60783 v1 Document of The World Bank Report No: RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SECOND PHASE OF COASTAL TRANSMISSION BACKBONE PROJECT (CREDIT 4214-BEN) TO THE REPUBLIC OF BENIN DECEMBER 21, 2010 1 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AfD Agence Française de Développement APL Adaptable Program Lending BOAD Banque Ouest Africaine de Développement CEB Communauté Electrique du Bénin CIE Compagnie Ivoirienne d'Electricité CMU Country Management Unit CTB Coastal Transmission Backbone ECOWAS Economic Community Of West African States EEP Ecowas Energy Protocol EIB European Investment Bank EMP Environmental Management Plan GoG Government of Ghana GRIDCo Ghana Grid Company IDA International Development Association KfW Kreditanstalt fur Wiederaufbau kV kilo Volt OFGW Optical Fiber Ground Wire PAPs Project Affected Persons PDO Project Development Objective RAP Resettlement Action Plan RIAS Regional Integration Assistance Strategy for West Africa ROW Right ­ of- Way RRDP Regional Regulatory Development Project SCADA/EMS Supervisory Control and Data Acquisition/Energy Management System T-Line Transmission Line VRA Volta River Authority Regional Vice President: Obiageli Katryn Ezekwesili Country Director: Madani M. Tall Sector Manager: S. Vijay Iyer Task Team Leader: Sunil W. Mathrani 2 AFRICA WAPP APL 1 (2ND PHASE) - COASTAL TRANSMISSION BACKBONE PROJECT P094917 CONTENTS Page A SUMMARY B PROJECT DESCRIPTION C PROJECT STATUS D PROPOSED CHANGES E APPRAISAL SUMMARY ANNEX A KEY OUTCOME INDICATORS ANNEX B RESULTS FRAMEWORK AND MONITORING ANNEX EXTENSION OF CLOSING DATE 3 WAPP APL 1 (2ND PHASE) - COASTAL TRANSMISSION BACKBONE PROJECT RESTRUCTURING PAPER SUMMARY 1. The proposed changes to the Second Phase of West African Power Pool Coastal Transmission Backbone Project (WAPP ­ CTB, Credit No. 4214-BEN), are the following: (i) extend the closing date by two and half years, to enable the Borrower to complete the activities of the project, specifically the Supervisory Control and Data Acquisition/Energy Management System (SCADA/EMS ­component 2), which has been delayed by over two years; (ii) change the disbursements category to include expenses related to works and (iii) revise the result framework. 2. This restructuring will not affect Project Outcomes, the Project Development Objectives or the Environmental and Social Safeguards category. The project's scope and output will also remain unchanged. PROJECT DESCRIPTION 3. This second phase of the WAPP Project (APL1, Phase 2) is part of a co-financing package for the segments of the 330kV interconnection between Ghana and Nigeria via Togo and Benin. The African Development Bank (AfDB) and the KfW (German Technical Cooperation Agency) are funding the construction of the T-line segment from Tema in Ghana through Lome (Togo) to Sakete (on the Benin-Nigeria border). The line is expected to become operational by 2013. The IDA funding is tied to progress on the AfDB and KfW components. 4. The Project comprises the following: (i) Transmission Infrastructure Development; (ii) Upgrade of System Control Centers/SCADA, (iii) Emergency Preparedness Plan for the Nangbeto Generation Station, and (iv) Expert Advisory Panel for the implementation of WAPP Action Plan. It is accompanied by a parallel IDA Credit (No. 4213­GH) for related activities in Ghana. PROJECT STATUS 5. The project complies with all covenants and was rated moderately unsatisfactory at the time of the last ISR in June 2010. As of November 2010, a total of US$1.6 million, 4 or, 10% of the Credit had been disbursed. However, the pace of procurement has improved during the past several months and the bidding process for the upgrade of the SCADA/EMS system, (which represents 80% of total project costs), is in the final phase of the bidding. The bid opening date for the second stage is set for February 23, 2011, and the contract is expected to be signed no later than April 2011. As the pace of procurement has improved, a rating upgrade is planned. The project objectives continue to be achievable, the performance of the Borrower is satisfactory; and an acceptable action plan has been submitted to complete the project. There are no overdue audit reports. 