Project Information Document/ Safeguards Data Sheet (PID/ISDS) … · 2017. 12. 19. · energy markets, ECOWAS has put in place, in 1999, the West African Power Pool (WAPP), a cooperative

The World Bank Guinea – Mali Interconnection Project (P166042)

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Project Information Document/ Integrated Safeguards Data Sheet (PID/ISDS)

Concept Stage | Date Prepared/Updated: 21-Dec-2017 | Report No: PIDISDSC23801

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BASIC INFORMATION

A. Basic Project Data OPS TABLE

Country Project ID Parent Project ID (if any) Project Name

Western Africa P166042 Guinea – Mali Interconnection Project (P166042)

Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead)

AFRICA Apr 03, 2018 Jun 29, 2018 Energy & Extractives

Financing Instrument Borrower(s) Implementing Agency

Investment Project Financing Republic of Guinea,Republic of Mali

EDG,EDM

Proposed Development Objective(s) The Project Development Objective is to: (i) enable electricity trade between Cote d’Ivoire, Guinea and Mali; and (ii) increase access to electricity in the Eastern part of Guinea as well as in the rural areas of Guinea and Mali.

Financing (in USD Million)

FIN_SUMM_PUB_TBL SUMMARY

Total Project Cost 420.99

Total Financing 420.99

Financing Gap 0.00

DETAILS -NewFin3

Total World Bank Group Financing 105.11

World Bank Lending 105.11

Total Non-World Bank Group and Non-Client Government Financing 315.88

Multilateral and Bilateral Financing (Concessional) 315.88

Environmental Assessment Category Concept Review Decision

A-Full Assessment Track II-The review did authorize the preparation to continue


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Other Decision (as needed)

B. Regional and Country Context

1. Despite Sub-Saharan Africa’s (SSA) significant energy endowment, approximately 600 million people, or two-thirds of its population, do not have access to electricity. For those having access to electricity access, average residential electricity consumption per capita in 2014 was equivalent to about half the average level of China or one-fifth that of Europe.1 2. While current levels of consumption are among the lowest in the world, demand for electricity in SSA is expected to increase many fold in over the next couple of years. A 2015 study on African electricity markets prepared by McKinsey estimates that demand for electricity in SSA will register a four-fold increase between 2010 and 2040, representing an average growth of 4.5% per annum.2 This growth will be mainly due to an increase in industrial and commercial demand for electricity averaging 4.1% per year, and an increase in residential demand averaging 5.6 % per year. This increase in demand could vary significantly between sub-regions. In West Africa, for instance, it is expected that demand for industrial and commercial electricity would grow faster than average, at 5.3% per year.3 3. SSA is also rich in potential power generation capacity. Excluding solar, the McKinsey study estimates that there are 1.2 terawatts of generation capacity potential. Among others, solar generation capacity was estimated at a staggering potential of 10 terawatts, particularly in the Sahel sub-region (including Mali). If every country builds infrastructure to fulfill its electricity needs, the McKinsey study estimates that the region would require about US$490 billion of capital for new electricity generation capacity by 2040, plus another US$345 billion for transmission and distribution. In this context, regional integration is a game changer that could shape the energy landscape of SSA. The study estimates that significantly increasing regional integration could save more than US$40 billion in capital spending, and save the African consumer nearly US$10 billion per year by 2040, as the levelized cost of energy would fall from US$70 to US$64 per megawatt-hour. Similarly, an assessment of Africa’s Infrastructure undertaken by the World Bank in 2010 finds that fostering regional power trade could reduce the annual costs of power system operation and development by up to $2 billion per year. The overall range of cost saving for the beneficiary countries is estimated to be in the range of US$0.01 to US$0.07 per kWh.4 4. In that context, and particularly for the West Africa sub-region where the demand-supply gap is likely to reach more than 100 GW by 2040, it is fundamental to optimize supply through regional integration that maximizes economies

1 World Energy Outlook 2014 Factsheet: Energy in Sub-Saharan Africa today, International Energy Agency. 2 Brighter Africa: The growth potential of the sub-Saharan electricity sector: Castellano, A.; Kendall A; Nikomarov. M; Swemmer T; February 2015. McKinsey & Company. 3 This strong growth of electricity demand results from relatively high economic growth, rapid urbanization, large population increases, and active

policies to expand access. 4 Foster, V., Briceño-Garmendia, C. Africa’s Infrastructure: A Time for Transformation, World Bank, 2010.


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of scale and links sources of supply to distant centers of consumption, as well as the development of cost-efficient sources of supply, such as hydroelectricity.

The West African Power Pool

5. Faced with the task of expanding the power system to meet development needs of countries in the sub region, the fifteen member states5 of the Economic Community of West African States (ECOWAS) have acknowledged that past efforts to achieve national self-sufficiency in electricity supply have been uneconomic due to the high cost of establishing power generation and transmission infrastructure at national levels. They have decided instead to opt for a regional approach to effectively address their growing energy needs. 6. Table 1 below presents a snapshot of the situation today in terms of available supply and demand in the WAPP sub region. Existence of large surplus of energy in some countries can be contrasted with scarcity of cost efficient sources of energy in others, offering a fertile ground to develop regional energy trade.

Table 1-Supply/ Demand Situation: WAPP

Source: World Bank, 2015 (Source Country Year)

7. The Implementation Road Map of the WAPP Infrastructure Program consists of five distinct but mutually reinforcing sub-programs that will converge into a regional power pool (see Table 2). To foster the expansion of regional energy markets, ECOWAS has put in place, in 1999, the West African Power Pool (WAPP), a cooperative mechanism for integrating national power systems (except Cape Verde) into a regional electricity market, with the expectation that this mechanism would help to provide a stable and reliable electricity supply at affordable cost over the medium to long-term. The WAPP, a “flagship infrastructure project” of the New Partnership for African Development (NEPAD), aims to foster the development of electricity in all ECOWAS member states.

