Status of FM Covenants

7. Below is the status of FM covenants:

Covenant for FM Status

Financing agreement dated June 12, 2012 - Schedule II Section II B 1 - The Recipient shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 4.09 of the General Conditions

Partially met (ongoing).

Financing agreement dated June 12, 2012 - Schedule II Section II B 2 - Without limitation on the provisions of Part A of this Section, the Recipient shall prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association

Partially met (EEP sending reports with some delays).

Financing agreement dated June 12, 2012 - Schedule II Section II B 2 - The Recipient shall have the Financial Statements audited or cause to be audited

Partially met - EEP-Project audit reports are sent on time.



in accordance with the provisions of Section 4.09(b) of the General Conditions. Each audit of the Financial Statements shall cover the period of one Fiscal Year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six (6) months after the end of such period.

However, Entity audit reports are delayed. Overdue entity audit report still exists from EEP (delay in the submission of entity audit reports existed in the past, and currently as well).

DBE- The DBE cleared all overdue audit.

Financing agreement dated June 12, 2012 as amended in August 28 2014 -Schedule II Section V B 1 “Other Fiduciary Undertakings” – The Recipient shall cause EEP to : (a) recruit, by October 31 2014, a consulting firm in accordance with the terms of reference and with qualification and experience satisfactory to the Association to advise EEP and EEU on the setting up their opening balances resulting from EEP restructuring in a manner that addresses the past audit issues and recommendation of the study on EEPCo’s fiduciary accountability systems and corporate governance undertaken in January 2013; and (b) assign to the Project not later than September 30, 2014, an internal auditor in accordance with the terms of reference and with qualification and experience satisfactory to the Association.

Partially met

(a) Recruitment process cancelled (JIT part excluded);

(b) Internal auditor assigned.

Financing agreement dated June 12, 2012 as amended in August 28, 2014 - Schedule II Section V B 2 “Other Fiduciary Undertakings” – The Recipient shall cause EEP to address the findings of the study referred to in paragraph 1 above with the assistance of the consulting firm to be employed pursuant to paragraph 1 above.

Partially met – Although delayed recommendations about system are being implemented.

Financing agreement dated June 15, 2016 -Schedule II Section V B 1 “Other Fiduciary Undertakings” - The Recipient shall cause EEP to: (a) recruit individual consultant(s), within three months of the Effective Date, in accordance with the terms of reference and with qualifications and experience satisfactory to the Association, to advise EEP and EEU on financial management matters including addressing the past audit issues and the recommendations of the study on EEP's fiduciary accountability system and corporate governance undertaken in January 2013; and (b) assign to, and maintain for, the Project an internal auditor in accordance with terms of reference and with qualifications and experience satisfactory to the Association.

Partially met from EEP

(a) No action taken – recruitment process not yet started;

(b) Internal auditor assigned.

Financing agreement dated June 15, 2016 -Schedule II Section V B 2 “Other Fiduciary Undertakings” - The Recipient shall cause EEP to address the findings of the study referred to in paragraph l above with the assistance of the consultant(s) to be employed pursuant to paragraph l above, in a manner satisfactory to the Association.

Partially met – Although delayed recommendations about system are being implemented.

Financing agreement dated June 15, 2016 -Schedule II Section V B 3 “Other Fiduciary Undertakings” - The Recipient shall cause EEP's and

Partially met – Both DBE and EEP internal auditors audit the



DBE's Internal Audit units to conduct an internal audit of Project activities at least once per year. The Recipient shall cause EEP and DBE to provide said audit report to the management of EEP and DBE and to the Association.

project activities at least once in a year.

Financing agreement dated June 15 2016 -Schedule II Section V B 4 “Other Fiduciary Undertakings” - The Recipient shall ensure that the task force (composed of representatives from MoFEC, MoWIE, EEP and EEU management and Board) established to follow up on financial management aspects of EEP and EEU under the Original Project shall continue to operate and meet regularly until the key financial management issues are resolved in a manner satisfactory to the Association.

Partially met – task force is following the implementation of the action plan although on irregular basis.

