-
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 67296-AFR
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 93.3 MILLION
(US$144.5 MILLION EQUIVALENT)
TO THE
REPUBLIC OF LIBERIA
FOR A
WEST AFRICAN POWER POOL (WAPP) - COTE D'IVOIRE, LIBERIA, SIERRA
LEONE, AND
GUINEA (CLSG) POWER INTERCONNECTION PROJECT
AND A
PROPOSED GRANT
IN THE AMOUNT OF SDR 20.4 MILLION
(US$31.5 MILLION EQUIVALENT)
TO THE
WEST AFRICAN POWER POOL (WAPP)
FOR A
WAPP INTEGRATION AND TECHNICAL ASSISTANCE PROJECT
IN SUPPORT OF THE FIRST PHASE OF THE CLSG POWER SYSTEM
RE-DEVELOPMENT
SUB-PROGRAM OF THE WAPP APL PROGRAM
May 4, 2012
This document has a restricted distribution and may be used by
recipients only in the performance of their
official duties. Its contents may not otherwise be disclosed
without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective March 31, 2012)
€ 1 = US$ 1.33
SDR 1 = US$ 0.64554
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank
CEB Communauté Electrique du Bénin (Electric Community of
Benin)
CLSG Côte d‟Ivoire, Liberia, Sierra Leone, and Guinea
ECOWAS Economic Community of West African States
EIB European Investment Bank
EEP ECOWAS Energy Protocol
ERERA ECOWAS Regional Electricity Regulatory Authority
ESIA Environmental and Social Impact Assessment
ESMP Environmental and Social Management Plan
FIRR Financial Internal Rate of Return
FMM Financial Management Manual
FNPV Financial net present value
JIC Joint Implementation Committee (see also WAPP JIC below)
HV High voltage
IDA International Development Association
IDC Interest during construction
IPA International Project Agreement
IPP Independent Power Producer
GRIDCO Ghana Grid Company Limited
GWh Giga Watt hours
KfW Kreditanstalt für Wiederaufbau
km Kilometer
kV Kilo Volt
kWh Kilo Watt hours
M&E Monitoring and Evaluation
MW Megawatt
NEPAD New Partnership for African Development
NPA National Power Authority (of Sierra Leone)
NPV Net present value
OMVG Organisation de Mise en Valeur du Fleuve Gambie
(Organization for the
Development of the River Gambia)
OMVS Organisation de Mise en Valeur du Fleuve Sénégal
(Orgnization for the
Development of the River Senegal)
OPGW Optical Fiber Ground Wire
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ii
PPA Power Purchase Agreement
PIPES Planning, Investment Programming and Environmental
Safeguards Department at
the WAPP
RAP Resettlement Action Plan
RIAS Regional Integration Assistance Strategy
RoW Right-of-way
RTC CLSG Regional Transmission Company
SCADA Supervisory Control And Data Acquisition
SIEPAC Sistema de Interconexión Eléctrica de los Países de
América Central or Central
American Electrical Interconnection System
SOGEM Société de Gestion de l‟Energie de Manantali (Energy
Management Company for
Manantali)
SONABEL Société Nationale d‟Electricité de Burkina Faso
(National Power Company of
Burkina Faso)
SPC Special Purpose Company
SWER Single wire earth return system
SWS Shield wire system
TSA Transmission Service Agreement
TSO Transmission System Operator
WAPP West African Power Pool
WAPP JIC West African Power Pool Joint Implementation
Committee
Regional Vice President: Obiageli K. Ezekwesili
Acting Regional Director:
Country Director:
Elizabeth Laura Lule
Yusupha Crookes
Sector Director: Jamal Saghir
Sector Manager: Lucio Monari
Task Team Leader: Fanny Missfeldt-Ringius
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iii
LIBERIA
West African Power Pool (WAPP) - Côte d'Ivoire, Sierra Leone,
Liberia, and Guinea
Power Interconnection Project
WAPP
WAPP Integration and Technical Assistance Project
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT
.................................................................................................1
A. Regional Context
..........................................................................................................
1
B. Sectoral and Institutional Context
.................................................................................
6
C. Higher Level Objectives to which the Project Contributes
.......................................... 8
II. PROJECT DEVELOPMENT OBJECTIVES
................................................................9
A.
PDO...............................................................................................................................
9
B. Project Beneficiaries
....................................................................................................
10
C. PDO Level Results Indicators
......................................................................................
10
III. PROJECT DESCRIPTION
............................................................................................11
A. Project Components
....................................................................................................
11
B. Project Financing
........................................................................................................
15
Lending Instrument
...........................................................................................................
15
Project Cost and Financing
...............................................................................................
15
C. Program Objective and
Phases....................................................................................
17
D. Lessons Learned and Reflected in the Project Design
................................................ 17
IV. IMPLEMENTATION
.....................................................................................................21
A. Institutional and Implementation Arrangements
........................................................ 21
B. Results Monitoring and Evaluation
............................................................................
22
C.
Sustainability...............................................................................................................
23
V. KEY RISKS AND MITIGATION MEASURES
..........................................................24
A. Risk Ratings Summary Table
.....................................................................................
24
B. Overall Risk Rating Explanation
................................................................................
24
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iv
VI. APPRAISAL SUMMARY
..............................................................................................25
A. Economic and Financial Analyses
..............................................................................
25
B. Technical
.....................................................................................................................
27
C. Financial Management
................................................................................................
27
D. Procurement
................................................................................................................
28
E. Environmental and Social Safeguards
........................................................................
28
F. Environmental and Social Issues
.................................................................................
35
Annex 1: Results Framework and Monitoring for the WAPP CLSG
Power Interconnection
Project
...........................................................................................................................................37
Annex 2: Results Framework and Monitoring for the WAPP
Integration and Technical
Assistance Project
........................................................................................................................40
Annex 3: Detailed Project Description
.......................................................................................41
Annex 4: Implementation Arrangements
..................................................................................53
Annex 5 Operational Risk Assessment Framework (ORAF)
..................................................70
Annex 6: Implementation Support Plan
....................................................................................73
Annex 7: Economic and Financial Analysis
..............................................................................78
Annex 8: Trading Potential and Arrangements
......................................................................102
Annex 9: Institutional Structure for the CLSG Interconnector
............................................107
Annex 10: Implementation Status of Projects of the West Africa
Power Pool (WAPP)
Adaptable Lending Program
....................................................................................................115
Annex 11: Environmental and Social Safeguards
..................................................................121
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v
PAD DATA SHEET
Liberia
West African Power Pool (WAPP) - Côte d‟Ivoire, Liberia, Sierra
Leone, and Guinea
Power Interconnection Project
WAPP
WAPP Integration and Technical Assistance Project
PROJECT APPRAISAL DOCUMENT .
Africa
AFTEG
.
Basic Information
Date: May 4, 2012 Sectors: Power (90%); General Energy Sector
(10%)
Country Director: Yusupha Crookes Themes: Infrastructure
services for private sector
Sector
Manager/Director:
Lucio Monari / Jamal Saghir EA Category: A (Full Assessment)
Project ID: P113266
Lending Instrument: Adaptable Program Loan Team Leader(s): Fanny
Missfeldt-Ringius
Joint IFC: No .
Recipient: The Republic of Liberia, The West African Power
Pool
Responsible Agency: The CLSG Regional Transmission Company
Contact: Shahid Mohammed Title: Chief Executive Officer
Telephone No.: +231 880 719963 Email: [email protected]
Responsible Agency: The West African Power Pool (WAPP)
Secretariat
Contact: Amadou Diallo Title: Secretary General
Telephone No.: +229 21 37 71 44 Email: [email protected] .
Project Implementation Period: Start Date: May 31, 2012 End
Date: June 30, 2017
Expected Effectiveness Date: For the WAPP CLSG Project -
December 1, 2012; For the WAPP Integration and Technical Assistance
Project – June
15, 2012
Expected Closing Date: December 31, 2017 .
Project Financing Data(US$M)
[ ] Loan [ X ] Grant Term:
Standard IDA credit terms [X] Credit [ ] Guarantee
For Loans/Credits/Others
Total Project Cost : US$476 million Total Bank Financing : US$
176 million
Total Cofinancing : US$300 million Financing Gap : None .
mailto:[email protected]:[email protected]
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vi
Financing Source Amount(US$M)
BORROWER/RECIPIENT 21
IBRD 0
IDA: New 176
IDA: Recommitted 0
Others, of which AfDB
EIB
KfW
279
133
105
41
Financing Gap 0
Total 476 .
Expected Disbursements (in USD Million)
Fiscal Year FY13 FY14 FY15 FY16 FY17 FY18
Annual 1 20 40 50 60 5
Cumulative 1 21 61 111 171 176 .
