i SCALING UP RENEWABLE ENERGY PROGRAM IN LOW INCOME COUNTRIES Mini Hydropower Plants and Related Distribution Networks Development Project COUNTRY: REPUBLIC OF MALI March 2018 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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SCALING UP RENEWABLE ENERGY PROGRAM IN LOW INCOME
COUNTRIES
Mini Hydropower Plants and Related Distribution Networks Development Project
COUNTRY: REPUBLIC OF MALI
March 2018
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LIST OF ACRONYMS
AfDB
ADF
African Development Bank
African Development Fund
AfIF Africa Investment Facility
AMADER L'Agence Malienne pour le Développement de l'Energie Domestique
et l'Electrification Rurale
ARP Abbreviated Resettlement Plan
CIF Climate Investment Fund
CREDD Economic Recovery and Sustainable Development Strategic
Framework
DEPS Directorate of Studies and Strategic Planning
DNE National Energy Director
EDM-SA Energie du Mali – Societé Anonyme
ESIA Environmental and Social Impact Assessments
ESMP Environmental and Social Management Plan
GHG Greenhouse Gases
GoM Government of Mali
IPP Independent Power Producer
PDM-Hydro Mini Hydropower Plants and Related Distribution Networks
Development Project
PMU Project Management Unit
SREP Scaling-up Renewable Energy Programme
TSF Transitioning States Facility
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TABLE OF CONTENTS
1. INTRODUCTION 1
Background Information 1
Project Rationale 2
Justification of SREP Intervention 3
2. PROJECT DESCRIPTION 4
Project Description and Objectives 4
Project Components 5
Brief Description of Expected Outcomes 6
3. FINANCING PLAN 7
Description of Project Costs 7
4. IMPLEMENTATION ARRANGEMENTS 8
Institutional and Implementation Arrangements 8
Project Timeline 9
Procurement 9
Financial Management Arrangements and Audit 10
Environmental & Social 11
Risks and Mitigation Measures 13
5. SREP INVESTMENT CRITERIA 13
Outline of SREP Investment Criteria 13
6. SREP RESULTS FRAMEWORK 15
Monitoring & Evaluation 15
7. INDICATIVE TIMELINE 15
8. CONCLUSION AND RECOMMENDATION 16
ANNEX 1: LOCATION OF THE PROJECT SITE 17
ANNEX 2: ECONOMIC ANALYSIS 18
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1. INTRODUCTION
Background Information
1.1 Mali, a landlocked country in the Sahel with a large portion of its territory in desert, has a
burgeoning population that is expected to grow from 18.1 million in 2016 to around 23.5 million
by 2025. Only 37% of the population lives in urban areas, the majority of which are clustered
around the capital of Bamako. The forecasted proportion of urban dwelling is not expected to
exceed 40%, even as the population rises into 2025
1.2 Almost 80% of the primary energy supply in Mali is from biomass, primarily from wood
and charcoal for domestic use. Particularly in rural areas, Malians rely heavily on biomass as the
sole form of energy. Some rural agglomerations have implemented diesel generation as an
alternative, but this is expensive and subject to fluctuations arising from price and availability of
fuel. This heavy reliance on biomass leads to a deforestation rate of about 4,000 square kilometres
per year at current levels; increasing population will put heavier burdens on biomass resources.
1.3 The electricity sub-sector in Mali is relatively undeveloped; the national energy access rate
is 41%. In rural areas, only 17% of the population has formal access to energy, while urban areas
see access rates closer to 70%. Even with overall production capacity of 556.2 MW, Energie du
Mali (EDM-SA) is unable to meet the needs of its existing customers and continues load-shedding
despite imports from Côte d’Ivoire and purchasing power from Independent Power Producers
(IPPs) for an additional 50 and 98 MW in 2016, respectively. For those households with access to
electricity, the average cost nationally in 2016 was USD 0.23 per kWh, almost double the
continent-wide average of USD 0.14 per kWh.
1.4 Providing access to energy, particularly in rural areas, is supported by government policy
and is driven by the L'Agence Malienne pour le Développement de l'Energie Domestique et
l'Electrification Rurale (AMADER). The United Nations Development Programme and the United
Nations Industrial Development Organization have supported, through AMADER, a long-term
program seeking to provide decentralized energy through 10 horsepower diesel engines to drive
power generation, water pumping and other devices in a multifunctional approach. At the village
level, these platforms are managed primarily by women’s associations. However, absent a local
feedstock, these village platforms rely on expensive and sometimes difficult to procure diesel fuel.
1.5 Armed conflicts starting in 2012 in Northern Mali, as part of a secession for an area referred
to by rebels as Azawad, led to nearly three years of armed conflict that drew in French and African
Union troops to re-stabilize the region. Though a ceasefire was signed in 2015, sporadic violence
still occurs throughout the country, including a mid-2017 attack by Islamists on a luxury resort in
Bamako. Food insecurity, economic instability and low delivery of basic services outside urban
areas are all cited as key drivers for continued instability throughout the country.
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Project Rationale
1.6 The Mini Hydropower Plants and Related Distribution Networks Development Project
(PDM-Hydro) is part of the Scaling-up Renewable Energy Programme (SREP) Investment Plan
(IP) endorsed by the SREP Sub-Committee (SC) November 2011. Backed by several donors,
SREP comprises three investment projects: (i) an on-grid Solar project not yet approved and
dropped for the SREP sealed pipeline, (ii) the PAPERM project approved in September 2014 and
currently under implementation; and (iii) this mini hydropower plants project. In addition, Mali is
benefiting from an allocation of USD 25 million under the SREP set-aside for a Solar PV project.