8. Details of implementation by component is as follows:

(a) Component 1: Reinforcement and expansion of electricity networks (US$100 million original credit, US$90 million AF, total US$190 million). All works related to the reinforcement and expansion of the transmission network are completed and commissioned. The contract for the construction of three single circuit 230 kV lines and substations is scheduled was launched on April 26, 2019, following the approval of the Resettlement Action Plan, and will be completed in 18 months, by the end of October 2020. Improvements in the reliability of the network in the project areas have been observed, with frequency of service interruption decreasing significantly in the country (the System Average Interruption Frequency Index (SAIFI) for EEP fell from 178 at the beginning of the project to 101 at the end of December 2018).

(b) Component 2: Access scale up (US$50 million original credit, US$70 million AF, total US$120 million). This component has suffered major delays, due to EEU’s difficulties in procuring and supervising contracts. The component is now on track, with a major focus put on strengthening the utility’s capacity to supervise contract implementation. The eight-town project, for the upgrading and expansion of medium voltage (MV) and low voltage (LV) distribution networks in eight towns (Addis Ababa, Mekele, Bahir Dar, Dessie, Adama, Dire Dawa, Hawassa, and Jimma), was completed (only minor corrections are now taking place), after delays due to the need for frequent power interruption to carry out the project activities, issues with clearance of the rights of way in certain cities and EEU’s difficulties with supervising the contractor. The procurement process for the six-town project, which took more than a year due to disagreements between the evaluation committee, EEU technical staff and the World Bank on deviations in the technical offers of the bidders - is being finalized as the World Bank provided it’s no objection to the revised evaluation report on April 9, 2019. Works should start on June 15, 2019. An owner’s engineer was contracted by EEU to help the utility supervise the contract more efficiently and EEU teams, who worked on eight-town project, will support the six-town project team, to help capture lessons learnt from the implementation of that project. The bidding package for 150,000 new connections in cities covered under the eight-town and six-town contracts (Adama, Dire Dawa, Hawassa, Jima, Bahir Dar, Dessie, Makele, Gonder, Adigrat, Debre Markos, Harar, Shashamane and Wolayta Sodo) was completed and procurement process was launched on March 14, 2019.

(c) Component 3: Market development for renewable energy and energy efficient products (US$20 million original credit, US$20 million AF, US$5 million TF0A2302, total US$45 million). This component has achieved


major success. More than one million households have been positively affected by increasing access to modern energy services. The credit line is now fully subscribed, and 1,051,691 solar lanterns and solar home systems have been procured. Participation of women in the credit line has exceeded expectations, resulting in a proposed adjustment of end targets. Sale of cookstoves, however, has been lackluster as micro finance institutions have not been interested in providing loans due to high transaction costs. Under this component, the project is linked to a US$5 million grant from the Small and Medium Enterprise Energy Support in Sub-Saharan Africa Grant (ESME, TF0A2302), which finances technical assistance to help support activities as well as a collateral support facility for private sector enterprises. Under ESME, training of micro-finance institutions (MFI) and private sector enterprises (PSE) and the procurement of the warrantee tracking system is completed. DBE has approved US$3.9 million in collateral support for 11 companies, and applications of two more companies are under process.

(d) Component 4: Modernization support (US$10 million original credit, US$20 million AF, total US$30 million). The component is financing capacity building activities for EEU and EEP to improve their operational and financial performance. The component finances a new enterprise resource planning (ERP) system for EEU, whose implementation was delayed due to the restructuring of EEU and EEU’s difficulties in supervising the contract. An outside expert has since been hired to help EEU. The system is expected to be fully installed by end June 2019. The component is also providing technical support to EEP and EEU to progressively improve commercial performance, financial management and governance, through: (i) financial advice; (ii) legal and safeguards support to EEP for development of a pipeline of independent power producers (IPPs) contracts; and (iii) implementation of a geographic information system (GIS) in EEU in the framework of the Government’s Universal Access Program.

9. Occupational Health and Safety (OHS). The fatal incidents that occurred on March 16, 2018 in Dessie town on one of the sub-projects managed by EEU (eight-town project) highlighted deficiencies in management of OHS within EEU1. Since the accident, EEU, with the support of the World Bank, has been implementing measures to strengthen OHS for the project as well as improve its overall OHS system. These include:

(a) At the project level: safety audits on ENREP sites, training of EEU OHS staff and contractor at headquarters and on sites (with safety materials), provision of sufficient personal protective equipment (PPE) on sites, awareness raising workshops with contractors and EEU/EEP before launching of new activities, strengthening of OHS clauses in World Bank-financed contracts.