Project Development Objective(s)
The Project development objectives of the WAPP CSLG Project are:
(i) to reduce the cost of and increase the electricity supply at
utility level; and (ii) to increase the export capability of Côte
d'Ivoire.
The Project development objective of the WAPP Integration and
Technical Assistance Project is to increase the technical
integration of the WAPP‟s network. .
Components
Component Name Cost (USD Million)
Project 1: WAPP CLSG Power Interconnection 444.4
Component 1.A: Power interconnection between CLSG 327.5
Component 1.B: Institutional framework and project oversight
45.4
Unallocated 71.5
Project 2: WAPP Integration and Technical Assistance Project
31.5
Component 2.A: Supply alternatives studies and project
preparation support 10.0
Component 2.B: Technical assistance and integration of WAPP
interconnected
network
21.5
.
Compliance
Policy
Does the project depart from the CAS in content or in other
significant respects? Yes [ ] No [ X ] .
Does the project require any waivers of Bank policies? Yes [ X]
No [ ]
Have these been approved by Bank management? Yes [X ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [X]
No [ ]
Does the project meet the Regional criteria for readiness for
implementation? Yes [X] No [ ] .
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
Forests OP/BP 4.36 X
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vii
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Special Conditions for Effectiveness for the WAPP CLSG Power
Interconnection Project
Name Justification
(a) The Subsidiary Credit Implementation Agreement has been
executed on behalf of the Recipient and the Regional
Transmission Company in form and substance satisfactory to
the
Association.
The Subsidiary Credit Implementation Agreement is expected to
be
entered into between Liberia and the RTC to pass onto the
Regional
Transmission Company the entire proceeds of the credit for
the
implementation of the Project. This agreement is expected to
include
many of the conditions on the use of credit proceeds that would
normally
be part of a Project Agreement with a Project implementing
entity, and be
the vehicle by which Liberia will collect revenue to repay the
credit.
(b) The execution and delivery of the Treaty on behalf of
each
Participating Country has been duly ratified by all
necessary
governmental action.
The Treaty provides the legal framework under which the entire
Project
will be implemented (including for the Regional Transmission
Company,
which is a creature of this instrument), and its ratification is
necessary to
ensure enforceability of its obligations against each of the
Participating
Countries.
(c) The execution and delivery of the International Project
Agreement, in form and substance satisfactory to the
Association, on behalf of each Participating Country and the
Regional Transmission Company, has been duly ratified or
authorized by all necessary governmental and/or corporate
action.
While the Treaty provides the legal framework for implementation
of the
Project and the establishment of the RTC, the International
Project
Agreement (IPA) provides all of the detailed mechanics for
operationalizing the Treaty‟s obligations and making the RTC
operational.
It is an agreement between the Participating Countries and the
RTC
whereby the Participating Countries grant the RTC the rights
agreed to in
the Treaty and obligate the RTC to implement the Project. For
example,
the IPA provides the RTC the right to the real property rights
needed for
implementation of the Project, the protections it needs in the
event of
action by a Participating Country in contravention of the terms
of the
Treaty, the basic tariff methodology that forms the core of the
company‟s
cost recovery, the obligations of the company with respect to
the organs
set up by the Treaty to monitor its implementation for the
Participating
Countries, the obligation of the Participating Countries (with
which the
Association does not have any direct contractual relationship,
aside from
Liberia) to provide the necessary financing for implementing the
Project,
etc.
(d) The Establishment Agreements have been executed on
behalf of the Participating Countries and the Regional
Transmission Company in form and substance satisfactory to
the
Association.
The Treaty stipulates that the RTC will enter into
Establishment
Agreements with the Participating Countries in which the company
will
establish offices to enable the company to carry out its
obligations under
the IPA. Without such Establishment Agreements in place, it
would be
very difficult, if not impossible, for the RTC to supervise
construction of
the Project.
(e) The Power Purchase Agreement has been executed on behalf
of the Utilities in form and substance satisfactory to the
Association.
At the heart of the sustainability of the Project is the premise
that
Participating Countries will enter into transactions that use
the
transmission line constructed under Part A.1 of the Project.
Although it is
difficult to stipulate specific conditions for these
transactions, at a
minimum, there should be an anchor transaction agreement – a
Power
Purchase Agreement - between one or more of the Utilities and/or
other
generators in the Participating Countries to demonstrate the
viability of
the Project.
-
viii
(f) The Transmission Service Agreement has been executed on
behalf of the Regional Transmission Company and an energy
user in form and substance satisfactory to the Association.
This condition relates to (e) above. As the RTC is expected to
provide
transmission service only, there should be a Transmission
Service
Agreement associated with the Power Purchase Agreement.
(g) Each of the Co-financing Agreements with Liberia has
been
executed and delivered and all conditions precedent to its
effectiveness or to the right of the Recipient to make
withdrawals under it (other than the effectiveness of this
Agreement) have been fulfilled.
The Project is being developed as a regional one with benefits
to all of the
Participating Countries. As IDA is financing only a portion of
the Project,
it is necessary to ensure that funding for Liberia is secured
and available
for Project start-up.
(h) The Regional Transmission Company has been duly created,
established and made operational in the territory of one of
the
Participating Countries, all in form and substance satisfactory
to
the Association. As part of such requirements, there shall be
in
place for the RTC: (i) the paid-in equity contribution pursuant
to
the provisions of the Treaty, including the amount required
on
behalf of each Participating Country to finance the
Resettlement
costs and the Interest During Construction; (ii) the
Shareholders‟
Agreement, in form and substance satisfactory to the
Association, signed and effective; (iii) the RTC Project
Implementation Manual, in form and substance satisfactory to
the Association, adopted; (iv) a financial management
assessment of the RTC completed to the satisfaction of the
Association; (v) the representatives of the RTC‟s
shareholders
and the WAPP and two (2) independent directors appointed to
the RTC‟s Board of Directors; and (vi) its General Manager
and
the key staff recruited, designated and/or appointed, all of
them
under terms of reference and with qualifications and
experience
satisfactory to the Association.
As a practical matter, the RTC needs to be fully constituted
and
operational in order to undertake the various obligations and
activities
expected of it. For example, in order to execute the IPA and
the
Transmission Service Agreement, the company needs to have
officers
appointed and empowered by the Board of Directors to bind the
company.
Accordingly:
(a) The Utilities, as the RTC's shareholders, must enter into
the
contemplated Shareholders Agreement that will govern their
rights and
responsibilities as the RTC's shareholders;
(b) The shareholders must meet to appoint their own Directors to
and
constitute the company‟s Board to allow the company to take
corporate
action in accordance with the terms of its Articles of
Association that is
annexed to the Treaty;
(c) the RTC Project Implementation Manual must be adopted, in
form
and substance satisfactory to the Association, to allow the RTC
to operate
in accordance with transparent principles and procedures
consistent with
the Bank's requirements;
(d) The representatives of the RTC‟s shareholders and the WAPP
and two
(2) independent directors must be appointed to the RTC‟s Board
of
Directors; and
(e) The General Manager (and key staff) of the RTC must be
recruited and
appointed by the Board, and the Board must give the General
Manager the
authority to enter into the various agreements to bind the
company.
In addition, because the financing plan for the RTC contemplates
nominal
equity contributions by the company‟s shareholders ($17 million)
to cover
the costs of implementing the ESMP and interest during
construction, this
equity needs to be made available for the company to carry out
its related
obligations. The Project assumes these costs to be the
responsibility of
the Participating Countries under Component A-5.
Disbursement condition for withdrawal of the Credit proceeds
to finance the construction of the 225kV converter substation in
Yekepa, Liberia: the Côte d‟Ivoire Co-financing Agreement
between Côte d‟Ivoire and the African Development Bank has
been executed and delivered and all conditions precedent to
its
effectiveness or to the right of Côte d‟Ivoire to make
withdrawals thereunder have been fulfilled.
This co-financing is necessary to ensure the Liberia
transmission line
financed by IDA can be operated and import power from Côte
d‟Ivoire.
Special Conditions for Effectiveness for the WAPP Integration
and Technical Assistance Project
WAPP shall have adopted the WAPP Project Implementation
Manual in form and substance satisfactory to the
Association.
The WAPP Project Implementation Manual must be adopted, in form
and
substance satisfactory to the Association, to allow the WAPP to
operate in
accordance with transparent principles and procedures consistent
with the
Bank's requirements.
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ix
Legal Covenants for the WAPP CLSG Power Interconnection
Project
Description Recurrent Due Date Frequency
The Association may suspend disbursements under the Credit
if
the Guinea Financing Agreement and/or the Sierra Leone
Financing Agreements shall have failed to become effective.
No December 31, 2013 Once
The Recipient shall require the Regional Transmission
Company (RTC), except as the Association shall otherwise
agree, to maintain a debt service coverage ratio of at least
1.3
under terms and conditions that have been agreed upon with
the
Association.