6. Transmission Infrastructure Development. After a long delay, financing has been been secured from KfW for the Togo portion of the 330 kV transmission line and the AfDB disbursement conditions are now fulfilled. This was a major contributor to the delays experienced under this project. The bidding documents for the construction and the request for proposals for the engineering supervision of works are completed and awaiting approval from the financiers. IDA is financing the supervision of T-line construction, which is fully funded by AfDB and KfW. Selection of the engineering firm for construction supervision is therefore tied to the implementation schedule of the works. The expression of interest has been published and the shortlist of consultants is being finalized. The request for proposals will be sent to shortlisted consultants in January 2011. 7. Upgrade of System Control Centers/SCADA, The first stage of the SCADA/EMS bidding process is completed and the second stage is ongoing. 8. The Emergency Preparedness Plan for the Nangbeto Generation Station was completed in December 2009. 9. Expert Advisory Panel for the implementation of WAPP Action Plan. The WAPP action plan was completed in December 2009. PROPOSED CHANGES · Project Development Objectives 10. The PDO remains unchanged, namely "The development objective of this WAPP APL 2 is to assure more stable and reliable exchange of electricity between WAPP "Zone A" Coastal States (Côte d'Ivoire, Ghana, Benin, Togo and Nigeria) as a means to alleviate and/or reduce their collective vulnerability to drought-induced power supply disruptions''. · Results/indicators 11. In the original result framework, the benefits of the project could not be assessed until all project works were completed. This anomaly was raised during the QAG Learning Review of Regional Projects in November 2009. The new indicators proposed below will reflect results of intermediate achievements 5 such as the energy delivered through the Tema­Ghana border T-Line and the improvement in the voltage level from the increase in reactive power. 6 Table 1: Results Framework Component/Intermediate Results Indicators Additional Indicators Use of Results Monitoring Results (initial) (new) Component 1: . Infrastructure Development ­ Coastal Transmission Backbone Outcome: Increased C1.l Increased quantity of C1.2 Quantity of To show the increase of capacity for power electricity electricity (MW) transit capacity of the WAPP exchanges between WAPP transferred between delivered through transmission link "Zone A" Coastal WAPP "Zone A" completed transmission States. Coastal States, line and substations disaggregated by power utility. C.1.3 Reduction in -To determine the increase of outages due to the reliability of the WAPP commissioning of the transmission link transmission line and substations C1.4 Improvement of voltage - To determine the increase by the increase of the of reliability of the WAPP reactive power due to transmission link the commissioning of the transmission line and substations Component 2: Upgrade of System Control Centers Coastal Transmission Backbone Outcome: Improved C2.1 Percent reduction in . To implement WAPP monitoring and the number and frequency "Operational control of power of power Mitigation and Security exchanges between outages that are linked to Plans" in order to assure WAPP "Zone A" Coastal malfunctions on the secure and reliable States. Coastal Transmission power exchanges along the Backbone, disaggregated Coastal transmission by power utility Backbone. . C2.2 Percent reduction in . To determine operational the detection/response effectiveness of system time for power control centers of WAPP outages that are linked to "Zone A" Coastal malfunctions on the States. Coastal Transmission Backbone, disaggregated - by power utility. 