(b) At corporate level (EEU): training of OHS staff, revision of OHS procedures (with World Bank inputs), and dissemination of revised procedures to management and staff (updated procedures were approved by management in April 2019 and was circulated among EEU directors on May 24, 2019); preparation of terms of reference for review of EEU OHS system (to be financed under the IDA Ethiopia Electrification Program, (ELEAP), P160395).

10. Financial Management. EEP financial audit report for FY2017 (due on January 8, 2018) was submitted on February 15, 2019, with more than 12 months of delay, while FY2018 audit report has been due since January 7, 2019. Submission of timely financial audits is a covenant under the project’s financing agreement. While financial management of EEP requires strengthening, improvements have been noted on the following key aspects: (i) improved audit opinion of EEP financial accounts (clean opinion); (ii) contract signed to address revenue issues (bulk meters to measure energy supplied to EEU); (iii) recruitment of international firm to perform fixed asset valuation and start implementation of Internationally Financial Reporting Standards (IFRS); and (iv) progress noted on implementation of automation, with installation of

1The Environmental and Social Incident Reporting (ESIRT) case was closed in March 2019, as compensation was provided the victims.


network and information technology infrastructure completed. Based on this progress, the World Bank provided a one-time exception to the obligation of EEP to submit the audited financial statement for FY2018 by January 7, 2019 and it has established August 31, 2019 as the new deadline date. This exception to the provisions of the World Bank’s procedure and clearance to proceed with the restructuring was approved by both Financial Management and WBG Finance and Accounting managers. EEP has prepared a time bound action plan to address the remaining FM issues (please see attached annexes).

11. The World Bank is continually monitoring the OHS aspects and the implementation of the aforementioned FM actions.

II. DESCRIPTION OF PROPOSED CHANGES

A. Extension of the project closing date by two and half years, until December 31, 2021

12. The extension would allow for the implementation of remaining activities, specifically: (i) the rehabilitation and expansion of distribution network in six towns; (ii) the connection of 150,000 households in the thirteen towns (except Addis Ababa); and (iii) the completion of construction of the three single circuits and substations. The revised implementation schedule is included in the table below.

13. The proposed extension will meet the requirements of World Bank Investment Project Financing (IPF) Policy regarding extension of closing dates have been met, specifically: (i) the project objectives will be achieved; (ii) the performance of the Borrower remains satisfactory; (iii) the World Bank and the Borrower agree on actions that will be undertaken by the Borrower to complete project critical activities. However, there is an outstanding audit, and clearance to proceed with the restructuring was approved by both FM and WFA managers.

Table 1: Implementation Schedule

Next step(s) Timeline Date of expected completion

Component 1: Reinforcement and expansion of electricity networksConstruction of Bokoji and Debre Tabor substations

Finalize Resettlement Action Plan (RAP)Launch bidding processConstruction

End June 2019End July 2019October 2019

End June 2019End September 2019March 2020

Component 2: Access scale upSix-town sub project Signing of the contract

ImplementationJune 15, 2019July 15, 2019 End June 2021

150,000 new connections Proposals and finalization of bidding processImplementation

May 24, 2019 (received)End July 2019 End May 2021

Component 3: Market development for renewable energy and energy efficient productsLoans to PSEs Continue processing applications Ongoing End June 2021Revolving MFI credit line Process applications Ongoing End June 2021Component 4: Modernization supportEnterprise resource planning system

Implementation of commercial system: 10 regions outside Addis

June 28, 2019 End June 2019

Revenue protection program (RPP)

Preparation of bidding documentsBidding processLaunch of RPP and implementation

Mid-June 2019May-June 2019End July 2019 End January 2020

Masterplan Preparation of selection packageSelection process finalized

End June 2019End October 2019


B. Cost adjustments of components14. The proposed restructuring would adjust costs of components:

(a) Budget for component 1 decreases by US$23 million. Significant savings were achieved under the contract for the rehabilitation of three transmission lines and substations. This is being offset by: (i) allocating funds to finance the construction of Bokoji and Debre Tabor substations along with a connection with the existing 230 kV transmission lines passing near the two towns, under goods supply contract estimated worth US$11 million, in line with the objective of Component 1, (ii) leaving contingency costs for the contracts still to be implemented.