Table 2. The WAPP Infrastructure Program

5 Benin, Burkina Faso, Cape Verde, Côte dIvoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo.


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Sub-programs Countries Expected Date of

Commissioning

Objectives

Coastal Transmission Backbone

Côte d'Ivoire, Ghana, Benin/ Togo, Nigeria

June 30, 2016 Establish a robust interconnection link between the ECOWAS Coastal Member States.

Inter-zonal Transmission Hub

Burkina Faso &Mali via Ghana, OMVS via Mali, Liberia-Sierra Leone-Guinea via Côte d'Ivoire

December 31st, 2018

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 (Organisation pour la mise en valeur du fleuve Sénégal) through Mali.

Organisations pour la mise en valeur du fleuve Gambie / Senegal (OMVG / OMVS) Regional Projects

Gambia, Guinea, Guinea Bissau, Mali, Senegal

June 30, 2022 (OMVG)

December 31st, 2022 (OMVS)

OMVG and OMVS projects interconnects national systems of The Gambia, Guinea, Guinea Bissau, Mali, and Senegal and secures access to sources of low cost energy to be built on the Gambia River and the Senegal River.

Côte d'Ivoire–Liberia-Sierra Leone-Guinea (CLSG) Regional Interconnector

Côte d'Ivoire, Liberia, Sierra Leone, Guinea

October 30th, 2019

Interconnect Côte d'Ivoire, Liberia, Sierra Leone, and Guinea into the WAPP Energy System and develop the hydropower resources in the sub-region.

North Core/Dorsale Nord Regional Interconnection Project

Nigeria, Niger, Burkina Faso, Benin/Togo

December 31st, 2022 (TBC)

Upgrade and extend capacity to transfer low cost energy supply in the short term from Nigeria to Niger, Burkina Faso, and northern Benin, and in the longer term also from Niger to the other countries once Kandaji and Salkadamna generation projects enter into operation.

World Bank Support to the WAPP

8. The World Bank has developed a strong partnership with the WAPP and is financing, together with other donors, part of all five WAPP Master Plan sub-programs. It is also supporting the preparation of key generation projects for cost efficient electricity for the region, and assisting member countries to build commercial and technical instruments to create an energy market. To channel this support, the Bank uses various instruments including so far: (i) investment project financing, (ii) technical assistance, and (iii) guarantees. 9. The World Bank’s rationale for supporting this regional integration agenda as a major tool to expand access to affordable and reliable electricity in West Africa is grounded in several considerations: (i) the fact that in West Africa regional transmission infrastructure is needed to bring generation to markets since significant sources of cost-effective energy generation, such as hydropower (in Guinea for instance), are often far from markets (in Mali for instance); (ii) a regional power system allows a number of countries to overcome the inefficiencies related to the small sizes of their economies, as it is the case for both Mali and Guinea, allowing development of large projects and export of excess production or import of lower cost electricity from other countries; (iii) taking a regional approach optimizes the use of resources for electricity supply across the region and reduces the overall capital costs of generation, even if energy trade is not fully developed and the infrastructure is not fully utilized in the short term; and (iv) the regional interconnectors also serve as an important part of the national transmission grid for countries like Guinea, Liberia and Sierra Leone, where national transmission networks are nascent and often limited to a small portion of the country’s territory, and will provide access to communities along the lines through the use of low-cost shield wire and/or other technologies, including off-grid solutions.


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10. The WB has provided concessional finance through IDA/IBRD credits since 2005 for the construction of major interconnection lines to develop the regional transmission infrastructure in the region, and to a lesser extent for the construction of regional generation projects through IDA credits, all of them based on renewable energy sources, mostly large hydro projects. The World Bank financed a first WAPP project in June 30, 2005, when the Board endorsed the application of the Adaptable Program Loan instrument within the framework of the World Bank’s Regional Integration Assistance Strategy for West Africa as the main vehicle for providing IDA support to the WAPP.6 At that time, the World Bank dedicated US$350 million in IDA resources under the IDA Regional Pilot Program to put in place a multi-year, programmatic framework to help ensure the timely implementation of WAPP priority investments and technical assistance activities under the Revised WAPP Master Plan. The Adaptable Program Loan instrument provided a framework for IDA support to the original set of WAPP priority projects, and allowed for the reinforcement of policies through dedicated policy triggers, such as country commitments and ratification of the ECOWAS Energy Protocol. This support also includes the financing of the Felou Hydroelectric plant, completed in 2014 (OMVS Felou Hydroelectric Project), and the rehabilitation of the regional Manantali hydro project, under the OMVS project currently under preparation. World Bank support to the WAPP investment program is summarized in Table 3 below.

Table 3. World Bank Support to WAPP Infrastructure Programs

WAPP Sub-programs World Bank Support

Coastal Transmission Backbone

Phase 1: US$40 million equivalent IDA credit to Ghana (P075994).

Phase 2: US$15 million equivalent IDA credit to Benin; US$45 million equivalent IDA credit to Ghana (P094917).

Inter-zonal Transmission Hub US$16 million equivalent IDA grant to Burkina Faso, and US$25.9 million equivalent IDA credit to Ghana (P094919).

OMVG/OMVS Power System Development

OMVG: US$47 million equivalent IDA credit to The Gambia, US$30 million equivalent IDA credit to Guinea, US$78 million equivalent IDA credit to Guinea-Bissau, and US$45 million equivalent IDA credit to Senegal.

OMVS: US$97 million equivalent IDA credit to Senegal.

CLSG Power System Re-development

US$144.5 million equivalent IDA credit to Liberia (P113266).

US$59.57 MILLION equivalent IDA credit to Sierra Leone, US$22.66 million equivalent IDA credit and US$22.66 million equivalent IDA grant to the Republic of Liberia, and US$17.50 million equivalent IDA grant to the West African Power Pool (P163033 under preparation - additional financing to P113266)

North Core/Dorsale Nord Regional Interconnection Project

Under preparation (P162933).

11. Trade is expected to increase further in the medium term, when the various regional transmission infrastructure projects currently under implementation are completed (see Figure 1).