Yes Following effectiveness Annually
The Recipient shall cause the RTC to recruit a qualified and
experienced internal auditor and an accounts officer on the
basis
of terms of reference and with qualifications and experience
satisfactory to the Association and to acquire and install
an
accounting information system for the Project.
No 6 months after
effectiveness
Once
The Recipient shall cause the RTC to prepare and furnish to
the
Association as part of the Project Report not later than
forty-five
(45) days after the end of each quarter, interim unaudited
financial reports for the Project covering the quarter, in
form
and substance satisfactory to the Association.
Yes Within 45 days after the
end of the quarter to
which the IFRs relate
Quarterly
The Recipient shall take all action required on its behalf
to
ensure that the Project is implemented in accordance with
the
provisions of the Liberia Environmental and Social Impact
Assessment (Liberia ESIA), the Liberia Environmental and
Social Management Plan (Liberia ESMP), and the Liberia
Resettlement Action Plan (Liberia RAP), all in a manner
satisfactory to the Association.
Yes
Following effectiveness
Ongoing
The Recipient shall cause the RTC to collect, compile and
furnish to the Association reports on the status of
compliance
with the Environmental and Social Impact Assessments
(ESIAs), the Environmental and Social Management Plans
(ESMPs), and the Resettlement Action Plans (RAPs) for the
Participating Countries.
Yes Within a quarter
following effectiveness
Quarterly
The Recipient shall cause the RTC to acquire and install a
suitable accounting information system for the Project.
No 6 (six) months after
effectiveness
Once
The Recipient shall ensure that the RTC employ an operations
and maintenance contractor under terms of reference and with
experience and qualifications satisfactory to the Association.
No Two (2) months before
the expected date of
completion of the
construction under
Component 1.A.1
Once
The Recipient shall require the RTC to carry out the Project
with due diligence and efficiency and in accordance with
sound
technical, economic, energy, financial, managerial,
environmental, and social standards and practices satisfactory
to
the Association, including in accordance with the provisions
of
the ESMPs and the RAPs and pursuant to the RTC Project
Implementation Manual and the Anti-Corruption Guidelines
applicable to recipients of loan proceeds other than the
Recipient.
Yes Following effectiveness Ongoing
The Recipient shall ensure that the RTC conclude with the
WAPP a Control Area Agreement in form and substance
satisfactory to the Association.
No Six (6) months before the
expected date of
completion of the
construction under
Component 1.A.1
Once
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x
The Recipient shall cause the RTC to review with the
Association the mid-term review report and, thereafter, take
all
measures required to ensure the efficient completion of the
Project and the achievement of the objectives thereof.
No On or about January 31,
2015
Once
The Recipient shall exercise its rights and carry out its
obligations under the Subsidiary Credit Implementation
Agreement in such manner as to protect the interests of the
Recipient and the Association and to accomplish the purposes
of
the Credit. Except as the Association shall otherwise agree,
the
Recipient shall not assign, amend, abrogate or waive the
Subsidiary Credit Implementation Agreement or any of its
provisions.
Yes Following effectiveness Ongoing
Not later than six (6) months after the Effective Date: (i) to
set
up an audit committee under terms of reference and with a
composition satisfactory to the Association to follow-up
with
management on any issues raised in the annual audits,
thereby
ensuring they properly addressed; and (ii) to develop an
anti-
fraud and anti-corruption policy satisfactory to the
Association
and set up an anti-fraud and anti-corruption committee under
terms of reference and with a composition satisfactory to
the
Association to handle any fraud and corruption cases
No 6 months after
effectiveness
Once
No withdrawal shall be made for payments made prior to the
date of this Agreement, except that withdrawals up to an
aggregate amount not to exceed SDR 650,000 equivalent may
be made for payments made prior to this date but on or after
April 1, 2012, for Eligible Expenditures under Category
(1)(b).
No Disbursement Condition
Legal Covenants for the WAPP Integration and Technical
Assistance Project
Description Recurrent Due Date Frequency
Schedule 2, Section IV, B.1: No withdrawal shall be made for
payments made prior to the date of this Agreement, except
that
withdrawals up to an aggregate amount not to exceed SDR
1,880,000 equivalent may be made for payments made prior to
this date but on or after June 20, 2011, for Eligible
Expenditures
under Category (1)
No Disbursement Condition
.
Team Composition
Bank Staff
Name Title Specialization Unit
Fanny Missfeldt-Ringius Senior Energy Economist TTL and
Economics AFTEG
Zayra Romo Energy Specialist Engineering AFTEG
Franklin Gbedey Energy Specialist Engineering AFTEG
Issa Diaw Senior Power Engineer Engineering AFTEG
Tjaarda Storm Van Leeuwen Consultant Inst. Framework &
Financial Analysis AFTEG
Arnaud Braud Financial Analyst Financial Analysis AFTEG
Dukjoong Kim Financial Analyst Financial Analysis AFTEG
Marcelino Madrigal Senior Energy Specialist Trading SEGEN
Maria C. Cruz Lead Social Development
Specialist
Social Safeguards AFTCS
Paivi Koskinen-Lewis Social Development
Specialist
Social Safeguards SDV
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xi
Robert Robelus Consultant Environmental Safeguards AFTWR
Allan Rotman Lead Procurement Specialist Procurement AFTPC
Itchi Ayindo Senior Procurement
Specialist
Procurement AFTPC
Mathias Gogohounga Procurement Specialist Procurement AFTPC
Patrick Umah-Teteh Senior Financial
Management Specialist
Financial management AFTFM
Alain Hinkati Financial Management
Specialist
Financial management AFTFM
Maxwell Bruku Dapaah Financial Management
Specialist
Financial management AFTFM
Luis M. Schwarz Senior Finance Officer Disbursement CTRLA
Claudia Pardiñas Ocaña Senior Counsel Law LEGAF
Sameh Mobarek Senior Counsel Law LEGPS
Anthony Molle Senior Counsel Law LEGAF
Anders Jensen M&E Specialist Monitoring and Evaluation
AFTDE
Manuel Berlengiero Energy Specialist Economics AFTEG
Bipulendu Narayan Singh Operations Analyst Economics SEGES
Anta Lo-Loum Language Program Assistant Administrative and
Client Support AFTEG
Non Bank Staff
Name Title Office Phone City
Fiona Woolf Legal Advisor - London .
Locations
Country First Administrative Division Location Planned Actual
Comments
Côte d‟Ivoire Dix-Huit Montagnes Region (Departments of Man and
Danane)
Man to border (Côte d‟Ivoire/Liberia).
Liberia Counties of Nimba, Grand Bassa, Montserrado,
Bomi, and Grand Cape Mount.
Border (Côte
d‟Ivoire/Liberia) and border
(Guinea/Liberia) -
Yekepa – Buchanan – Mount Coffee -
Monrovia – Mano –
border (Liberia/Sierra
Leone).
Sierra Leone Eastern province (Kenema and Kono districts),
Northern province (Bombali, Kambia,
Koinadugu and Tonkolili districts), and Southern province
(Pujehun district).
Border
(Liberia/Sierra
Leone) – Kenema – Bikongor –
Bumbuna – Yiben –
Kamakwie – border (Sierra
Leone/Guinea).
Guinea Administrative regions of Kindia (Madina-Oula
and Sougueta), Labe (Linsan) and Nzerekore
(Nzerekore and Yalenzou).
Border
(Guinea/Liberia) -
Nzérékoré; and border (Sierra
Leone/Guinea) –
Linsan.
.
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1
Liberia West African Power Pool (WAPP) Côte d‟Ivoire, Liberia,
Sierra Leone, and Guinea
Power Interconnection Project
And
WAPP
WAPP Integration and Technical Assistance Project
I. STRATEGIC CONTEXT
A. Regional Context
Regional Overview
1. The 15 member states1 of the Economic Community of West
African States (ECOWAS) occupy some five million square kilometers
and are currently home to about 250 million people.
Half of the present population lives in poverty, with per capita
income barely above US$300 per
year. Despite the region‟s large energy endowment, the per
capita consumption of electricity is
among the lowest in the world with approximately 171 kWh per
capita and year in 2010.
2. Faced with this power system expansion challenge, ECOWAS
Member States have acknowledged that past efforts to achieve
national self-sufficiency in electricity supply have been
uneconomical due to the high cost of establishing power
generation and transmission
infrastructure. They also acknowledge two major shortcomings in
the region at the present time:
(a) low-cost, sizeable, and complex hydro-based power plants and
systems are difficult to
develop in the national context alone, but are key to providing
low-cost electricity in a region
that has among the highest electricity prices in the world, and
(b) the lack of adequate
transmission infrastructure (within and between national power
systems) is a key constraint in
the drive towards greater cooperation in power sector
development.