(b) Component 2 sees an increase of US$4 million of its budget, mainly due quantity variations on the 8-town contracts.

(c) Component 3 sees a US$2 million in its costs, mainly due to the impact of US$/SDR fluctuations on the credit line.

(d) Under Component 4, an increase in costs of US$38 million due to:(i) The implementation of the ERP in EEU, for a total of US$46 million, following a request from the

Government in October 2016 to increase IDA budget for this activity by US$23 million to cover the full cost of the system.

(ii) Expansion of Technical Assistance activities (approximately US$15 million) in support of EEU and EEP for financial advisory support to EEP, update of EEU and EEP masterplans, and increase in budget for the implementation of EEU RPP, which is necessary to monitor consumption of and guaranteeing billing from the largest customers of the utility.

(e) Unallocated funds2 (US$20 million) are used to finance the balance of those changes.

15. Overall project costs (which include Government’s contribution) decrease from US$498 million to US$478 million, due to a US$20 million exchange rate loss; the US$23 million reduction in Government of Ethiopia (GoE) contribution to ERP is covered through the World Bank financing.

C. Reallocation between categories 16. The proposed restructuring would reallocate funds under the original credit from the unallocated category to Category 1 (to finance changes described above) and Categories 2-3 managed by DBE, which requested an increase to its allocation to compensate for the variation in the US$/SDR exchange rate. The reallocation consists of:

(a) Under Category 1 (components 1,2 and 4.1) led by EEP and EEU): increase by 12 percent of SDR allocation (SDR 12.7 million/US$18 million)

(b) Under Category 2 (component 3): increase by 8 percent of SDR allocation (SDR 1.0 million/US$2 million)(c) Under Category 3 (component 4.2): increase by 8 percent of SDR allocation (SDR 26,000/US$38,000)

A) Change in performance indicators: 17. EEP and EEU have faced challenges in monitoring project performance indicators related to quality of service (interruptions), in particular due to lack of adequate monitoring systems. The implementation of SCADA and the commercial modules of ERP will enhance better tracking of indicators and overall performance by the utilities. However, the SCADA and ERP will not be completed before the end of June 2019. The proposed changes outlined below seek to

2 Please note that the Project Appraisal Document for the project and the Project Paper of the AF included US$40 million for the credit line under the original credit. However, in fact, only US$20 million were assigned to this activity in the grant agreement, and US$20 million were included in an unallocated category. As result, cost for the component in the table should have been US$55 million, not US$75 million.


streamline indicators and adjust some end targets based on progress achieved. All other indicators have been revised to match the end target date with the newly established closing date:

(a) PDO indicators: i. Beneficiaries: Number of direct project beneficiaries (of which percentage of female) - The end target is

reduced to 7,552,500 from 9,675,000, to reflect decrease in expected number of households with access to modern energy services due to higher number of (more expensive) SHS systems sold vs solar lanterns, for a same budget resulting in lower number of overall households reached, as explained in iii (calculation is more conservative as it only includes households who acquire access to solar home systems, lanterns and cookstoves).

ii. Access: Number of households (HH) with access to modern energy services (off-grid) - The end target would be reduced from 2 million to 1.5 million. With the objective of increasing penetration of larger systems, under the credit line, the Government decided that 75 percent of the credit line would be used for Solar Home Systems (SHS) (vs. less than 15 percent originally). Since SHS are more expensive than solar lanterns, the total number of systems procured will be less than the total target.