7 · Supervision Strategy 12. Continued intensive project supervision is proposed, mainly by field office staff in Ghana, Togo and Benin. This would build upon the enhanced supervision that was carried out in FY09-FY10 to ramp up the pace of implementation. Supervision resources covered key engineering, economic, and safeguards compliance activities and senior safeguards specialists were also assigned to the team. · Reallocations 13. The only change required to Cr. 4214 is to change the "Goods'' category to "Goods and Works'' in order to finance expenses related to works. These were part of the initial project description, which entails supply and installation of the Scada system. · Closing date 14. Delay in obtaining financing for the Lome C ­ Sakete T-line segment (now resolved) means that completion of construction will be delayed until first quarter of CY2013. In addition the SCADA/EMS has been delayed because of anomalies in the bidding process as the construction time for both of these components is estimated to exceed 24 months. Therefore an extension of the closing date from December 31, 2010 to June 30, 2013 is requested. · Implementation schedule Table 2: Summary of contract implementation schedule Component Contract Estimated Initial Rescheduled Amount / completion completion date Contract date amount (Million US$) Component 1: Engineering services for Transmission supervision of works associated December 1.5 August 2012 Infrastructure with transmission facility 2012 Development development for the CTB; Component 2: SCADA/EMS for CEB System December 12.8 July 2011 Upgrade of Control Center and Network- 2012 Transmission Engineering Consulting Services Control and for SCADA Project Supervision December 0.55 July 2011 Communications (CEB). 2012 System Component 3: Emergency Preparedness Plan for Upgrade of the Nangbeto Generation Station December Strategic Power 1 Completed 2009 Generation Stations Component 4: Expert Advisory Panel Implementation December 0.25 Completed of WAPP 2009 Action Plan 8 APPRAISAL SUMMARY Benefits 15. The restructured project is expected to reinforce the project's benefits, as follows: · Increasing cross-border electricity trade between WAPP "Zone A" Coastal States; · Reducing power transfer losses in the principal transmission networks of the WAPP "Zone A" Coastal States; and · Improving cost efficient coverage of peak power demand through economy power exchanges between WAPP "Zone A" Coastal States. 16. However, it should be noted that the above benefits will only be possible when the entire coastal backbone from Lagos to Takoradi in western Ghana via Benin and Togo is commissioned in June 2013. Risks 17. The three project risks remain as stated in the original project document. However a fourth risk related to the synchronization of transmission systems has been added. First, there continue to be challenges to regional integration and finding ways for ECOWAS member states to relax national self-sufficiency approaches in favor of a shared, regional approach (e.g. economically sized generation facilities; harmonization of regulatory instruments and shared generation reserves). In this regard, the ECOWAS Regional Regulatory Development Project (RRDP), funded by AFD, has assisted in strengthening cooperation in developing of a consensus-based regulatory framework for WAPP. 18. Second, there is the risk of non-application (or lack of respect) by a few ECOWAS member states to adhere to Ecowas Energy Protocol principles that are critical for WAPP's long-term operation (i.e. third-party access to power generation and transmission facilities; and free transit of electricity, or power wheeling. 19. Third, there continue to be risks of further delays due to weak implementation capacities. These risks are mitigated by the recruitment of an engineering firm providing technical assistance to the project team. Inter linkages with the implementation of the AfDB and KfW funded segments of the T-line mean that further delays due to exogenous factors cannot be entirely ruled out. However, the decision to group the two line segments in one procurement package that will be awarded to a single contractor minimizes this risk. 20. Fourth, in order to draw all the benefits from the transmission line, the CEB/VRA (Ghana-Togo-Benin) system must be synchronized to the TCN (Nigeria) system to carry out effective power exchanges, which is not presently the case. To mitigate this risk, a 9 system synchronization component will be included in the new WAPP Ghana-Burkina interconnection project under preparation. 