ECOWAS Vision – West Africa Power Pool
3. To address these challenges ECOWAS has formed and put in
place the West African Power Pool (WAPP) – a cooperative power
pooling mechanism for integrating national power
system operations into a unified regional electricity market –
with the expectation that this
mechanism would, over the medium to long term, assure their
citizens a stable and reliable
electricity supply at affordable cost. To this end, ECOWAS
states adopted an ECOWAS Energy
Policy in 1982 and decided to establish a West African Power
Pool (WAPP) in 1999. To
operationalize this mission, the 29th Summit of the Heads of
State and Governments of the
1 Benin, Burkina Faso, Cape Verde, Côte d‟Ivoire, The Gambia,
Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria,
Senegal, Sierra Leone, and Togo.
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2
ECOWAS Member States adopted the "Articles of Agreement," which
formally set up the
WAPP Secretariat as a "Specialized Institution of ECOWAS."2
4. As a “flagship infrastructure project” of the New Partnership
for African Development (NEPAD),
3 the WAPP directly contributes to the broader ECOWAS agenda to
establish an open,
unified, regional economic space in West Africa. The vision for
WAPP is also embodied in the
ECOWAS Energy Protocol (EEP) – that of creating a "level playing
field" to facilitate the
balanced development of diverse energy resources of the ECOWAS
Member States for their
collective economic benefit, through long-term energy sector
co-operation, unimpeded energy
transit and increasing cross-border electricity trade. To this
end, the WAPP has been helping
countries in the ECOWAS region to develop regional priority
projects. These priority projects
are identified through a regional Masterplan, which is regularly
updated, and subsequently
endorsed in WAPP fora. The Masterplan was most recently updated
in December 2011.
5. In July 2006, the "WAPP Organization" was formally
inaugurated as an all-inclusive organization of (public and
private) electric power utilities based in ECOWAS member
states.
The governance structures of the WAPP organization is
constituted of, (i) the General Assembly,
which comprises representatives of all members and is the
highest decision making body; (ii)
the Executive Board, which consists of six elected members and
the Secretary General and is
responsible for policy, overseeing WAPP operations and planning
for future development; (iii)
the WAPP Organizational Committees, which include the
Engineering and Operations, the
Strategic Planning and the Finance & Human Resources
Committees and are composed of
technical experts of WAPP Membership to provide support and
advice to the Executive Board;
and, (iv) the WAPP Secretariat, which is the administrative
organ headed by the Secretary
General and is responsible for the day-to-day operations of the
WAPP.
6. The Implementation "road map" of the WAPP Infrastructure
Program is based on realizing distinct but mutually reinforcing
infrastructure sub-programs, which when fully
realized will converge into a unified, well functioning regional
power pooling mechanism in
West Africa. The five (5) sub-programs being implemented by WAPP
are the following (see
also Graph 1):
(a) Coastal Transmission Backbone Subprogram (Côte d'Ivoire,
Ghana, Benin/Togo, Nigeria): aims to establish a robust
interconnection link between the
ECOWAS Coastal Member States.
(b) Inter-zonal Transmission Hub Sub-program (Burkina Faso and
Mali via Ghana, OMVS via Mali, Liberia-Sierra Leone-Guinea via Cote
d'Ivoire): aims to
establish more secure, reliable transmission corridors for
transfer of low cost
energy to displace diesel-based sources especially in Burkina
Faso through Ghana
and Côte d‟Ivoire, and OMVS through Mali.
2 ECOWAS/ CEDEAO (2006). 29th Session of the Authority of Heads
of State and Government. Decision A/Dec. 18/01/06
Adopting the Articles of Agreement Relating to the Establishment
and functioning of the West African Power Pool, Niamey, 12
January 2006; and Decision A/Dec.20/01/06 Granting the Status of
a Specialized Institution of ECOWAS to the WAPP
Organization. Niamey, 12 January 2006. 3 NEPAD was established
to implement an integrated socio-economic development framework for
Africa, and was formally
adopted at the 37th Summit of the Organisation for African Unity
in July 2001.
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3
(c) OMVG/OMVS Power System Development Subprogram (The Gambia,
Guinea, Guinea Bissau, Mali, Senegal): aims to interconnect
national systems of
The Gambia, Guinea, Guinea Bissau, Mali, Senegal and secure
access to sources
of low cost energy to be built on the Gambia River, the Senegal
River and the
Konkoure River Basins.
(d) North-core Transmission Sub-program (Nigeria, Niger, Burkina
Faso, Benin): aims to upgrade and extend existing capacity to
transfer low cost energy supply to
Niger, Burkina Faso, and northern Benin and Togo.
(e) Côte d'Ivoire–Liberia-Sierra Leone-Guinea Power System
Re-development Subprogram (Côte d'Ivoire, Liberia, Sierra Leone,
Guinea): aims to interconnect
Côte d'Ivoire, Liberia, Sierra Leone, and Guinea into the WAPP
Energy System
and to develop the hydropower resources in the sub-region.
Figure 1: Implementation Roadmap of the Core WAPP Programs
Interconnecting Côte d’Ivoire, Liberia, Sierra Leone and
Guinea
7. In early 2012, Liberia and Sierra Leone are still recovering
from the civil wars that have devastated large parts of both
countries, and – in the case of Liberia – led to the complete
destruction of it public power system. Guinea is also only
stabilizing after getting to the brink of
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4
civil war in 2010. Cote d‟Ivoire‟s situation only normalized in
2011. Both the power systems in
Sierra Leone and Guinea are marked by heavy investment needs.
Electricity connection rates are
among the lowest in the world and the cost of generating power
in these countries remains high,
primarily due to the small size of the power systems and the
reliance on fossil fuel-based
generation. The unavailability of public power supply and high
costs of power generation are
recognized to be one of the major impediments to economic
recovery and poverty reduction in
Liberia, Sierra Leone, and Guinea.
8. Liberia is only slowly rebuilding its power utility Liberia
Electricity Corporation (LEC) that had ceased operating during the
civil war, and in early 2012 has about 5000 customer. In
Guinea‟s forest region, no grid-provided power is available. The
national power utility,
Electricité de Guinea (EdG), has been unable to restore service
in the forest region since the end
of the war in the area and there is still heavy load shedding in
areas served by EDG. In Sierra-
Leone, public electricity services are currently only available
in selected parts of Sierra Leone
for about 25 percent of the time only. The operations of the two
utilities, the National Power
Authority (NPA) and the Bo Kenema Power Service Ltd, have been
stagnant since the civil war.
9. However, the efforts that are underway in Liberia, Sierra
Leone, and Guinea should both improve the current performance of
the of the energy sectors and broaden the electricity access
rates. In Liberia, a management contractor, Manitoba Hydro
International, has been in place
since July 2011. Since the contractor‟s arrival, both the
technical and financial performance of
LEC has improved, and the number of customers has more than
doubled. In addition, an
investment package in the amount of US$50 million has been made
available by the World
Bank, GPOBA, the Government of Norway, and USAID to support the
expansion of customer
connections to 33,000 by 2015.
10. In Sierra Leone, the new electricity law ratified in early
2012 should lead to greater financial accountability of the energy
sector. In addition, a World Bank financed energy project
is expected to reach financial closure in early 2013. The
proposed project should significantly
improve the distribution network and increase customer
connections of Sierra Leone‟s power
utility, the National Power Authority (NPA). In Guinea, the
Government endorsed a new sector
strategy in February 2012. With ongoing support from AfDB and
new support planned by the
World Bank, the performance of the power sector is also put on
target to improve.
11. Nevertheless, the energy sectors of Liberia, Sierra Leone,
and Guinea in their own right are too small to be able to lower the
cost of electricity to levels that are internationally
competitive. By interconnecting these small systems, however,
this structural challenge can be
overcome.
12. In recognition of these benefits and following the return to
peace in Liberia and Sierra Leone, the 2005 WAPP Master Plan
already retained the interconnections between Man (Côte
d‟Ivoire) – Monrovia (Liberia) and Conakry (Guinea) – Bumbuna
(Sierra Leone) on the priority
list of projects. In 2006, the WAPP undertook a detailed review
of the power systems in Liberia,
Sierra Leone, and Guinea, which led to the drafting of the
“Concept for Liberia, Sierra Leone,
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5
Guinea Power System.”4 Under this review, these individual
projects were aggregated into a
single transmission line project to interconnect Côte d‟Ivoire,
Liberia, Sierra Leone, and Guinea,
and to develop the systems of these three countries as a single
network and within one sub-
program. The wider WAPP LSG concept seeks the following
outcomes:
Provide residents of the greater Monrovia area in Liberia; Bo,
Kenema and Western Areas in Sierra-Leone; and, the Forest Region of
Guinea, with improvements in power
supplies in the short term.