(b) Intermediate results indicators:i. Number of biogas plants installed: the target is doubled to 10,000.ii. Number of solar lanterns and solar home systems sold. Both indicators will be eliminated, as there are

already two very similar indicators: “number of solar lanterns and solar home systems procured”. iii. Number of solar lanterns procured - End target is reduced from 1.5 million to 1.3 million due to the

increased allocation of SHS in the credit line.iv. Number of SHS procured - End target is increased from 10,000 to 200,000 to reflect Government’s decision

to allocate a larger portion of the credit line to SHS. v. Number of efficient cook stoves installed - The target is significantly reduced, from 100,000 to 500. Costs

of standard improved stoves (Birr 300) is affordable, and as a result does not require MFI support. MFIs are not interested in providing loans for Injera stoves (costing on average Birr 800), as they consider transaction costs too high.

vi. Number of loans given to households: End target increased to 200,000 from 40,000 originally. vii. Loans given to female applicants (as percentages of amount and number) - The target for both indicators

is raised to 50 percent from 35 percent and 40 percent, respectively, to account for significant progress in female participation.

viii. Number of partner MFIs - The end target is raised to 25, from 15.ix. Number of loans given to PSEs: The end target is raised to 30, from 12.

Click here to enter text.III. SUMMARY OF CHANGES

Changed Not Changed

Results Framework ✔

Components and Cost ✔

Loan Closing Date(s) ✔


Reallocation between Disbursement Categories ✔

Disbursement Estimates ✔

Legal Covenants ✔

Implementation Schedule ✔

Implementing Agency ✔

DDO Status ✔

Project's Development Objectives ✔

Cancellations Proposed ✔

Disbursements Arrangements ✔

Overall Risk Rating ✔

Safeguard Policies Triggered ✔

EA category ✔

Institutional Arrangements ✔

Financial Management ✔

Procurement ✔

Other Change(s) ✔

Economic and Financial Analysis ✔

Technical Analysis ✔

Social Analysis ✔

Environmental Analysis ✔

IV. DETAILED CHANGE(S)

OPS_DETAILEDCHANGES_COMPONENTS_TABLE

COMPONENTS

Current Component Name

Current Cost

(US$M)Action Proposed

Component NameProposed

Cost (US$M)

Reinforcement and Expansion of Electricity Network 220.00 Revised Reinforcement and Expansion

of Electricity Network 197.00

Access Scale-Up 150.00 Revised Access Scale-Up 154.00


Market Development for Renewable Energy and Energy Efficient Products

75.00 RevisedMarket Development for Renewable Energy and Energy Efficient Products

59.00

Modernization Support 53.00 Revised Modernization Support 68.00

TOTAL 498.00 478.00

OPS_DETAILEDCHANGES_LOANCLOSING_TABLE

LOAN CLOSING DATE(S)

Ln/Cr/Tf StatusOriginal Closing

Revised Closing(s)

Proposed Closing

Proposed Deadline for Withdrawal

Applications

IDA-51260 Effective 31-Dec-2017 30-Jun-2019 31-Dec-2021 30-Apr-2022

IDA-58140 Effective 30-Jun-2019 31-Dec-2021 30-Apr-2022

TF-A2302 Closed 31-Aug-2017 31-Aug-2018, 30-Apr-2019

OPS_DETAILEDCHANGES_REALLOCATION _TABLE

REALLOCATION BETWEEN DISBURSEMENT CATEGORIES

Current Allocation Actuals + Committed Proposed Allocation Financing %(Type Total)

Current Proposed

IDA-51260-001 | Currency: XDR

iLap Category Sequence No: 1 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Parts 1,2,4.1

102,000,000.00 110,727,569.28 114,691,000.00 100.00 100.00

iLap Category Sequence No: 2 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Parts 3.1,3.2

13,000,000.00 13,297,200.79 14,033,000.00 100.00 100.00

iLap Category Sequence No: 3 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Part 4.2

320,000.00 236,060.38 346,000.00 100.00 100.00

iLap Category Sequence No: 4 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Part 4.3


130,000.00 114,026.82 130,000.00 100.00 100.00

iLap Category Sequence No: 5 Current Expenditure Category: UNALLOCATED

13,750,000.00 0.00 0.00

Total 129,200,000.00 124,374,857.27 129,200,000.00

IDA-58140-001 | Currency: XDR

iLap Category Sequence No: 1 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Parts 1,2,4.1

127,800,000.00 12,553,488.50 127,800,000.00 100.00 100.00

iLap Category Sequence No: 2 Current Expenditure Category: GDS,WKS, NCS,CS,OP. Parts 3.1,3.2