10 ANNEX 1 -A Key Outcome Indicators Project Results Framework (unchanged) PDO Project Outcome Indicators Use of Project Outcome Information OUTCOMES - Increased cross-border power exchanges between the WAPP "Zone A" Coastal States. - Reduced power transfer losses in the principal transmission networks o f the WAPP "Zone A" - Shows the contribution of the project to the Coastal States. achievement of WAPP program objective of PDO: - Improved satisfaction of peak power demand facilitating the development of a unified electricity To increase access of WAPP through economy power exchanges between the market among ECOWAS member states. "Zone A" Coastal States (Côte d'Ivoire, Ghana, Benin Togo and WAPP "Zone A" Coastal States. - High level of power losses may flag possible Nigeria) to more reliable (technical and or operational) problems in the electricity to alleviate supply P1- Quantity of electricity traded (Import Export) deployment of WAPP Cooperation Agreement deficits during peak power between the WAPP "Zone A" Coastal States, to integrate the national power grids of demand periods and/reduce disaggregated by power utility ECOWAS member states. vulnerability to hydro induced power supply disruptions. P2- Percent reduction of power losses along the - High levels shows contribution of the project to principal transmission interconnection links among the realization of core principle embodied in the WAPP "Zone A" Coastal States, disaggregated by ECOWAS Energy Protocol -"open access" to power power utility generation assets in ECOWAS member states. P3- Percent o f the peak power demand met through economy power exchanges along the WAPP Coastal Transmission Backbone, disaggregated by power utility 11 ANNEX 1-B: Results Framework and Monitoring AFRICA: WAPP APL 1 (2ND PHASE - COASTAL TRANSMISSION BACKBONE) Arrangement for Result Monitoring Phase (Revised and extended) Target values Data Collection and Reporting Outcome Indicators Utility Baseline 2006 2007 2008 2009 2010 2011 2012 2013 Frequency Data collection Responsibility 2005 instruments PDO indicators P1- Quantity of electricity Imports (MW) traded CIE 0 0 0 0 0 0 0 0 0 Bi-annual Recorded data Power utility (Import Export) between the VRA 90 90 90 170 170 100 100 20 20 (May/Nov) by each power report data to WAPP "Zone A" Coastal CEB 115 130 150 160 180 200 220 240 240 utility transfer the WAPP area States, disaggregated by PHCN 0 0 0 0 0 0 0 0 0 substation, and coordination power utility summarized in centers Exports (MW) the utility CIE 125 140 150 200 200 150 150 70 70 database (MIS) VRA 80 80 80 80 80 80 80 80 80 on a monthly CEB 0 0 0 0 0 0 0 0 0 basis. PHCN 0 0 10 50 70 70 70 70 70 P2- Percent reduction of power losses along the CIE 4% 1% 2% 2% 2% 2% 2% 2% 2% Bi-annual Recorded data Power utility principal transmission VRA 4% 1% 5% 2% 2% 2% 2% 2% 2% (May/Nov) by each power report data to interconnection links among CEB 6% 3% 2% 2% 2% 2% 2% 2% 2% utility transfer the WAPP area WAPP "Zone PHCN 8% 1% 2% 2% 2% 2% 2% 2% 2% substation, and coordination A" Coastal States, summarized in centers disaggregated by power the utility utility database (MIS) on a monthly basis. P3- Percent of the peak power demand met through CIE 0% 0% 0% 0% 0% 0% 0% 0% 0% Annual Power utility Power utility 7.9% 7.2% 6.6% 10.1% 9.8% 6% 3% 1% 1% economy power exchanges VRA 57.5% 60.7% 65.2% 64.8% (Nov.) initial demand report data to 68.4% 69% 69% 70% 70% along CEB 0% 0% 0% 0% 0% 0% 0% 0% 0% figures and the WAPP area the WAPP Coastal PHCN recorded power coordination Transmission Backbone, utilization centers disaggregated by power figures utility Component Indicators Component 1 C1.l Increased quantity o f Recorded