Pursue a regional infrastructure developmental approach that
will provide over the medium to long term adequate electricity to
the people in a more efficient and cost
effective way, boosting economic and social development.
Establish a regional regulatory framework for the sector that is
conducive to the participation of private/strategic partners in the
development of the power sector. The
participation of the private sector and strategic partners is
critical to obtaining the
required capital investment and effective management for the
electricity sector. This will
also enable Government to concentrate on other social needs;
and
Ensure the technical capacity, management competence and the
financial viability of the institutions of the electricity
sub-sector for the sustainable provision of services and
specifically, the viability of those agencies that are
responsible for operating an open
access transmission network and associated support services that
enable competitive
delivery of power to consumers.
13. The project will contribute to economic recovery and poverty
reduction through improved access to essential power supplies in
the LSG area. This will be accomplished through
the re-construction of essential infrastructure and
strengthening of institutional capabilities to
plan, procure, operate, maintain and sustainably manage these
services. It will provide support
for targeted critical investments with the aim of developing the
most economic power resources
in the LSG area and making services available from a regional
power system that overcomes the
structural inefficiencies presented by the small sizes of the
individual economies. The realization
of the CLSG Power Network will also interlink the WAPP Coastal
Transmission Backbone and
the OMVG/OMVS Power System. The proposed CLSG Power Network
project was confirmed
as one of the high priority projects in the revised WAPP Master
Plan (2011).
14. The regional context of the program will have a
transformational impact in the national power systems by building
its own backbone transmission line. While the CLSG
interconnector transmission line represents the initial stage
for enabling energy trade in the
region, the project will also transform the domestic power
systems by building the backbone
transmission lines in Liberia and Sierra Leone at the time when
both domestic generation and
distribution infrastructure are limited in these countries. The
small size of the power sector
prevents economies of scale, making it difficult for governments
to afford and operate large
infrastructure investments while the nascent national systems
emerge from emergency response
mode. In turn, the combined regional and domestic impacts will
support the transition to
4 Arthur Energy Advisors (2006). Concept for LSG Power System
covering Liberia, Sierra Leone, and Guinea.
Commissioned by the WAPP Secretariat.
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6
normally functioning power utilities in these countries with
lower cost, more sustainable
generation and more effective means to control and optimize
system expansion and operations.
15. Grid connection of mining sites would allow a number of
alternative power supply models to be developed. The CLSG countries
are endowed with vast areas of world class iron
ore deposits that once developed could represent a major demand
on the CLSG line. Once the
CLSG Regional Transmission Company (RTC) is established and the
CLSG line constructed, the
cost of extending the transmission grid to connect the major
mining sites would be low. Indeed
the CLSG line goes closely past the most significant mining
areas and the potential amount
traded by the mining companies is high. If mining demand were
interconnected to the grid,
different supply arrangements could be developed that would
allow the energy supply surplus
from mining to be sold to the grid (either bilateral or to the
utilities) or allow the development of
large supply generation plan to meet the mining demand while
using the CLSG line. Taking into
consideration the impact of the mining demand on the design of
the line, a two phase
construction approach was adopted. The line is expected to be
upgraded by 2020 with the second
circuit equipped (i.e. an additional capacity of 145 MW) to
accommodate higher demand.
16. In recognition of the benefits that this project will bring
to the CLSG countries, it was singled out by the G20 as a priority
project at the 2011 Cannes meetings.
World Bank Support of the WAPP
17. On June 30, 2005, the World Bank's Executive Board of
Directors endorsed the application of the adaptable program lending
(APL) instrument, within the framework of the
World Bank's Regional Integration Assistance Strategy (RIAS) for
West Africa, as the vehicle
for providing IDA credit support to the WAPP initiative. The
Bank earmarked US$350 million
in IDA resources under the IDA Regional Pilot Program to put in
place a multi-year
programmatic framework to help close the financing gap and
thereby ensure timely
implementation of priority WAPP investments and technical
assistance activities of the Revised
WAPP Master Plan.
18. The APL instrument provides the framework for the IDA credit
support to the original set of WAPP priority projects. It is a
useful and relevant tool, as it reinforces policies through
dedicated policy triggers, such as country commitments and
ratification of the ECOWAS Energy
Protocol. The APL original umbrella envelope of US$350 million
has been depleted.
19. Future WAPP priority projects that are being considered for
World Bank financing include the Mount Coffee Hydropower Plant
Rehabilitation in Liberia, the Adjarala Hydropower
Plant between Benin and Togo, and the Gouina Hydropower Plant in
Mali. Annex 10 provides
an overview of the implementation status of projects of the WAPP
APL program.
B. Sectoral and Institutional Context
20. The Heads of State of Côte d‟Ivoire, Liberia, Sierra Leone,
and Guinea (CLSG) project have entrusted the preparation of the
CLSG power interconnection project to the WAPP
Secretariat. The Energy Ministers then established the WAPP
Joint Implementation Committee
(JIC), which gathers representatives from all four countries‟
ministries in charge of energy and
the power utilities. Following the adoption of the WAPP Cote
d‟Ivoire Liberia-Sierra Leone-
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7
Guinea (LSG) sub-program and the setting up of the WAPP JIC in
2007, the four countries have
jointly pursued the preparation of this project, which has been
considered a high priority project
for the sub-region. Once constructed, it will constitute the
first interconnection of power systems
ever among these four countries.
21. The WAPP JIC has overseen the preparation of the project‟s
feasibility study, the Environmental and Social Impact Analyses
(ESIAs), and the institutional studies that have
defined the institutional framework for the project. They have
endorsed final reports and studies,
as well as concepts for moving forward.
22. In 2008, the ECOWAS Heads of State endorsed the
establishment of “Special Purpose Companies” (SPC) as a major
vehicle for the implementation of WAPP regional priority
projects. A few examples of such SPCs exist in the ECOWAS
region. These include SOGEM,
which runs the Manantali (and soon also the Felou) hydropower
plants in Mali, which are jointly
owned by Mauritania, Senegal and Mali. This also includes the
CEB, which owns and operates
key generation plant and transmission lines for the Governments
of Benin and Togo. The
experience of these SPCs in the ECOWAS region has been mixed,
and the WAPP JIC is aiming
to take the lessons learned from these experiences to setting up
a better structured SPC for the
WAPP CLSG project (see below discussion in the lessons learned
section).
23. After the technical and safeguard studies were well
underway, the WAPP JIC began to tackle the setting up of the SPC
(CLSG Regional Transmission Company or “RTC”) in 2011. In
a first instance, the WAPP JIC adopted in Guinea in June 2011 an
interim institutional
mechanism, the Project Implementation Unit (PIU), which would
initially be located with the
WAPP Secretariat, and then will be strengthened and transferred
to the RTC, once the later is
established. At the WAPP, the PIU is to have a “light”
structure. Once the RTC is established,
and presumably construction of the line has begun, the PIU would
be reinforced and merged into
the RTC to ensure the construction can properly supervised. The
PIU would not only be directly
responsible for the management of the Contractor(s) of the line,
but also for the management of
the Owner‟s Engineer, who in turn will directly oversee the
Contractors‟ work.
24. In 2011-2012, the WAPP and JIC began developing the legal
framework for implementation of the CLSG Transmission Line. As
discussed in more details in Annex 9, this
structure is primarily based on creating a RTC by treaty among
the States to design, construct,
own, operate, maintain, and develop the line. The RTC, a
supranational entity with commercial
character, would be set up based on articles of association
annexed to the treaty that provide for
the entity's governance structure. An international project
agreement (IPA) implements the
provisions of the treaty by agreement among the CLSG states and
this RTC.
25. The IPA provides for the countries' obligations towards the
RTC and gives the RTC the mandate to implement the CLSG
Transmission Line. The RTC's shareholding will be divided in
equal shares among the national utilities designated for the
role by the States and subject to a
shareholders' agreement that governs the utilities' respective
rights and responsibilities. Users of
the CLSG transmission line are expected to enter into power
purchase agreements for the sale
and purchase of power, and use the line to move the power
pursuant to a transmission service
agreement with the RTC. The ownership structure of the RTC is
illustrated in the graph below.
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8
26. On 5 and 18 March 2012 the draft treaty was initialed by the
Ministers of Energy of the CLSG states. By the end of April 2012
the outstanding legal documents are to be finalized, and
the Heads of State are expected to sign the treaty by the end of
May 2012. The treaty is expected
to be ratified by the CLSG parliaments by early September 2012.
The RTC is expected to be
fully staffed by end 2012.