Figure 1. Map of WAPP Infrastructure

6 See Report No: 32276-AFR.


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OMVG

CLSG

Guinea-MaliInterconnector

12. In that context, Guinea is positioned to play an important role in the future regional power market, if large hydro plants can supply power at a competitive price. Guinea’s hydropower potential is estimated at 6,000 MW, or more than 10 times the current size of its national grid. Potential importers of Guinean hydropower (Senegal, Guinea Bissau, The Gambia, Liberia, Sierra Leone, and Mali) have domestic or regional sources of power at slightly higher than USD 0.10 per kWh from gas fired plants, solar energy and coal fired plants. For Guinea to capture part of the regional power market and fully utilize the rapidly expanding regional power transport network under the West Africa Power Pool (WAPP), Guinea will need to be selective in the hydropower plants it develops and focus on those with the capacity to supply electricity all year around at a low cost. The 240MW Kaleta hydropower plant was inaugurated in 2015 to replace expensive thermal power generation, and Guinea is proceeding with the Souapiti hydropower plant with a reservoir, which will optimize a cascade of hydropower plants already developed (Kaleta, 240 MW and Garafiri, 80 MW) or planned to be developed (Amaria, 300 MW) on the Konkoure river and therefore enable year-round power production. 13. Mali on the other hand is heavily dependent on expensive thermal generation (more than 50% of its energy mix) and is in dire need to diversify its sources of energy. The demand for electricity in Mali is increasing on average by 10% per year. Mali has until recently relied on expensive rental diesel units to meet its fast-growing demand, but that approach comes with a high financial cost. Without any major untapped hydropower potential, the only alternative for Mali is energy imports from its neighboring countries, in particular Guinea.


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Sectoral and Institutional Context

14. The proposed Guinea Mali Interconnector starts in N’Zérékoré in Guinea, near the Liberian border, stretches across the eastern part of Guinea from south to north, through Fomi and crosses the Malian border into Sanankoroba in Mali. The Guinea Mali Interconnector will be connected to the Cote d’Ivoire, Liberia, Sierra Leone and Guinea (CLSG) interconnector in N’Zérékoré substation (Guinea) and with the OMVG and the CLSG interconnectors through the Linsan-Fomi line (to be constructed by the Guinean government with secured financing from China) in Linsan substation (Guinea). These three interconnectors will enhance electricity trade between Mali, Guinea, Cote d’Ivoire, Burkina Faso, Liberia, Sierra Leone, Gambia, Guinea Bissau and Senegal. Furthermore, the Guinea Mali Interconnector will also improve the stability of the national networks and thus contribute to the integration of Variable Renewable Energy (VRE) in Guinea and Mali, two countries with important solar energy potential. 15. Mali has been trading electricity with Mauritania and Senegal through the OMVS system and Cote d’Ivoire through an existing interconnector, while Guinea has no experience in electricity trading so far. Table 4 below summarizes some key sector indicators of the two concerned countries.

Table 4. Key Sector Indicators

Guinea Mali

Access to electricity (% of population) 18% 30%

# of electricity customers 230,000 400,000

System losses (%) 40% 23%

Average electricity tariff ($/kWh) 0.09 0.16

Average cost of service ($/kWh) 0.20 0.25

Sources: World Bank Country Engagement Notes for Guinea and Mali.

Guinea 16. Current electricity sector institutions in Guinea include both public and private sector players. The key sector institutions include the Electricité de Guinée (EDG), the state-owned electricity utility that was created following the failure of the privatization of the power network in the 1990s. EDG is currently being managed by the consortium, Veolia-Seureca, since October 2015, under a Management Service Contract (MSC) signed between the Government of Guinea (GoG) and the consortium on June 19, 2015. IPPs produce more than 70% of electricity generation, leaving less than 30% of the generation to EDG. The Ministry of Energy and Hydrology (MEH) of Guinea sets the sector’s policy and plays an overarching surveillance role of the sector. 17. Despite its vast hydropower potential of about 6,000 MW, Guinea’s energy sector performance has remained below that of regional peers. The official access rate in 2015 stood at 18%, while reaching 29% when including significant proportion of illegal connections (compared to 64% in Senegal, 55% in Cote d’Ivoire and 30% in Mali for example). The access rate in rural areas is as low as 3% in rural areas, which is significantly lower than the Sub-Saharan Africa (SSA) average of 15% in rural areas. The installed capacity in 2016 is about 590 MW while the available capacity is limited to around 458 MW due to ongoing rehabilitation of the existing power plants. In 2016, EDG produced 1531.5 GWh to meet the needs of its 246,527 customers, of which 65% live in the capital city of Conakry. About 45% of the energy was produced