1.7 The original feasibility study for this project covered six sites including the two mini
hydropower plants that shall be supported by this project, as well as four micro hydropower plants
that will be supported in a subsequent project.
1.8 This project will contribute to an increase in the installed capacity of Mali’s electricity
system with a renewable energy source of 8.9 MW and promote the population’s access to quality
energy services. The annual energy produced is estimated at 23.68 GWh/year. Increasing
renewable energy installed capacity is part of the first pillar of Mali’s Economic Recovery and
Sustainable Development Strategic Framework (CREDD 2016-2018). The project is in line with
the National Strategy for the Development of Renewable Energies, dating back to 2006, which
aims to enhance the share of renewable energies in the national electricity production.
1.9 From a policy perspective, GoM has embarked on a “sector turnaround” with donor support
since the collapse of EDM-SA privatization in 2005. This includes substantial investment in
decentralized energy as a way to reach the wider country, as EDM-SA’s grid (and resources for
expansion) are limited primarily to urban areas. Investment in mini-grids is therefore a high
priority. Undertaken by AMADER, this typically has taken the form of concessionaires being
awarded a license to operate diesel gensets. Subsidies required to operate such systems feasibly in
the context of Malian rural communities’ ability to pay have proven unsustainable. As such, EDM-
SA is searching for alternatives including conversion to heavy fuel oil and exploring feasibility
around solar with storage, solar hybrid and other generation schemes. Investment in hydropower,
where available, is also a viable alternative to diesel and in line with EDM-SA’s strategy and the
national energy policy framework. The consultative process used to develop the SREP IP follows
the bottom-up approach that makes use of local cooperatives to drive mini-grid investment
decisions.
1.10 Lessons learned by AfDB in implementing power projects in Mali, including the
preparation of the SREP IP alongside the Government of Mali (GoM), have been taken into
account in this project design. Thus: (i) project implementation has been entrusted to EDM-SA,
an independently-managed, partially private company with adequate expertise for the execution of
project activities, (ii) the project includes provisions for additional support to the Project
Management Unit (PMU) in terms of international expertise with regards to procurement, and (iii)
the project includes provisions in the project design for training and capacity building for
stakeholders, particularly women, in the communities that will benefit from the power generated.
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1.11 The project’s impact areas are the Ségou and Mopti regions in central Mali. They are not
yet covered by the country's interconnected electricity grid and access to electricity is almost non-
existent outside the major agglomerations, where limited access through diesel gensets is the only
form of generation currently available. The project will help to reduce regional disparities and
fragility by connecting 12,500 households and economic operators to the public electricity service.
Furthermore, these regions have seen increasing incidents of violence and instability in recent
years, so the economic and social effects of power availability to ten communities served by these
mini hydropower plants will hopefully offset some of the political instability in the region.
1.12 The SREP IP was designed to promote the management and sharing of renewable energy
knowledge and products in Mali. As such, the knowledge and products generated by this project
will promote renewable energy development in Mali and offer opportunities for replication of good
practices in other countries of the sub-region. The PMU’s monitoring and evaluation expert will
provide a periodic report on the trend of indicators. Furthermore, reports filed by supervision
missions, the engineering consultant responsible for works monitoring and the project auditor are
sources from which the Bank will draw lessons on the achievement of project objectives, with a
view to improving the structuring of future operations.
Justification of SREP Intervention
1.13 This project is in line with SREP priorities and criteria, having already been included as
part of the overall SREP Investment Plan for Mali. Specifically, the implementation of the two
mini hydropower plants through this project will inform replication in subsequent micro
hydropower projects, and it will contribute to the economic and social well-being in the
communities where the two plants will be installed. It is also in-line with SREP’s focus on making
energy access affordable for end users without jeopardizing the long-term financial sustainability
of the project.
1.14 In terms of the SREP results framework, the project supports the project-level outcomes
of: (i) increased provision of community-level energy access in 10 rural communities, (ii) the
implementation of a green mini-grid system to offset current use of diesel power generation, and
(iii) modern energy access for 12,500 households, many of which currently rely exclusively on
biomass for energy consumption. Overall, this increases installed RE capacity in Mali by 8.9 MW
between the two plants. This results in overall country outputs of: (i) reduced or offset Greenhouse
Gas (GHG) emissions of 15,800 tonnes (CO2 equivalent) per year, (ii) increased health outcomes
due to more stable and cheaper electricity to health centres in the ten served communities, (iii) 400
direct jobs during construction of which 15% are expected to be for women, (iv) 20 permanent
direct jobs during the operation phase, 20 internships (50% reserved for women) and indirect
employment opportunities generated by access to productive energy, (iv) linked capacity building
ushering new economic opportunities and entrepreneurship, particularly for women. The SREP
grant will also leverage resources provided by the African Development Fund (ADF) through the
Transition States Facility (TSF) and the EU Africa Investment Facility (AfIF) by a factor over
nearly five times.
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2. PROJECT DESCRIPTION
Project Description and Objectives
2.1 The project aims at developing two mini hydro power plants by converting already
constructed water retention dams through a retrofitting process. The total capacity of both plants
is 8.9 MW with an expected energy generation of 23.68 GWh per year with an average capacity
factor of 0.30 driven by the seasonal variation in water flow on the Bani river. Included in the
project design is the construction and commissioning of two separate local distribution systems
for 10 communities near the two plants. It is estimated that 12,500 household connections will be
made along with the installation of 8,000 public lighting sets.
2.2 Location. The project impact area is shared between two regions, Segou and Mopti, and
includes 4 “cercles” (second-level administrative units) (Djenné, Tominian, Bla and San) and 14