data Power utility 12 electricity CIE 125 15 10 50 0 (50) (100) (130) (130) Annual by each power report data to transferred between WAPP VRA 170 0 0 80 0 (100) (120) (150) (150) (Nov.) utility transfer the WAPP area "Zone A" CEB 115 15 20 10 20 20 20 20 20 substation, and coordination 0 0 10 50 70 70 70 70 70 Coastal States, disaggregated PHCN summarized in centers by power utility. the utility database (MIS) (New) C1.2 Quantity of CIE 0 50 100 130 130 on a monthly electricity (MW) delivered VRA 0 50 120 150 150 basis. through completed CEB 0 0 0 0 0 transmission line and PHCN 0 0 0 70 70 substations Recorded data (New) C.1.3 Reduction in by each power Power utility outages due to the CIE Annual utility transfer report data to commissioning of completed VRA 0 0 0 2 2 (Nov.) substation, and the WAPP area transmission line and CEB 0 2 2 3 3 summarized in coordination substations (hours/year) PHCN 0 0 0 3 3 the utility centers 0 0 0 0 0 database (MIS) (New) C1.4 Improvement of VRA on a monthly voltage by the increase of CEB 50 70 basis the reactive power due to the 50 commissioning of the transmission line and substations(MVAR) Component 2 C2.1 Percent reduction in CIE 15 1% 2% 2% 2% 2% 2% 2% 2% Annual Recorded data Power utility the number and VRA 15 1% 5% 5% 5% 4% 4% 2% 2% (Nov.) by each power report data to frequency of power CEB 20 3% 2% 2% 2% 2% 2% 2% 2% utility transfer the WAPP area outages along the PHCN 50 1% 2% 2% 2% 2% 2% 2% 2% substation, and coordination Coastal Transmission summarized in centers Backbone, disaggregated the utility by power utility. database (MIS) on a monthly basis C2.2 Percent reduction in the CIE 2 days 1% 2% 2% 2% 2% 2% 2% 2% Annual Power utility Detection/response time VRA 2 days 1% 5% 5% 5% 4% 4% 2% 2% (Nov.) report data to for operation CEB 4 days 3% 2% 2% 2% 2% 2% 2% 2% the WAPP area problems along the Coastal PHCN 5 days 1% 2% 2% 2% 2% 2% 2% 2% coordination Transmission centers and Backbone, disaggregated WAPP TSOs by power utility. 13 Component 3 C3.1 Deployment of VRA Not in Not in Not in Not Under Under Deployed Deploy Deplo Annual Power utilities Power utility develo developm ed yed emergency preparedness (Akosombo and place place place in pment ent (Nov.) reports to report to WAPP plan for strategic Kpong) place WAPP ICC organization hydropower stations Deployed CEB(Nangbeto Not in Not in Not in Under Under Deploy Deplo ) place place place Not develo developm ed yed in pment ent place Component 4 0% 75% 80% 90% 90% 90% 90% 100% 100% Bi- annual WAPP WAPP C4.1 Power Sector M&E (March, secretariat Organization data of the November) reports ECOWAS member states collected, analyzed, and disseminated. C4.2 Fully implemented WAPP WAPP WAPP Not in Annual WAPP WAPP and well place Organization operational cooperatio (November) secretariat Organization functioning WAPP article of Mitigation n reports Cooperation Agreement agreement and agreement for the Coastal adopted security implemen plan for ted Transmission Backbone. CTB in place . 14 ANNEX 2: Extension of Closing Date AFRICA -- WAPP APL 2 (SECOND PHASE OF THE COASTAL TRANSMISSION BACKBONE) P094917 Credit No. 4214-BEN Restructuring Paper 1. The closing date for the SECOND PHASE OF COASTAL TRANSMISSION BACKBONE (Credit No. 4214-BEN will be extended from December 31, 2010 until June 30, 2013. 2. Substantial efforts have been made in procurement and the SCADA component, which represents 80% of the Credit, is in the final stage of the procurement process. Project objectives continue to be achievable. 3. Procurement delays have accumulated in the implementation of the SCADA/EMS contract. Some components have also been delayed, mainly due to a lack of capacity of the project unit in CEB, which has been now filled by the recruitment of a consultant in charge of the bidding process and implementation monitoring. See Table 2 in the main text for the revised milestones. 4. This will be the first closing date extension of the project. wb10286 / P:\GHANA\WUE\CR4356GH\Other\WAPP-II-DFinal-Rest-Paper-Benin-Dec-20-2010.doc / 12/21/2010 1:14:00 PM 15 16