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by the Kaleta hydropower plant (240 MW), 31% by thermal IPPs and 24% by EDG’s legacy power plants. The electricity demand has grown by 13% in 2015 and it is expected to grow at 9 to 10% per annum in the next five years. 18. Unreliability is rampant - Guinea reported 1,962 outages per year due to breakdowns. The perception of reliability is the lowest in SSA, with 20% of the population believing that electricity is never reliable (Afro-barometer 2014). Extended blackouts often contributed to street protests, with the most recent protest reported in June 2017. Operational inefficiencies with the utility Electricité de Guinee (EDG) also translate into: (i) high commercial and technical losses, standing at about 35% (among the highest in SSA), due to poor development and maintenance of the transmission and distribution networks, illegal connections (around 11% of the population), and a poor billing system with many unmetered customers (about 80%); and (ii) weak collection rate, of about 79% (below the average in SSA). These issues are compounded by the gap between electricity tariffs and cost of supply, which prevent the utility from conducting the required investments. With three-quarters of all consumers belonging to the low-voltage category, average electricity tariff is at about $0.09/kWh, which is well below the cost of service of about $0.2/kWh (double the worldwide average of approximately $0.10 per kWh). As a consequence, EDG is in a critical financial situation with significant debts and arrears. Indeed, EDG owes around US$ 240 million (about 3% of GDP or 4 years of annual turnover) to suppliers while the GoG owes EDG about US$ 160 million. 19. The GoG has ambitious development plans prioritizing privately financed generation and public sector financed transmission and distribution for access. A few power generation projects have been commissioned lately, including the Kaleta (240 MW) hydropower plant (commissioned in August 2015)7 as well as Kaloum 1 (24 MW), Kaloum 2 (26 MW), Kipe (50MW) and K-Energies (75 MW) thermal plants that added around 175 of installed capacity to the national grid and were developed by private investors (IPPs). The country launched the construction of the 450 MW Souapiti I Hydropower Plant to meet the domestic and regional demand in 2022, and reduce overall risks in the sector. Souapiti I will have a dam reservoir that will mitigate the seasonality along the cascade of projects on the Konkouré river, thus limiting the need for expensive thermal power generation during the dry season that constitute about 30 % of current electricity generation. Regional hydropower projects are under development including Sambangalou through the Gambia River Basin Development Organization OMVG (120 MW) and Koukoutamba through the Senegal River Basin Development Organization OMVS (290 MW). Other projects in the pipeline include Amaria hydropower plant (300 MW), Poudaldé (60 MW), and other renewable energy project to be developed as PPP. The development of all those projects will position Guinea as the major powerhouse of the West African region. Mali 20. Within the perimeter of its concession, the vertically integrated Malian electricity utility (Energie du Mali S.A, EDM) has monopoly over power transmission and distribution, while generation is open to the private sector. EDM is therefore the single buyer for power supplied by independent power producers (IPPs). The Malian Rural Electrification Agency (Agence Malienne pour le Développement de l'Energie Domestique et l'Électrification Rurale, AMADER), created in 2003, supplies electricity to rural areas through a public-private partnership (PPP) approach, whereby rural electrification concessions are granted to private operators. 21. Significant progress has been made in increasing access in Mali, with access to modern energy services reaching about 30% nationally, corresponding to an access rate of 55% in urban areas and 18% in rural areas. In fact, the access rate in rural areas has increased ten-fold from about 1-2% to 18% in less than a decade. Households still mainly rely on fuelwood for cooking, and wicks and kerosene lamps for lighting. The use of these traditional fuels poses both health and

7 Kaleta has been partly privatized to raise equity financing for Souapiti. CWE and the GoG own 51% and 49% of Kaleta’s shares respectively


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environmental hazards while requiring time-consuming foraging by women and children, and providing inadequate levels of service. 22. Total domestic installed generation capacity connected to the grid stands at 479 MW, although in 2016 only about 250 MW was available mainly due to lack of maintenance of existing generation facilities, resulting in breakdowns. Additionally, isolated centers in areas located far away from the grid are being served with stand-alone thermal generation units totaling an installed capacity of 57 MW. To serve the fast-growing demand, EDM has largely relied on expensive rental containerized diesel units, which have reached an aggregated installed capacity of 98 MW in 2016 (that is, 28% of grid-connected available capacity, including the capacity of rentals).8 Despite these expensive efforts, planned and unplanned outages have increased sharply in recent years in both frequency and duration. Moreover, total losses (including technical and commercial losses) have increased from 19.6% in 2011 to close to 22.6% in 2015, mainly due to the lack of investment in the rehabilitation of the network. Therefore, the unreliability of the existing generation facilities, the delays in procurement of new generation facilities, the limited investments in the network, and the fast pace of new customer connections leading to network densification have all contributed to the deterioration in the quality of service, while costs have continued to rise.

23. The financial situation of EDM has been undermined by high production costs as well as high technical and commercial losses. As the country relies heavily on expensive imported fossil fuels for power generation, the average cost of electricity service to the end users is estimated at $0.25 per kWh. On the other hand, the electricity tariff stands at $ 0.16 per kWh on average and is not cost reflective. Despite that, the tariff is considered high for the average Malian household and businesses whose competitiveness is undermined. On the other hand, EDM has been making losses totaling $100 million in 215. EDM received a total subsidy amounting to US$73.6 million in 2015, translating into a subsidy of US$ 0.055 per kWh. Facing increasing liquidity challenges, EDM has been relying heavily on short-term borrowing to meet its obligations and has delayed payments to fuel and power suppliers, including neighboring countries such as Côte d’Ivoire. EDM’s profitability depends upon its ability to reduce its cost of service, improve efficiencies along the value chain, and adjust tariffs.9 24. In an effort to address the challenges in the sector and restore it profitability, EDM has set up a new organization in January 2017 to: (i) reinforce the control and the fight against fraud through the creation of a new internal audit position; (ii) strengthen the strategic planning function by strengthening the prerogatives of the Studies and Strategic Planning Department; (iii) optimize the procurement of supplies, assets and fuel through the creation of a Procurement Department; (iv) strengthen the information and management / data security systems through the creation of an Information System Department; and (v) improve the level of recoveries through the establishment of a department dedicated to that task. In addition, the Government of Mali (GoM) and EDM have decided to stop relying on emergency power to meet its growing demand and have phased out the rental containerized diesel units. Finally, EDM has developed an emergency plan that has been under implementation since January 2017. The plan aims at: rehabilitating several power plants, including Sirakoro (56 MW), Balingue (33 MW), Sélingué (49 MW) and Sotuba (6 MW); rehabilitating and strengthening several transport and distribution substations; improving billing and collection; increasing the capacity of the existing interconnections with Cote d'Ivoire (from 40 to 75 MW) and Senegal and Mauritania (from 20 to 60 MW).

8 Oil-based generation products are imported and especially costly given that Mali is a landlocked country connected to neighboring countries’ ports through relatively poor transport infrastructure. 9 There has been no substantial tariff adjustment since 2004, with only very limited increases in 2009 and 2014.