14,200,000.00 3,885,167.47 14,200,000.00 100.00 100.00

Total 142,000,000.00 16,438,655.97 142,000,000.00

OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE

DISBURSEMENT ESTIMATES

Change in Disbursement EstimatesYes

Year Current Proposed

2012 0.00 0.00

2013 5,000,000.00 0.00

2014 20,000,000.00 17,343,620.79

2015 25,000,000.00 57,298,443.99

2016 50,000,000.00 45,547,760.89

2017 60,000,000.00 31,674,677.71

2018 40,000,000.00 47,975,715.20

2019 0.00 29,230,466.98

2020 0.00 0.00


OPS_DETAILEDCHANGES_LEGCOV_TABLE

LEGAL COVENANTS

Loan/Credit/TF Description Status Action

IDA-51260

Finance Agreement: EEPCO Financial Viability Plan | Description :GOE to submit to the Bank a plan designed to ensure financial viability of EEPCO. | Due Date :10-Oct-2012

After delay complied with No Change

IDA-51260

Finance Agreement :Subsidiary Loan Agreements | Description :The EEPCO subsidiary agreement has been entered into between the Recipient and EEPCO.The DBE subsidiary agreement has been enteredinto between the Recipient and DBE. | Due Date :10-Oct-2012

Complied with No Change

IDA-51260

Finance Agreement :Retroactive Financing | Description :Retroactive financing up to USD 10,000,000 for eligible expenditures for the parts of the project implemented by EEPCO, incurred between April 1, 2012 and the date of signing of the Financing Agreement. | Due Date :28-Feb-2013

Complied with No Change

IDA-51260

Finance Agreement :DBE Manual | Description :DBE to submit to the Bank a manual which will include eligibility criteria for selecting financial institutions and final beneficiaries (PSEs, individuals or households), and templates for sub-credit agreements. | Due Date :28-Feb-2013


IDA-51260

Finance Agreement :EEPCO Auditor | Description :Within 3 months of effectiveness, EEPCO to assign a qualified and experienced internal auditor for the project to strengthen the monitoring of internal control systems for the project | Due Date :03-Apr-2013



IDA-51260

Finance Agreement :EEPCO Financial Advisor/Specialist | Description :Within 3 months of effectiveness, EEPCO to recruit a qualified and experienced Financial Advisor/Specialist who will coordinate accounting functions between EEPCO and the PIU on terms of reference acceptable to the Bank. | Due Date :03-Apr-2013

Partially complied with Revised

Proposed

The Recipient shall cause EEP to : (a) recruit a consulting firm to advise EEP and EEU on the setting up their opening balances resulting from EEP restructuring in a manner that addresses the past audit issues and recommendation of the study on EEPCo’s fiduciary accountability systems and corporate governance undertaken in January 2013; and (b) assign to the Project an internal auditor.

CP

IDA-51260

Finance Agreement :EEPCO Accounting/Billing Interface | Description :EEPCO to conduct a review to identify issues related to the Agresso accounting software and the billing interface, and resolve the issues identified withing 24 months after effectiveness. | Due Date :03-Jan-2015

Not complied with Revised

Proposed

Finance Agreement :EEPCO Accounting/Billing Interface | Description :EEPCO to conduct a review to identify issues related to the Agresso accounting software and the billing interface, and resolve the issues identified withing 24 months after effectiveness. | Due Date :03-Jan-2015

Complied with

IDA-51260Finance Agreement :DBE Institutional Development Plan | Description :DBE to implement its Institutional Development Plan | Due Date :03-Jul-2014

Partially complied with No Change

IDA-51260

Finance Agreement :Addressing Audit Issues identified | Description :The Recipient shall cause EEP to address the findings of the study referred to in paragraph above with the assistance of the consulting firm to be employed pursuant to paragraph above.” | Due Date :31-Dec-2014

Not complied with Revised

Proposed Finance Agreement :Addressing Audit Issues identified | Description :The Recipient shall cause EEP to address the findings of the study referred to in paragraph above

Partially complied with


with the assistance of the consulting firm to be employed pursuant to paragraph above.” | Due Date :31-Dec-2014

IDA-51260

Finance Agreement :Consulting firm for Auditing | Description :The Recipient shall cause EEP to: (a) recruit, by October 31, 2014, a consulting firm, in accordance with the terms of reference and with qualifications and experience satisfactory to the Association, to advise EEP and EEU on the setting up their opening balances resulting from EEPCo restructuring in a manner that addresses the past audit issues and the recommendations of the study on EEPCo. | Due Date :31-Oct-2014

