The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Power Recovery Project (P144029) EUROPE AND CENTRAL ASIA | Albania | Energy & Extractives Global Practice | IBRD/IDA | Investment Project Financing | FY 2015 | Seq No: 8 | ARCHIVED on 24-Jun-2019 | ISR37654 | Implementing Agencies: Ministry of Infrastructure and Energy, Republic of Albania Key Dates Key Project Dates Bank Approval Date: 29-Sep-2014 Effectiveness Date: 30-Jan-2015 Planned Mid Term Review Date: 07-May-2018 Actual Mid-Term Review Date: 07-May-2018 Original Closing Date: 30-Nov-2019 Revised Closing Date: 30-Nov-2019 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The project development objective is to improve reliability of power supply and financial viability of the power sector. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Short Term Complementary Power Import Support:(Cost $30.00 M) Upgrading Distribution Infrastructure:(Cost $93.00 M) Transmission Meter/Data Center Upgrade:(Cost $20.00 M) Supporting Power Sector Reforms and Project Implementation:(Cost $7.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Unsatisfactory Overall Risk Rating High High Implementation Status and Key Decisions 1. Project implementation has been expedited since the mid-term review. The project is contributing to lowering electricity distribution losses in Albania, and increasing reliability of the medium-voltage network in the Tirana area, measured by the capacity utilization percentage of substations. Based on the latest status, the project is now ready for a restructuring, including a one year closing date extension. 2. Financial viability of the power sector. While progress has been made over the last three years, placing KESH and OST on a relatively sound financial framework, OSHEE continues to face a financial gap, especially during a dry year such as 2017 and expected again in 2019. With some delays, an updated Financial Recovery Plan was approved by the Council of Ministers in April 2019 and provides guidance on the key financial 6/24/2019 Page 1 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) drivers to help improve OSHEE financial condition, in particular, a distribution loss reduction trajectory for 2018–2021, and a prioritized investment focusing on loss reduction. 6/24/2019 Page 2 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial 6/24/2019 Page 3 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- High High Institutional Capacity for Implementation and Sustainability -- High High Fiduciary -- High High Environment and Social -- Low Low Stakeholders -- High High Other -- -- -- Overall -- High High Results PDO Indicators by Objectives / Outcomes Electricity losses per year in the project area IN00717210 ►Electricity losses per year in the project area (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 45.00 26.00 24.00 14.00 Date 03-Jul-2014 14-Dec-2018 31-Dec-2018 30-Jun-2019 Latest total distribution losses data for the full year 2018. Technical and non-technical losses are not Comments: updated due to their inaccuracies. These sub-indicators will be deleted at project restructuring. IN00717279 Total net injected generation (Megawatt hour(MWh), Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 7,145,000.00 6,498,515.00 6,437,000.00 7,850,000.00 IN00717280 Electricity losses per year in the project area- Technical (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 15.30 17.30 16.30 12.60 IN00717281 Electricity losses per year in the project area- Non-Technical (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 29.80 8.70 7.70 1.40 Collection rate of distribution company IN00717276 ►Collection rate of distribution company (Percentage, Custom) 6/24/2019 Page 4 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Baseline Actual (Previous) Actual (Current) End Target Value 78.00 96.60 93.00 93.00 Date 03-Jul-2014 31-Oct-2018 31-Dec-2018 30-Jun-2019 These are collections of bills in 2018, excluding arrears from the past. A total of 64.7b lek were billed in 2018, of which 51.8b lek were collected, and 8.4b lek were under regular collection (0-60 days age), and Comments: remaining 4.5b lek (7 percent of total billed in 2018) were over 60 days unpaid. Reliability of MV level at Tirana area IN00717277 ►Reliability of MV level at Tirana area (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 100.00 95.00 89.00 70.00 Date 03-Jul-2014 31-May-2018 31-Dec-2018 30-Jun-2019 Total amount of intercompany arrears IN00717278 ►Total amount of intercompany arrears (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1,200.00 600.00 546.00 550.00 Date 03-Jul-2014 31-May-2018 31-Dec-2017 30-Jun-2019 This is based on audited financial data in 2017 Comments: Intermediate Results Indicators by Components Short Term Complementary Power Import Support IN00717282 ►Implemented Risk management mechanism for weather related power imports (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The ToR is under review This weather risk by the Project, Ministry of mitigation is being Energy, Ministry of provided under a Finance and Bank team. separate World Bank Since July 2016, the technical assistance The Risk Mitigation electricity market model (Albania Mechanisms are Value No has changed. The Growth and Jobs established and hydrology risk is Policy Implementation implemented. transferred from KESH Support P168919). (wholesale is abrogated) This originally planned to OSHEE (the activity would be distribution company is cancelled under responsible for regulated project restructuring. 