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Relationship to CPF 25. The goals of the Guinea Mali Interconnector are aligned with the World Bank corporate goals of ending extreme poverty and promoting shared prosperity through providing the participating countries with affordable, reliable and sustainable electricity through regional integration. This will enhance the prospects for further integration of the countries’ infrastructure and natural resource management, therefore resulting in more sustainable growth through increased trade and economic competitiveness. The proposed Project also supports the first pillar of the World Bank’s Africa Strategy on promoting competitiveness, as, through lowering generation costs, it aims to aid in the stabilization and financial recovery of the countries’ utility companies, and to reduce their dependency on government subsidies. The project is in line with the Directions for the World Bank Group’s Energy Sector, which emphasized the leveraging of private sector resources and experience to enable reliable and more efficient energy sectors in developing countries; and the Africa Energy Strategy, particularly the first three pillars that target scaling up regional power generation and transmission capacity, expanding electricity coverage, and improving sector planning and utility performance. 26. The proposed Project is also in line with the strategy of the World Bank in each of the participating countries:

➢ In Guinea, a new Country Partnership Framework (CPF) is under development for the period FY18-21. The new

CPF is based on GoG’s development priorities for the period 2016-20 that are set out in the National Economic and Social Development Plan (PNDES 2016-20). The PNDES is structured around four pillars that are driven by three drivers of structural change, among which catalytic investments in the energy sector. The draft program for the FY18-21 CPF includes a US$ 75 million IDA allocation for the Guinea Mali Interconnector.

➢ The development of energy infrastructure represents a key component of the GoM’s strategy to support economic development. The Project is fully consistent with the World Bank Group’s FY16–19 CPF for Mali.10 The CPF lays out three GoM objectives to which World Bank Group interventions are expected to contribute by (a) improving governance, (b) creating economic opportunities, and (c) building resilience. The proposed project will directly support the second area of focus of the CPF by contributing to the provision of affordable, reliable, and sustainable energy supply as an enabler to economic development with the aim to end poverty and promote shared prosperity.

27. Finally, the proposed Project is well aligned with principles of ‘Maximizing Finance for Development’, being part of a larger comprehensive World Bank engagement in the energy sector of the two concerned countries and providing support across the value chain. The proposed Project provides public sector financing for the construction of strategic infrastructure where commercial financing is not considered viable, while also supporting increased private sector participation in the generation sub-sector, which is a commercially viable segment, as they connect potentially interested purchasers to the generators. The private sector could play a substantial role in developing the potentially large solar energy potential along the line route in the two countries. The project team is mobilizing trust funds to facilitate the integration of solar energy into the national grids of the two countries, in an effort to pave the way for private sector participation.

10 Report No. 94005-ML.


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C. Proposed Development Objective(s) 28. The Project Development Objective is to: (i) enable electricity trade between Cote d’Ivoire, Guinea and Mali; and (ii) increase access to electricity in the Eastern part of Guinea as well as in the rural areas of Guinea and Mali. 29. The proposed project Social Risk Rating has been set to High both because of its social and environmental category A stance requiring (full assessment), as well as its transboundary coverage that span between two neighboring countries (Guinea and Mali), whereby the transmission line from Guinea to Mali (a 714 km 225 kV double circuit transmission line from N’Zérékoré in Guinea to Sanankoroba in Mali as well as the construction or extension of seven substations including the electrification of rural communities leaving along the said-line route) with a 40/50m wide Right-of-Way/ROW) will be crossing several culturally and environmentally sensitives areas spanning from dense tropical forest (Guinea forest region: Nzerekore, Fomi, Beyla, Kankan, Kerouane and Siguiri to savannah (Sanankoroba), with various ecosystems throughout.

30. The risks and impacts that vary exponentially depending of the socioecological zone, are foreseen to include land taking resulting or not in the loss of assets, eco-forestry services, and/or restriction to access to source of livelihoods upon which most of these direct or indirect beneficiaries would rely upon. In light of the abovementioned foreseen risks and impacts, it is advisable to trigger the following social and environmental safeguards policies, namely: OP/BP 4.01 (Environmental Assessment), OP/BP 4.11 Physical Cultural Resources; OP/BP 4.04 (Natural Habitats), OP/BP 4.36 (Forestry) and OP/BP 4.12 (Involuntary Resettlement). Since the Borrowers, through an existing regional program, have managed to prepare series of pre-investment studies (ESIA, ESMP, RAP and feasibilities) the World Bank Social and Environmental Safeguards team is reviewing these first setsand will thereafter determine the need or not, to prepare additional standalone safeguards instruments. To ensure subsequent processing of this regional project, the project will tailor a consistent institutional safeguards capacity building program for both the two-national environmental and social agencies, as well as the national PIUs social and Environmental Safeguards specialists to adequately support this challenging undertaking. The next field mission will further assess the scope and extent of these risks and impacts and advise the projects and respective government accordingly. Key Results (From PCN)

31. The expected PDO level result include:

▪ Energy traded annually between Cote d’Ivoire, Guinea and Mali (GWh/year) ▪ People provided with new or improved electricity service in the cities of Nzerekore, Fomi, Beyla, Kankan, Kerouane

and Siguiri in Guinea (number) ▪ People provided with new or improved electricity service in the rural areas of Guinea and Mali (number)

D. Concept Description

32. The Guinea Mali Interconnector Project is part of the WAPP infrastructure investment pipeline projects for the creation of a regional power pool in West Africa. The proposed project aims to connect Guinea and Mali using a high voltage 225 kV transmission line and enable energy trade between those two countries, thus lowering the average cost of electricity in Mali (the main importer). The project will also connect in Guinea to the broader WAPP system with the ongoing CLSG (through the N’Zérékoré and Linsan substations) and OMVG (through the Linsan substation) projects. This network meshing with the three projects will enhance energy trade among the WAPP countries: Cote d’Ivoire, Liberia, Gambia, Guinee, Guinee Bissau, Mali, Senegal and Sierra Leone. However, in the short to medium term, there will most