Not complied with Marked for Deletion

IDA-51260

Finance Agreement :EEP Financial Viability Plan Review | Description :No later than May 15 of each year during Project implementation, starting in calendar year 2015, the Recipient shall prepare and furnish to the Association an annual progress report on the implementation and update of the Financial Viability Plan, including measures recommended to ensure the continued financial viability of the Recipient's Power Sector. | Frequency :Yearly


IDA-58140

Finance Agreement :Schedule 2 Section V.A.1 | Description :The Recipient shall implement the plan furnished to the Association under the original project which is designed to ensure the financial viability of EEP and EEU, during the next three years (Financial Viability Plan). | Frequency :Yearly


IDA-58140

Finance Agreement :Schedule 2 Section V.A.2 | Description :No later than May 15 of each year during the Project implementation, the Recipient shall prepare and furnish to the Association an annual progress report on the implementation and update of the Financial Viability Plan including measures recommended to ensure the continued financial viability of the Recipient's Power Sector, particularly in light of the restructuring of the EEPCo. | Frequency :Yearly



IDA-58140

Finance Agreement :Schedule 2 Section V.B.1 (a) | Description :The Recipient shall cause EEP to: recruit individual consultant(s), within three months of the effective date, in accordance with the terms of reference and with qualifications and experience satisfactory to the Association, to advise EEP and EEU on financial management matters including addressing the past audit issues and the recommendations of the study on EEP's fiduciary accountability system. | Due Date :31-Dec-2016

Not yet due Revised

Proposed

The Recipient shall cause EEP to: (a) recruit individual consultant(s) to advise EEP and EEU on financial management matters including addressing the past audit issues and the recommendations of the study on EEP's fiduciary accountability system and corporate governance undertaken in January 2013; and (b) assign to, and maintain for, the Project an internal auditor.

Partially complied with

IDA-51260

The Project Implementing Entity shall ensure that the audited financial statements for each period shall be: (a) furnished to the Recipient and the Association not later than six (6) months after the end of the period with the exception of the audited financial statements ending fiscal year 2018, which shall be furnished to the Recipient and the Association by August 31, 2019; and (b) made public.

Not yet due New

IDA-58140

The Project Implementing Entity shall ensure that the audited financial statements for each period shall be: (a) furnished to the Recipient and the Association not later than six (6) months after the end of the period with the exception of the audited financial statements ending fiscal year 2018, which shall be furnished to the Recipient and the Association by August 31, 2019; and (b) made public.

Not yet due New

IDA-51260

Financing agreement dated June 12, 2012 - Schedule II Section II B 1 - The Recipient shall maintain or cause to be maintained a financial management system in accordance with the provisions of Section 4.09 of the General Conditions

Partially complied with New


IDA-58140

Financing agreement dated June 15, 2016 -Schedule II Section V B 2 “Other Fiduciary Undertakings” - The Recipient shall cause EEP to address the findings of the study referred to in paragraph l above with the assistance of the consultant(s) to be employed pursuant to paragraph l above, in a manner satisfactory to the Association.


IDA-58140

The Recipient shall cause EEP's and DBE's Internal Audit units to conduct an internal audit of Project activities at least once per year. The Recipient shall cause EEP and DBE to provide said audit report to the management of EEP and DBE and to the Association.


IDA-58140

Financing agreement dated June 15, 2016 -Schedule II Section V B 3 “Other Fiduciary Undertakings” - The Recipient shall cause EEP's and DBE's Internal Audit units to conduct an internal audit of Project activities at least once per year. The Recipient shall cause EEP and DBE to provide said audit report to the management of EEP and DBE and to the Association.


IDA-51260

Financing agreement dated June 12, 2012 - Schedule II Section II B 2 - Without limitation on the provisions of Part A of this Section, the Recipient shall prepare and furnish to the Association not later than forty-five (45) days after the end of each calendar quarter, interim unaudited financial reports for the Project covering the quarter, in form and substance satisfactory to the Association.


IDA-51260

Financing agreement dated 12-Jun-2012-Schedule II Section II B 2 - The Recipient shall have the Financial Statements audited or cause to be audited. Each audit of the Financial Statements shall cover the period of one Fiscal Year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than six (6) months after the end of such period.