Figure 2: Ownership Structure of the CLSG Regional Transmission
Company
C. Higher Level Objectives to which the Project Contributes
27. The project is aligned with the goals and strategies of
relevant regional and sub-regional organizations—namely, NEPAD,
ECOWAS and the WAPP Organization. The
WAPP is part of NEPAD‟s development strategy toward regional
integration of electricity
networks. As a result of this strategy, the WAPP aims to create
an open, unified regional
economic space through the integration of markets for
infrastructure services. The WAPP‟s
regional infrastructure development program for ECOWAS states
fully aligned with the goals of
NEPAD. It provides the power utilities of the region with a
vehicle to achieve the vision
embodied in the ECOWAS Energy Protocol –that of creating a
“level playing field” to facilitate
the balanced development of diverse energy resources of the
ECOWAS Member States for their
collective economic benefit, through long-term energy sector
cooperation, unimpeded energy
transit and increasing cross-border electricity trade. The CLSG
countries have shown their
commitment to the project by endorsing the updated WAPP Master
Plan (2011) that identifies
the proposed project as a priority project for the
sub-region.
CLSG Regional Transmission Companya supranational entity with a
commercial character
Énergies de Côte d'Ivoire
(CI-Energies)
Liberia Electricity Corporation
National Power Authority
Electricité de Guinée
S H A R E H O L D E R S
SHAREHOLDERSAGREEMENT
CLSG TREATY
ARTICLES OF ASSOCIATION
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9
28. The Project is consistent with the criteria of engagement
and selectivity set out in key assistance strategies. These include
the World Bank‟s Regional Integration Assistance
Strategy (RIAS),5 which under its Pillar 1 recognizes the need
for improving access to clean
energy and improving supply reliability. The Program also meets
the three key criteria for
regional projects: (a) involvement of more than two countries
(b) economic benefits that will
accrue to several countries, and (c) evidence of regional
ownership and commitment of the
participating countries and provision of a platform for policy
harmonization in power sector
development.
29. The Project will reduce greenhouse gas emissions. The
interconnection results in reduced use of hydrocarbon fuels in the
four countries and helps avoid more than 5.6 million
tons of carbon over the lifetime of the project in comparison to
the “without” project scenario.
Assuming a damage cost value of US$20 per ton, overall gains
from avoided carbon emissions
can be valued at US$62.5 million in net present value (NPV)
terms.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
30. The Project development objectives of the WAPP CSLG Project
are: (i) to reduce the cost of and increase the electricity supply
at utility level; and (ii) to increase the export capability
of Côte d'Ivoire.
31. The Project development objective of the WAPP Integration
and Technical Assistance Project is to increase the technical
integration of the WAPP network.
32. While all CLSG countries will benefit of reduced costs and
increased electricity supply over the lifetime of the investment of
the CLSG transmission line, the impact of the CLSG
project over the five-year lifetime of the present project is
more differentiated as follows: (i)
Liberia and Sierra Leone are expected to exhibit reduced costs
of electricity supply at the utility
level; and (ii) Liberia, Sierra Leone, and Guinea are expected
to experience an increase of
electricity supply at the utility level.
33. The WAPP CLSG project will increase Côte d'Ivoire's capacity
of exporting electricity by interconnecting Côte d'Ivoire with
Liberia, and through Liberia with Sierra Leone and Guinea
as well. Export could initially come both from Côte d'Ivoire and
Ghana. The increased revenue
stream from exports to Côte d'Ivoire's power sector would be a
combination of revenue of sale of
electricity and transmission wheeling charges. In the medium
term, the project would also help
unlock Guinea‟s large hydropower potential. It is estimated that
with the Project Guinea would
add about 2,800 MW of hydropower capacity and generate an
additional 133,400 GWh over the
period of 2012-2030. Without the project, there would be lower
demand for hydropower from
Guinea, and only 1,600 MW of Guinea‟s potential would be
developed generating about 67,500
GWh over the same period.
5 Regional Integration Assistance Strategy, IDA and IBRD, April
2008.
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10
34. For the WAPP Integration and Technical Assistance Project,
increasing the technical integration of the WAPP network means
enhancing the synchronization of the WAPP
transmission network by installing equipment to enhance such
trades and to provide technical
assistance to the WAPP to ensure better operation of
networks.
B. Project Beneficiaries
35. The WAPP CLSG Power Interconnection Project. The project
beneficiaries are the existing and future customers of the power
utilities in Côte d‟Ivoire, Liberia, Sierra Leone, and
Guinea, who will be provided with more and lower cost power.
This cost reduction will help
make electricity more affordable for households and along with
greater security of supply, will
improve the competitive edge of firms in Liberia, Sierra Leone
and Guinea to create jobs and
spur economic growth. At the end of the project‟s life, a total
addition of 5.2 million people is
expected to benefit from the electricity provided through the
line, of which 2.6 million are
women. Both men and women are expected to benefit equitably from
the proposed project.
36. In Côte d‟Ivoire, revenues from electricity exports will
help the newly created Énergies de Côte d'Ivoire (CI-Energies) to
increase its income substantially.
37. The WAPP Integration and Technical Assistance Project. The
direct beneficiaries of this project are the power utilities in the
ECOWAS region, which will benefit from more
efficient electricity trades, in turn rendering their own
operation more efficient.
C. PDO Level Results Indicators
38. The key PDO Level Results Indicators for the WAPP CLSG Power
Interconnection Project are the following:
Annual electricity supply from CLSG imports at utility level
(GWh) disaggregated by Liberia, Sierra Leone, and Guinea.
Annual weighted cost of electricity supply at power utility
level in Liberia and Sierra Leone (USD/kWh).
Cote d‟Ivoire export capability to CLSG countries (MW).
Direct project beneficiaries (number), of which female (%).
39. The key PDO Level Results Indicators for the WAPP
Integration and Technical Assistance Project are the following:
WAPP Master Plan Priority projects prepared to financial closure
(number).
Ratio of annual total hours of synchronization of WAPP Zone A
against total hours in a year within TCN-CEB-GRIDCO interconnection
(%)
40. Annex 1 presents the detailed results framework for project
1, and Annex 2 provides the detailed results framework for project
2.
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11
III. PROJECT DESCRIPTION
A. Project Components
41. Two Projects are presented under this phase of the Program,
each of them being implemented independently. The first project is
dedicated to the implementation of the WAPP
CLSG Power Interconnection, while the second project is
dedicated to the implementation of the
supply and technical integration of the WAPP network. Total
costs are respectively US$444
million and US$31.5 million (project 1 includes US$71 million
for physical and price
contingencies). The overall cost is therefore US$476 million
(excluding duties and taxes), of
which IDA is financing US$176 million. A detailed project
description is presented in Annex 3.
The WAPP CLSG Power Interconnection Project
Component 1.A: Power interconnection between Côte d’Ivoire,
Liberia, Sierra Leone, and
Guinea (US$321.9 million, of which IDA US$84.8 million, AfDB
US$106.9 million, EIB
US$82.9 million, KfW US$37.0 million, CLSG Governments US$10.1
million)
42. Under this component, the infrastructure of the 1,349 km
transmission interconnection between Côte d‟Ivoire, Liberia, Sierra
Leone, and Guinea is being financed. The component will
be implemented by the CLSG Regional Transmission Company (RTC),
and it will be co-
financed by AfDB, EIB, KfW, and IDA. The co-financing structure
is based on parallel
financing. A coordinated procurement strategy for the
structuring of the bidding process and
bidding documents has been adopted.
Sub-Component 1.A-1: Transmission and Distribution
Interconnection
43. This component will finance the construction of 1,349 km of
225kV double circuit overhead transmission line interconnecting
Côte d‟Ivoire, Liberia, Sierra Leone and Guinea. The
line will have a transmission capacity of 290 MW once completed
(see detailed explanation in
Annex 3). This component is estimated to cost about US$193
million excluding contingencies,
taxes and duties. The line will be co-financed by AfDB, EIB, and
IDA.
44. The IDA credit will finance the sections of this
transmission line within Liberia, from Yekepa, to Buchanan, and
onwards to Mount Coffee up to the border with Sierra Leone in
Mano.
The IDA credit will also finance the construction of two lines
totaling a total length of 50 km of
66kV overhead distribution lines in Liberia from Mount Coffee to
Monrovia. The agreed
financing plan foresees for the remaining co-financiers6 the
following breakdown: (i) the EIB
will finance the transmission line between Yiben (Sierra Leone)
to the border between Sierra
Leone and Liberia; (ii) the AfDB will finance the remaining
transmission lines as follows: from
Linsan (Guinea) to Yiben (Sierra Leone), from Nzérékoré (Guinea)
to Yekepa (Liberia), and
from Yekepa (Liberia) to Man (Côte d‟Ivoire).
45. To ensure the sizing of the transmission line responds to
the actual needs on the ground and to reduce the initial investment
costs, a two-stage implementation of the proposed
6 Co-financiers include all multilateral and bilateral
institutions involved in the project (AFDB, EIB, KfW, and WB).