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likely be bilateral contractual relationships between Cote d’Ivoire, Guinea and Mali, until the regional market becomes fully operational with the creation of a spot market. 33. In addition to the contributions of the governments of Mali and Guinea, the proposed regional project would be financed by several other donors: African Development Bank (AfDB), the European Union (EU) - through the AfDB, the European Investment Bank (EIB), the Islamic Development Bank (IsDB), the ECOWAS Bank for Investment and Development (EBID) and the West African Development Bank (BOAD). The total project cost is estimated at US$ 421 million, out of which IDA is expected to contribute US$ 105 million. The financing structure is based on parallel co-financing, so that each donor can use its own rules and procedures. 34. The main rationale for the construction of the Guinea Mali Interconnector is the realization of the trade potential between the two countries participating in the project. In the short term, the interconnector will allow low cost energy supply from Guinea and Cote d’Ivoire (through the CLSG line) to flow into Mali. This will allow the diversification of the energy mix in Mali (currently mainly composed of thermal generation) through the import of cheaper energy from Guinea and Cote d’Ivoire. The interconnector will also develop the transmission network in the eastern part of Guinea and substitute expensive diesel generators with cheaper and cleaner hydropower energy. In fact, that part of the country includes major load centers (mainly the cities of Kankan, Kerouane and Beyla) that are currently not connected to the national grid and are being electrified with diesel generators. Finally, in the medium to long term, the interconnector will generate hard currency revenues for Guinea and Cote d’Ivoire through the sale of electricity to Mali. 35. To this end, the WAPP Secretariat, EDG and EDM, in a collaborative effort, intend to undertake this project that will comprise the construction of 714 km long 225 kV double circuit transmission line from N’Zérékoré in Guinea to Sanankoroba in Mali, as well as the construction or extension of six substations in Guinea: Nzerekore (planned to be built within the CLSG project), Fomi, Beyla, Kankan, Kerouane and Siguiri; and one substation in Mali: Sanankoroba. Figure 2 shows the line route while Annex 1 shows the proposed parallel co-financing arrangements.

Figure 2. Transmission Line Route


Dec 19, 2017 Page 14 of 21

36. The Guinea Mali Interconnector is expected to initially transport 150 MW from Guinea / Cote d’Ivoire to Mali upon completion, then ramp up to 200 MW from 2024 to 2030 and gradually increase to 286 MW in 2035. Guinea is currently aggressively developing its hydropower potential partly to meet the export demand towards Mali. In fact, Guinea has launched the construction of the 450 MW Souapiti 1 Hydropower Plant which is expected to be commissioned in 2022. Souapiti 1 will have a dam reservoir that will mitigate the seasonality along the cascade of projects on the Konkouré river, thus providing reliable power supply even during the dry season. In addition, there are several regional hydropower projects that are under development, including Sambangalou through the Gambia River Basin Development Organization OMVG (120 MW) and Koukoutamba through the Senegal River Basin Development Organization OMVS (290 MW). 37. The proposed project includes four components. The first component is dedicated to the construction of the transmission line and associated substations. The second component will provide implementation support and technical assistance to the PIUs in the two participating countries to assist them to effectively implement the project and ensure the sustainability of its results. The third component will cover the reinforcement of the national grid in Mali to absorb the additional power supplied through the interconnector. Finally, the fourth component will enable the expansion of access to electricity in the two countries through the implementation of rural electrification connections from the substations and/or directly from the line using low cost shield wire technology.

38. The project’s main components are the following:

Component 1: Power interconnector between Guinea and Mali (Project US$ 322 million, of which IDA Credit US$ 65 million).

39. This component finances the construction of the interconnector between Guinea and Mali. The component will be co-financed with AfDB, EU, EIB, IsDB, EBID and BOAD.

Sub-component 1-A: Construction of the Transmission Interconnector (Project US$ 288 million, of which IDA Credit US$ 56 million). 40. This component involves the construction of 714 km 225 kV double circuit transmission line from N’Zérékoré in Guinea to Sanankoroba in Mali as well as the construction of five substations in Guinea (Fomi, Beyla, Kankan, Kerouane, Siguiri) and the extension of one substation in Guinea (N’Zérékoré, planned to be built under the CLSG project) as well as the extension of one substation in Mali (Sanankoroba). The 225 kV high voltage transmission line will be equipped with double circuit, one earthwire and one Optical Fiber Ground Wire (OPGW). The OPGW will provide grounding and communication capabilities to the line. This component includes also for the substations: (i) the SCADA/telecommunication equipment and (ii) the compensation equipment (Reactance, Capacitor Bank and SVC).

Sub-component 1-B: Implementation of the Environmental and Social Management Plans (ESMPs) and Resettlement Action Plans (Project US$ 34 million, of which IDA Credit US$ 9 million) 41. The cost of the implementation of the Resettlement Action Plans (RAPs) will be covered by the respective Governments as part of their counterpart financing. The costs of the implementation of all the aspects of the Environmental and Social Management Plans (ESMPs) --other than the implementation of the RAPs-- will be financed under the IDA credit. Environmental mitigation measures under the Environmental and Social Management Plans (ESMPs) will be almost entirely included in the contractor contracts.


Dec 19, 2017 Page 15 of 21

Component 2: Implementation support and capacity building (Project US$ 31 million, of which IDA Credit US$15 million) Sub-component 2-A: Implementation support (Project US$ 27 million, of which IDA Credit US$ 11 million) 42. This subcomponent will finance an Owner’s Engineer to assist the PIUs in the two countries 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. 43. This sub-component will also cover the operating costs of the two Project Implementation Units (PIU) in the two countries and those of the Joint Implementation Committee (JIC) and steering committee during the construction of the line. It will cover support for the setting-up of the PIUs, including setting up of systems such as procurement and financial management systems and recruitment of staff, and the operational costs (salary, acquisition of vehicles, office supplies, furniture and hardware/software, etc.) during the construction phase. It will also finance the recruitment of the internationally recruited coordinator at the JIC and the logistical expenses related to the organization of the steering committee meetings.

Sub-component 2-B: Capacity building (Project US$ 4,1 million, of which IDA Credit US$ 3,7million)

44. This sub-component will finance the recruitment of engineers highly experienced in implementing 225 kV or more transmission line projects who will reinforce the capacity of the PIUs as well as the carrying out of specialized studies as required. Component 3: Reinforcement of the Malian grid (Project US$ 21 million financed by IDA) 45. With the supply of significant amount of power from Guinea towards Mali through the new interconnector, the Malian grid will need to be reinforced, particularly around the capital city of Bamako. This component will partially finance the construction of a 225 kV ring around Bamako and will be entirely financed by the Bank.