.


.Results framework

COUNTRY: EthiopiaElectricity Network Reinforcement and Expansion Project (ENREP)

Project Development Objectives(s)

The Development Objectives of the Electricity Network Reinforcement and Expansion Project are to improve reliability of the electricity network and to increase access to electricity services in Ethiopia.

Project Development Objective Indicators by Objectives/ OutcomesRESULT_FRAME_TBL_PDO

Indicator Name DLI Baseline End Target

Increase access to electricity services in Ethiopia

Direct project beneficiaries (Number) 0.00 7,552,700.00

Action: This indicator has been Revised

Female beneficiaries (Percentage) 0.00 50.00


Access: Number of HHs connected to the grid (Number) 0.00 150,000.00


Access: Number of HHs with access to modern energy services (off-grid) (Number) 0.00 1,500,000.00


Improve reliability of the electricity network

Reliability: System Average Interruption Frequency Index, SAIFI, in the project areas. (Number) 178.00


SAIFI - Project Area 1 (7 towns) (Number) 196.00 98.00


RESULT_FRAME_TBL_PDO



SAIFI - Project Area 2 (6 towns) (Number) 157.00 78.00


PDO Table SPACE

Intermediate Results Indicators by ComponentsRESULT_FRAME_TBL_IO


Reinforcement and Expansion of Electricity Network

Reliability: System Average Interruption Duration Index, SAIDI, in the project areas (Hours) 258.00 129.00


Project Area 1 (7 towns) (Hours) 224.00 112.00


Project Area 2 (6 towns) (Hours) 298.00 149.00


Segments of transmission lines constructed, upgraded or rehabilitated (km) (Kilometers) 0.00 609.00


Number of Substations constructed or upgraded under the project (Number) 0.00 30.00



RESULT_FRAME_TBL_IO


Time to complete EEP entity audit report (Months) 7.00 6.00


Number of EEP retained procurement staff (Number) 1.00 4.00


Number of EEP/EEU Staff Trained (Number) 0.00 90.00


Access Scale-Up

Total Energy Sales in the project areas (Gigawatt-hour (GWh)) 0.00 2,240.00


Segments of distribution lines constructed, upgraded or rehabilitated (Kilometers) 0.00 3,338.00


Market Development for Renewable Energy and Energy Efficient Products

Number of biogas plants installed (Number) 0.00 10,000.00


Number of Solar Lanterns Sold (Number) 0.00 1,500,000.00

Action: This indicator has been Marked for Deletion

Number of Solar Home Systems Sold (Number) 0.00 10,000.00

Action: This indicator has been Marked for Deletion

Number of Solar Lanterns Procured (Number) 0.00 1,300,000.00


Number of Solar Home Systems Procured (Number) 0.00 200,000.00


RESULT_FRAME_TBL_IO



Number of energy savings lamps imported and distributed (Number) 245,424.00 500,000.00


Number of efficient cookstoves installed (Number) 0.00 500.00


Total amount of loans given to HHs (Amount(USD)) 0.00 11,000,000.00


Total amount of loans given to female applicants (%) (Amount(USD)) 28.66 50.00


Number of loans given to HHs (Number) 0.00 200,000.00


Number of loans given to female applicants (Number) 34.45 50.00


NPL Ratio of HH Loan Portfolio (Percentage) 0.00 5.00


Number of Partner MFIs (Number) 0.00 25.00


Woreda covered by credit line (Number) 0.00 150.00


Total amount of loans given to PSEs (Amount(USD)) 0.00 29,000,000.00


RESULT_FRAME_TBL_IO



Number of loans given to PSEs (Number) 0.00 30.00


NPL Ratio of the PSE Loan Portfolio (Percentage) 0.00 5.00


Modernization Support

Number of gender informed awareness events held (Number) 0.00 9.00


EEP publishes annual report on citizen engagement (Yes/No) No Yes


IO Table SPACE






Documents

World Bank Documentdocuments.worldbank.org/curated/en/336381559329428583/pdf/Dis… · Task Team Leaders: Karen Bazex, Rahul Kitchlu Public Disclosure Authorized Public Disclosure