6/24/2019 Page 5 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) end-users security of supply). The new wholesale power exchange (Alb Power Exchange) was planned to be established by the end of 2017, but is not yet established by December 2018. Date 03-Jul-2014 14-Dec-2018 10-Jun-2019 30-Jun-2019 Transmission Meter/Data Center Upgrade IN00717284 ►Number of medium voltage customers in deregulated market (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 96.00 96.00 5,000.00 Date 03-Jul-2014 14-Dec-2018 10-Jun-2019 30-Jun-2019 IN00717287 ►Share of meters installed by OST (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 10.00 19.00 100.00 Date 03-Jul-2014 14-Dec-2018 10-Jun-2019 30-Jun-2019 The total number of meters to be installed is 2,328. Comments: Upgrading Distribution Infrastructure IN00717283 ►Implementation of a new billing and collection management system (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The Billing System package is contracted (Jul14, 2016) and is under implementation. The hardware installation is completed and the contractor is working for software customization. Final acceptance test The risk management The new Billing and The rollout of the Billing of the billing system is Value mechanism is not in Management System System has experienced targeted for completion place in Operation delay in customers' by end June 2019 database clean up. However, the full system is now expected to be in operation by February 2019. OSHEE and the contractor has agreed to this revised schedule. Date 03-Jul-2014 14-Dec-2018 10-Jun-2019 30-Jun-2019 6/24/2019 Page 6 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) IN00717286 ►Direct project beneficiaries (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 20,000.00 60,000.00 200,000.00 Date 03-Jul-2014 14-Dec-2018 31-May-2019 30-Jun-2019 IN00717290 Female beneficiaries (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 50.00 50.00 52.00 Supporting Power Sector Reforms and Project Implementation IN00717285 ►Debt-to-Capitalization Ratio of OShEE (shown), KESh and OST (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 300.00 23.70 23.70 60.00 Date 03-Jul-2014 31-Dec-2017 31-Dec-2017 30-Jun-2019 This is the average of the Debt-to-Capitalization Ratio of three Utilites. Comments: For OSHEE only this value is 143. Based on 2017 audited financial statements. IN00717288 ►Debt to Equity Ratio of OShEE (shown), KESh and OST (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.10 -0.48 -0.48 1.60 Date 03-Jul-2014 31-Dec-2017 31-Dec-2017 30-Jun-2019 Audited 2017 financial statements. Comments: IN00717289 ►OShEE monthly revenues used to pay for energy purchases to KESh and transmission fees to OST (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 40.00 100.00 100.00 100.00 Date 03-Jul-2014 31-May-2018 31-May-2018 30-Jun-2019 in terms of account payable to kesh in the non auditted 2018 Comments: IN00717291 ►Power sector reforms implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The new Power Law is The consultant The cost recovery tariff approved and it is under (NordPool) supported Value No mechanism is implementation since by the Bank and implemented. May 2015. Regulatory Vienna Energy 6/24/2019 Page 7 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Entity (ERE) is preparing Secretariat, was New market is the Bylaws (Rules and working together with functioning and 40% of Regulations). GoA Ministry of Energy to market is deregulated approved the new establish the proposed Albanian Market Model power exchange in on Jul 7, 2016. The Albania by the end of Wholesale supply was 2018. The Bank (IBRD abrogated and KESh is a and IFC) is supporting generation company financially the only. GoA approved the establishment of Public Service Obligation Albanian Market act on March 31, 2016. Operator and Albanian The process was delayed Balancing Market. The because of the general distribution company is election on June 28, prepared to unbundle 2017. The Power Law the wires from retail was amended on Feb supply. The plan for 2018; the amendment deregulation of MV facilitates the customers and IPP is establishment of Market under implementation. Operator as independent Since Jan 1st 2018, all company with state and customers (96 private ownership customers) connected The consultant in 35 kV distribution (NordPool) supported by network are equipped the Bank and Vienna with new metering Energy Secretariat, is system and are working together with deregulated. Actually Ministry of Energy to only 17 customers establish the proposed from total 96 are fully power exchange in supplied by qualified Albania by the end of suppliers; the others 2018. The Bank (IBRD (79) are actually and IFC) is supporting supplied by OSHEE. financially the In 2018 only 14% (974 establishment of GWh) of the total Albanian Market demand(7639 GWh) Operator and Albanian was deregulated; Balancing Market. The those are 12 HV distribution company is customers connected prepared to unbundle the in transmission wires from retail supply. network and few 35 kV The plan for deregulation customers. of MV customers and IPP For 2019 the is under implementation. percentage is reduced Since Jan 1st 2018, all in 11%. customers (96 customers) connected in 35 kV distribution network are equipped . with new metering system and are deregulated. Four from 96 are fully supplied by qualified suppliers; the others 92 are actually supplied by OSHEE. In 2017 only 11% of the total demand was deregulated; those are 10 HV customers connected in transmission network. The same market share 6/24/2019 Page 8 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) is reported for the first quarter 2018. . Date 03-Jul-2014 14-Dec-2018 30-Apr-2019 30-Jun-2019 Twelve customers connected in HV are qualified as eligible deregulated customers; the annual consumption in 2018 was is expected to be above GWh 960 which is 14% of total demand in Albania. At the beginning of 2018 the other 96 MV customers connected in 35 kV were qualified but only 17 are actually suppled in deregulated market; the total deregulated customer consumption was 974 GWh (inluding 14 GWh in 35 kV level). During Jan-Apr 2019, the total deregulated consumtion was 375 GWh and the total demand was 3303 GWh. There are 300 MV customers equped with new metering system and ready to chose a supplier in Comments: the deregulated market The Albanian government adopted the decision to set up power exchange (APEX) on May 15, 2019 (with day-ahead and intraday markets). The power exchange will be established in accordance with EU directives and as a step-in power sector reform. The power exchange will speed up the electricity market liberalization and deregulation. OST, Albania’s state-owned transmission system operator, will be in charge of setting up a company to operate the power exchange. The operator will be a joint stock company, and the Albanian government will select its shareholders. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P144029 IBRD-84290 Effective USD 150.00 150.00 0.00 75.99 62.21 55% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P144029 IBRD-84290 Effective 29-Sep-2014 03-Nov-2014 30-Jan-2015 30-Nov-2019 30-Nov-2019 Cumulative Disbursements 6/24/2019 Page 9 of 10 The World Bank Implementation Status & Results Report Power Recovery Project (P144029) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 6/24/2019 Page 10 of 10