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12
component has been adopted. The CLSG interconnection
transmission line will be built as a 225
kV double circuit line with one circuit equipped and with a
capacity of 145 MW. The
transmission towers will be built to support a double circuit
line. Under phase 2 the line will be
upgraded to include the second circuit, with a total
transmission capacity of 290 MW. The
second phase is expected to be undertaken about 3 years after
operation of the line is initiated,
when the load on the line is expected to increase. The financing
for this second circuit is not part
of the present project.
46. The transmission line has a provision of Optical Fiber
Ground Wire (OPGW) in Sub-Component 1-A-1. As per the normal
international practice for OPGW, supply, installation, and
commissioning will be part of electricity wire tender. The AfDB
is considering exploring the
feasibility of using the line for purposes of telecommunications
as part of its financing, which
could add to the revenue of the line.
Sub-Component 1.A-2: Substations
47. This sub-component will finance the construction of 11 225kV
substations in Yekepa, Buchanan, Mount Coffee and Mano in Liberia;
in Kenema, Benkongor, Bumbuna, Yiben, and
Kamakwie in Sierra Leone; and in Linsan and Nzérékoré in Guinea.
Additionally, this
component will provide financing to the required compensation
system. The feasibility study
identified that compensation equipment would need to be
installed in the substations of Mount
Coffee (Liberia), Bumbuna (Sierra Leone), Linsan (Guinea), and
Man (Côte d‟Ivoire). The
Owner‟s Engineer will verify the location of the compensation
equipment as part of his
assignment.
48. The financing plan for the construction of the 11
substations, compensation system and reinforcement of specific
substations has been confirmed as follows: (i) the World Bank
will
finance Yekepa sub-station in Liberia; (ii) KfW will finance
Mano, Monrovia, and Buchanan
substation in Liberia; (iii) EIB will finance Bikongor, Kenema,
and Bumbuna Substations in
Sierra Leone; and (iv) AfDB will finance Linsan and Nzérékoré
sub stations in Guinea,
Kamakwie and Yiben substations in Sierra Leone, and Man
substation in Côte d‟Ivoire.
Sub-Component 1.A-3: Supervisory Control and Data Acquisition
(SCADA)
49. This sub-component will finance the procurement and
installation of the supervisory control and data acquisition
(SCADA) system that will monitor and control the interconnected
transmission line in the four countries to ensure proper
exchange of power and operating control
of the system. The estimated cost of the SCADA is US$6.4 million
and will be financed by
AfDB. The finances will go towards the financing of a new
control center in Guinea, and
towards the upgrading of the capabilities of the SCADA system
and control center in Côte
d‟Ivoire so that it can accommodate operation of the WAPP CLSG
transmission line.
Sub-Component 1.A-4: Installation and Supply of Compensation and
Frequency Regulation
Equipment
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50. This sub-component will finance measures to enhance
compensation and frequency control along the CLSG transmission
line, which are to be determined by the Owner‟s Engineer
at a time closer to commissioning of the transmission line. This
would include measures to
minimize reactive power and enhance frequency control in transit
situations. This sub-
component is financed by IDA.
Sub-Component 1.A-5: Implementation of the Environmental and
Social Management Plans
(ESMPs) and Resettlement Action Plans
51. The cost of implementation of the Environmental and Social
Management Plans (ESMPs) (which includes the cost of the
Resettlement Action Plans or RAPs) in the amount of
US$ 10.1 million will be covered by the respective Governments
as part of their counterpart
financing. The costs of the implementation of the environmental
mitigation measures under the
ESMPs will be almost entirely included in the contractor
contract, while the costs of the social
mitigation measures will be directly born by the CLSG
Governments. The measures to be
adopted in relation to the ESMPs are discussed in the section
pertaining to safeguards further
below as well as in Annexes 4 and 11.
Component 1.B: Institutional framework and project oversight
(US$45.4 million, of which
IDA US$45.0 million, AfDB US$0.4 million)
52. Under this component key institutional features of the
project will be supported and developed that will ensure the sound
implementation of the WAPP CLSG transmission
interconnector. The component will be implemented or
administered by the Regional
Transmission Company (RTC) and it will be financed by IDA and
EIB.
Sub-Component 1.B-1. Establishment of the Regional Transmission
Company
53. This sub-component will cover the operating costs of the RTC
during the construction of the line. It will cover support for the
development of the institutional framework of the RTC, the
setting-up of the RTC, including setting up of systems such as
procurement and financial
management systems and recruitment of staff, and the operational
costs during the construction
phase of the CLSG power interconnection. The AfDB will finance
part of the auditing costs.
Sub-Component 1.B-2. Implementation support through the Owner’s
Engineer
54. The proposed project will finance an Owner‟s Engineer to
assist the RTC with (i) overall project management and supervision
of the procurement, design, construction and preparation
for operation and maintenance of the complete investment,
including the full transmission line,
construction and upgrade of substations; (ii) supervision and
monitoring of the implementation
of the Environmental and Social Management Plans (ESMPs) and the
Resettlement Action Plans
(RAPs), based on an agreed monitoring plan; (iii) the carrying
out of a compensation and
frequency regulation studies and measures, to re-evaluate the
compensation requirements for the
line, including reactive power and frequency control in transit
situations, and further dimension
the scope and the scale of compensation and frequency regulation
required; and (iv) the carrying
out of the audits of the Regional Transmission Company.
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14
55. The pre-award (pre-construction) activities for the Owner‟s
Engineer will be financed by the EU-Africa Infrastructure Trust
Fund through the European Investment Bank (EIB) under a
single contract and will be lump-sum. Funding for post award
(construction) activities of the
Owner‟s Engineer will be provided by IDA under a separate single
contract. This contract will be
time-based. As agreed with the EIB, the overall assignment for
the Owner‟s Engineer will be bid
out as a single procurement, and World Bank procurement rules
will be used. Moreover, the
World Bank will provide no objections to the client during the
recruitment process. Only if the
Owner‟s Engineer is performing well under the first phase will
the firm‟s contract for the second
phase be signed. This type of contracting is standard best
practice for Owner‟s Engineer‟s
contracts.
The WAPP Integration and Technical Assistance Project
Component 2.A: Supply Alternatives Studies and Project
Preparation Support (US$10 million,
all of which financed by IDA)
56. Under this component a key studies will be conducted to
ensure that in the medium to long-term the generation capacity
along the line will be developed in a timely manner and in
accordance with least cost principles. More specifically,
technical assistance will be provided for
preparatory institutional, legal, pre-feasibility/feasibility,
and environmental and social impact
assessment studies for the CLSG transmission line and potential
hydropower plant candidates
along the transmission line. The potential hydropower plant
candidates may include (i) Bikongor
hydropower plant (Sierra Leone); (i) Kassa B hydropower plant
(Guinea); and (iii) Souapiti
hydropower plant. These project sites have been identified as
part of the least cost expansion
plan along the WAPP CLSG interconnection through the updated
WAPP Masterplan (2011).
This component will be implemented by the WAPP Secretariat, and
it will be financed by IDA.
In addition, this component will support project preparation,
including the WAPP CLSG JIC,
through studies and support of decision meetings, training,
staffing and outfitting of a Project
Implementation Unit (PIU).
Component 2.B: Technical Assistance and Integration of WAPP
network (US$21.5 million,
all of which financed by IDA)
57. This component financed by IDA proposes to support the
integration of WAPP networks and to provide technical
assistance.
Sub-Component 2.B-1: Technical Integration of WAPP Network
58. The establishment of a sub-regional market for electricity
is conditioned by the interconnection and synchronous operation of
transmission networks. Frequency and load/supply
control is one of the challenges of a synchronous
interconnection. The proposed synchronization
component will address this issue, thereby reducing supply costs
and increasing supply volume
in the WAPP. The WAPP will implement this component in at least
five power utilities in the
ECOWAS region. An updated feasibility study will determine the
equipment needs. Then a
single contractor will install the equipment. WAPP will retain
ownership of this equipment and
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lease it on a „gratis‟ basis to the power utilities subject to
them adequately undertaking the O&M
of the equipment.
Sub-Component B-2: Strengthening of the WAPP
59. This sub-component aims to speed up WAPP project
implementation by strengthening the Planning, Investment
Programming and Environmental Safeguards (PIPES) Department and
for the Information and Coordination Center and build capacity.
Technical assistance will also
include supporting the certification process of network
operators and will assist the development
of standardized market operating rules for the WAPP zone.
60. The project costs (see further below) also include provision
for an unallocated amount, which reflects both physical and price
contingencies for the project.