Component 4: Rural Electrification (Project US$ 47 million, of which IDA Credit US$ 4 million) 46. In addition to the regional interconnector, the Guinea Mali Interconnector Project includes a national rural electrification component in each country that finances the implementation of rural electrification along the line route. That component will be managed by the respective national utilities and will extend the existing distribution systems supplied through the 225/33 kV substations of the transmission line in the main cities of Sanankoroba, Siguiri, Kankan, Kérouané, Beyla and N’Zérékoré towards rural areas and/or directly from the line using low cost shield wire technology and will allow to provide reliable and affordable access to electricity to the local populations in those areas.

47. The project costs are based on the feasibility study developed in November 2015 by the consultant INTEC-LAHMEYER and includes a 10% contingency provision. The cost estimates have been reviewed by the team and are deemed to be in line with current market prices. The 10% contingency will cover the eventual following extra costs: (i) unit price variations for steel, transformer, compensation equipment, etc.; (ii) finalization of the line routing after route alignment survey by the contractor; (iii) modification of the scope of works of the contractor due to the final line routing (deviation, number and type of tower/foundation); (iv) price adjustments as a result of potential delays in the


Dec 19, 2017 Page 16 of 21

effectiveness of the contract (v) others unforeseen events (special foundation design after soil investigation, etc). Table 5 below shows the distribution among donors and countries of the financing.

Table 5: Breakdown of Project Costs and Financing

SAFEGUARDS

A. Project location and salient physical characteristics relevant to the safeguard analysis (if known)

The project will cover two neighboring countries Guinea and Mali, spanning over a 714 km and 225 kV double circuit

transmission line between N’Zerekore (Guinea) and Sanankororba (Mali), including the construction or extension of 7 substations and the electrification of several rural communities living along the T-line route. In Guinea, the transport line will involve two administrative regions (Kankan and Nzerekore), 7 divisions, 21 rural communes and 4 urban communes for a total 592 km. The Post stations will be built close of the following cities Siguiri, Fomi, Kankan, Kerouane, Beyla and Nzerekore. In Mali, the project will cover one key region (Koulikoro) and two circles (Kangaba and Kati) for 140 km. The two countries crossed by a network of (over 732 km) present sensitives areas that will be negatively impacted by the project. B. Borrower’s Institutional Capacity for Safeguard Policies

Since the project will be implemented in each country by a national PIU under the overall regional steering committee,

the project will include, in each country a Social and an Environmental Safeguards Specialist whose’ s role and responsibility, will be to ensure project’s compliance on social and environmental safeguards. Both countries Environmental and Social agencies, namely BGEE (Guinea) and DNACPN (Mali) have extensive experience

in implementing World bank funded operations, and have therefore continuously dealt with World Bank Safeguards specialists both in terms of projects preparation and implementation as well as safeguards training sessions. Nonetheless, when it comes to properly implementing safeguards requirements as stated in legal agreements, both BGEE and DNACPN lack utmost capacity to adequately deal with safeguards compliance. Therefore, this interconnector energy project will make provision to enhance the technical safeguards capacity of these environmental and social safeguards agencies so that they are better equipped to tangibly support the project throughout its lifecycle. Likewise, the two social and environmental safeguards specialists to be hired in each national PIU will be trained by the

($) ($) ($) ($) ($) ($) ($) ($) ($) ($)

$68,627,224 $78,524,530 $40,093,297 $43,007,327 $30,239,790 $105,110,914 $33,480,000 $4,411,304 $17,499,471 $420,993,630

Component 1: Power Interconnector between

Guinea and Mali $43,985,043 $78,524,530 $40,093,297 $43,007,327 $29,027,082 $65,147,953 $4,411,304 $17,499,471 $321,696,008

Sub-component 1-A: Construction of the

Transmission Interconnector $43,985,043 $78,524,530 $40,093,297 $43,007,327 $26,340,858 $55,920,892 $287,871,948

Sub-component 1-B: Implementation of the

Environmental and Social Management Plans

(ESMPs) and Resettlement Action Plans

$2,686,224 $9,227,061 $4,411,304 $17,499,471 $33,824,061

Component 2: Implementation support and

technical assistance $2,824,169 $1,212,708 $14,913,818 $12,269,131 $31,219,825

Sub-component 2-A : Implementation Support $2,824,169 $815,958 $11,160,000 $12,269,131 $27,069,257

Sub-component 2-B : Capacity Building $396,750 $3,753,818 $4,150,568

Component 3: Reinforcement of the Malian grid $21,000,000 $20,999,772

Component 4 : Rural Electrification $21,818,013 $4,049,143 $21,210,869 $47,078,025

TotalAfDB IDB EBID IEB BOAD IDA EUGovernment

Guinea

Government

Mali


Dec 19, 2017 Page 17 of 21

World Bank safeguards specialists and work in tandem, both virtually and during project implementation to deliver the ambitious energy program’s safeguards requirements in accordance with both national regulations and World Bank Safeguards policies.

C. Environmental and Social Safeguards Specialists on the Team

Cheikh A. T. Sagna, Social Safeguards Specialist Emeran Serge M. Menang Evouna, Environmental Safeguards Specialist

D. Policies that might apply

Safeguard Policies Triggered? Explanation (Optional)

Environmental Assessment OP/BP 4.01 Yes

The policy is triggered as the project will cover more than 714 km and will imply civil works (stations and sub-stations, Transmission and distribution lines) including clean up of the right of way, installation of work campsand material storage, production of wastes, as well as tree and vegetation trimming, etc. The two governments have already prepared two ESIAs reports that will be reviewed and cleared by the Bank and national environmental agencies and disclosed both in-country and at the InfoShop prior to project appraisal.