B. Project Financing
Lending Instrument
61. The proposed lending instrument is an Adaptable Program
Lending (APL). This project is a natural continuation of the
previous West African Power Pool (WAPP) Adaptable Program
Lending (APL) that was developed in 2006 as part of the World
Bank‟s support to the regional
program of the WAPP. It is a horizontal APL4, which covers the
sub-region of the CSLG
countries and connect previously not yet interconnected
countries in the sub-region. It is also the
first phase of a vertical APL. Phase 2 of the APL 4 is expected
to be the Mount Coffee
Hydropower Plant, which is a regional hydropower resource
located in Liberia along the CLSG
Power Interconnection. Principles for advancing to the next
phase of an APL within the
geographical area that delineates the APL‟s (for example APL 4
covers the CLSG countries), are
(i) the readiness of the subsequent project; (ii) the level of
advancement of the preceding phases
within the geographical area; and (iii) the adherence to WAPP
principles, such as the ECOWAS
Energy Protocol (EEP).
Project Cost and Financing
62. The table below presents a summary of the project costs in
thousand US$ and the percentage contribution of IDA financing per
component. Annex 3 includes a more detailed cost
breakdown by component. The co-financiers for this project are
AfDB, EIB, and KfW. The
Governments will also contribute to the project.
Table 1: Project Cost and Financing
Project Components Project Cost
(US$ thousand)
IDA Financing
(US$ thousand)
% Financing
Project 1
Component 1.A: Power interconnection
between Côte d‟Ivoire, Liberia, Sierra Leone,
and Guinea.
321,948
8
84,800
26%
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Component 1.B: Support for the institutional
framework and project oversight.
Project 2
Component 2.A: Supply Alternatives Studies
and Project Preparation Support.
Component 2.B: Technical Assistance and
Integration of WAPP Network.
Total Baseline Costs
Physical and Price Contingencies
45,420
10,000
21,500
398,867
77,018
45,070
10,000
21,500
161,370
14,630
99%
100%
100%
40%
19%
Total Project Costs 475,885 176,000 37%
63. The table below gives a more detailed breakdown of the
project costs and the financing by respective co-financier.
Table 2: Breakdown of Project Costs and Financing
64. Indicative terms for the financing are shown in the table
below:
Table 3: Indicative terms of Financing
Lender Amount
(US$ 000)
Tenor
(Years)
Grace Period
(Years)
Interest
Rate
Service
Charge
On-lending
Term
EIB 105,180 18 5 1.4% 2 Mil
Euro Same as
Gov.
AfDB(Loan) 28,831 50 10 0.75% 0% Same as
Gov.
AfDB EIB KfW WB Governments Total
[kUS$] [kUS$] [kUS$] [kUS$] [kUS$] [kUS$]
Component 1.A
Power interconnection between Côte
d‘Ivoire, Liberia, Sierra Leone, and Guinea 106,986 82,951
37,067 84,800 10,143 321,948
1-A-1 Transmission Interconnection 58,793 60,748 0 73,200 0
192,740
1-A-2 Substations 41,773 22,204 37,067 10,100 0 111,144
1-A-3 SCADA 6,420 0 0 0 0 6,420
1-A-4 Compensation and frequency control measures 0 0 0 1500 0
1,500
1-A-5 Implementation of the ESMPs and RAPs 0 0 0 0 10,143
10,143
Component 1.B
Institutional framework and project
oversight 350 - - 45,070 - 45,420
1-B-1
Establishment of the Regional Transmission
Company 350 0 0 19,170 019,520
1-B-2 Owner's Engineer 0 0 0 25,900 0 25,900
25,758 22,228 3,707 14,630 10,695 77,018
133,094 105,180 40,774 144,500 20,837 444,385
Component 2.A Studies and Project Preparation Support 0 0 0
10,000 0 10,000
Component 2.B
Technical Assistance and Integration of
WAPP Network 0 0 0 21,500 0 21,500
2-B-1 Technical Integration of WAPP Network 0 0 0 18,000 0
18,000
2-B-2 Technical Assistance to WAPP 0 0 0 3,500 0 3,500
0 0 0 31,500 0 31,500
133,094 105,180 40,774 176,000 20,837 475,885
Note: The project financing costs include 10% of phys ica l
contingencies and 4.5% of price contingencIes for the World Bank
financed parts .
Component Activity
WAPP CLSG Power Interconnection Project
WAPP Integration and Technical Assistance Project
Total Costs WAPP Int. and Tech. Assist. Project
Unallocated and Interest During Construction
Overall Costs
Total Costs WAPP CLSG Power Interconnection Project
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Lender Amount
(US$ 000)
Tenor
(Years)
Grace Period
(Years)
Interest
Rate
Service
Charge
On-lending
Term
AfDB (Grant ) 104,263 - - - - -
IDA 176,000 40 10 0% 0.75% Same as
Gov.
KfW 40,774 - - - - -
65. The four governments have agreed to finance the cost of
implementation of the Environmental and Social Management Plans
(ESMPs), including the Resettlement Action Plans
(RAPs) (US$ 10.1 million), and the Interest During Construction
(IDC) (US$5.5 million) as part
of their counterpart financing. The Government of Liberia will
also provide about US$5.1
million for cost contingencies. The table below shows the
indicative amount per country and the
expected timeline for disbursement:
Table 4: Counterpart Financing
Country ESMP
(US$ mil.)
IDC
(US$ mil.)
Unallocated
(US$ mil.)
Cote d‘Ivoire 2.19 1.38 -
Liberia 2.39 1.38 5.15
Sierra Leone 3.40 1.38 -
Guinea 2.16 1.38 -
C. Program Objective and Phases
66. The project is part of a wider program by the Bank to
support the WAPP priority projects. The goal of the WAPP APL
program is as stated earlier, to establish a well-functioning,
cooperative, power pooling mechanism for West Africa, as a means
to increase access of the
citizens of ECOWAS to stable and reliable electricity at
affordable costs. The WAPP has a
rigorous process of selecting priority projects on the basis of
a regional Masterplan (last updated
in 2011), which uses least cost expansion principles.
67. Support under the program is accorded in four WAPP zones as
follows: (i) WAPP zone A core countries; (ii) WAPP zone B core
countries; (iii) interconnection of zone A and zone B
countries; and (iv) targeted support of most vulnerable WAPP
countries. The WAPP CLSG
project inscribes itself in the support of the most vulnerable
countries. Next WAPP possible
candidate projects include the Mount Coffee Hydropower Plant in
Liberia, the Adjarala
Hydropower Plant between Benin and Togo, and the Gouina
Hydropower Plant in Mali.
D. Lessons Learned and Reflected in the Project Design
68. The WAPP CLSG project has been designed taking into account
broad lessons from the the setting up of the SIEPAC project in
Central America (Sistema de Interconexión Eléctrica de
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los Países de América Central or Central American Electrical
Interconnection System), which
has similarities with the proposed WAPP CLSG project, especially
with regard to the
arrangements for the creation of a cross-border transmission
infrastructure. In addition, lessons
learned from the design of comparable Bank financed regional
APLs for Southern Africa Power
Pool (SAPP), the Energy Community of South East Europe (ECSEE),
and the existing WAPP
program have been applied. The project has also benefitted from
lessons learned from a five
decades long evolution of the best known regional power market -
the Nordic power market
which is operated by NordPool.
69. Lack of transmission line usage: lessons of experience from
projects show that the construction of cross-border transmission
line is a necessary condition for trades to take place,
but not a sufficient condition to enable the flow of trades when
excess power is not available to
be traded on the line. The demand-supply balance for Côte
d‟Ivoire and Ghana indicate that both
countries would be able to export power in direction of Liberia,
Sierra Leone, and Guinea.
Moreover, Côte d‟Ivoire‟s Minister of Energy confirmed in a
joint Memorandum of the four
CLSG Ministers of Energy dated 5 and 18th
of March 2012 the availability of 83 MW for the
export along the transmission line once the construction is
complete. In the medium term, Guinea
can also become a large exporter through development of its
hydropower resources. Annex 8
gives a detailed breakdown of availability of power along the
CLSG line.
70. Even if supply is available in principle, as the
demand-supply balance seems to indicate, the question is how power
trades can best be incentivized due to a sound institutional
framework
and market design. Beyond the mere availability of trade, the
WAPP JIC is envisaging the
incorporation of the following mechanism in the institutional
framework in order to incentivize
trade:
Establishing a clear and transparent framework for trades along
the line with required use of a standardized Transmission Service
(TSA) by including a standard form for this
agreement in the International Project Agreement of the RTC;
A simple, yet effective, method to price transmission whose main
objective to ensure transmission cost are recouped. The more
complex the tariff methodology, the more
difficult it is for future investors in power generation to
anticipate transmission costs. A
postage-stamp methodology is easier to understand and apply by
the entity determining
prices. A postage stamp tariff methodology has indeed been
adopted to determine
transmission usage costs under the WAPP CLSG Project.
As part of the tariff methodology, the Gove