Natural Habitats OP/BP 4.04 Yes

The policy is triggered as the project right-of-ways (ROW) will have potential negative impacts in the birds and many ruminants and amphybiants’ natural habitats. The preliminary review of the ESIAs reveal that several endangered species were identified in the regions; and Ramsar sites were also identified close of the ROW. The draft ESIAs proposed relevant measures to protect endangered species.

Forests OP/BP 4.36 Yes

The policy is triggered as some project activities will most likely imply cleaning up of over 1,000 ha of forest and sensitive areas spaces mainly in Guinea as well as in some parts of Mali. The two governments envisage to re-afforest an equivalent if not greater surface as an ecosystem mitigation measure. Provisions are being offered in the ESIA that will be complied with during project implementation. Relevant measure will be further define in the needes site specific ESMPs during project implementation.

Pest Management OP 4.09 No

The policy is not triggered as the project does not anticipate acquiring pesticides. The iron/concrete pylons will be built without requiring pretreatment for termites or rodent insects.


Dec 19, 2017 Page 18 of 21

Physical Cultural Resources OP/BP 4.11 Yes

The policy is triggered as several cultural sites have, so far, been pre-identified in the project areas along the T & D-lines; and the ESIAs reports have proposed relevant mitigation measures, such as the use of “Chance Finds” protocoles to ensure a safe and sustainable the protection of these sites.

Indigenous Peoples OP/BP 4.10 No

The policy is not triggered as no Indigenous Peoples, as per World Bank definition, have been identified in the project areas in the two countries. Although there are herders and transhuman populations found along the areas, these issues will be rather captured under OP/BP 4.01 to address their vulnerability aspects.

Involuntary Resettlement OP/BP 4.12 Yes

The policy is triggered as the project foreseen activities will require land acquisition along both the T and D-line as well as for the construction of stations and substation and workers and material storage camps in both countries, which will lead to loss of assets and/or restriction of access to various means of livelihood upon which affected and/or project riparian communities would depend heavily; hence resulting in the payment of compensation whether or not project affected persons may have to move. The two Government have, with the help of the ongoing regional program of OMVG, prepared two standalone safeguards instruments, namely ESIAs that deal with several socio-economic aspects relevant to supporting the needs of project affected or impacted persons, as well as RAPs to comply with the core requirement of OP/BP 4.12 policy. Just as the ESIA, the RAP are currently being reviewed by the Bank and once approved, will be publicly disclosed both in-country and at the InfoShop prior to project appraisal.

Safety of Dams OP/BP 4.37 TBD

Since the project will most likely draw energy from existing hydro-power dams, the variation of water level, depending on its usage by downstream and/or upstream communities, as well as the climate variation (impact of Climate Change) may possibly impact the sustainability of the energy services to the targeted beneficiary communities. The team will further assess this likability as well as seek advice from our Lead Specialists and RSA, and advise accordingly prior to project appraisal. If not triggered, slight provisions will however be captured in the ESIAs or site specific ESMPs for safety and security. If triggered,


Dec 19, 2017 Page 19 of 21

a standalone Dam Safety Plan will be prepared by both countries in compliance with policy core requirements.

Projects on International Waterways OP/BP 7.50

TBD

Though there are no international waterways along the targeted project areas, however, the fact that the functioning of both the T and D-lines will very highly depend on the peaceful sustainability of the Gambia River Basin; the policy is set to TBD and the safeguards team will further assess this likability during the next safeguards preparation mission and/or seek advice from both the Leads and RSA on whether or not to trigger the policy and prepare a Riparian Notification Letter sent to the GBRB (Gambia River Basin) for compliance prior to project appraisal.

Projects in Disputed Areas OP/BP 7.60 No

The current conflict that spur in Mali is mostly located in the mid-northern regions of the country, which is way far from the targeted project areas located in the southern region bordering Guinea. This is to just state that the policy will not be triggered for these very same reasons.

E. Safeguard Preparation Plan Tentative target date for preparing the Appraisal Stage PID/ISDS Apr 18, 2018 Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing should be specified in the Appraisal Stage PID/ISDS A first draft of 4 standalone safeguards documents have already been prepared by the two countries which the World

Bank Safeguards Team is currently reviewing. In like of the triggered safeguards policies, these are sufficient enough for the project to comply with appraisal stage requirements. If found of quality, these will soon be submitted to the RSA for Bank’s approval and in-country and InfoShop public disclosure before January 30th, 2018. Should there be any need of site specific ESMPs, these will most likely be prepared during project implementation once the final T and D-lines as well as stations and substation final design footprints have been known. The Appraisal is being set to April 18th, 2018, which basically means that both safeguards instruments and PID/ISDS

ought to be disclosed by no later than April 12,th, 2018. The team will endeavor to satisfactorily handle this matter beforehand, say by end of March, 2018.


Dec 19, 2017 Page 20 of 21

CONTACT POINT

World Bank

Thierno Bah

Senior Energy Specialist

Borrower/Client/Recipient

Republic of Guinea

Kanny Diallo

Minister of Planning and International Cooperation

[email protected]

Republic of Mali

Boubou Cisse

Minister of Economics and Finance

[email protected]

Implementing Agencies

EDG

Attou Abdenbi

Managing Director

[email protected]

EDM

Dramane Coulibaly

Managing Director

[email protected]

FOR MORE INFORMATION CONTACT

The World Bank

1818 H Street, NW

Washington, D.C. 20433

Telephone: (202) 473-1000

Web: http://www.worldbank.org/projects

APPROVAL

Task Team Leader(s): Thierno Bah

http://www.worldbank.org/projects


Dec 19, 2017 Page 21 of 21

Approved By APPROVALTBL

Safeguards Advisor: Maman-Sani Issa 16-Jan-2018

Practice Manager/Manager: Charles Joseph Cormier 23-Jan-2018

Country Director: Michael Hamaide 12-Feb-2018

Project Information Document/ Safeguards Data Sheet (PID/ISDS) … · 2017. 12. 19. · energy markets, ECOWAS has put in place, in 1999, the West African Power Pool (WAPP), a cooperative

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