The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) REPORT NO.: RES60305 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SIERRA LEONE ENERGY SECTOR UTILITY REFORM PROJECT APPROVED ON DECEMBER 18, 2013 TO REPUBLIC OF SIERRA LEONE ENERGY & EXTRACTIVES WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Robert R. Taliercio Regional Director: Franz R. Drees-Gross Practice Manager/Manager: Ashish Khanna Task Team Leader(s): Kagaba Paul Mukiibi, Ibrahim Jalloh The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) ABBREVIATIONS AND ACRONYMS The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P120304 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 18-Dec-2013 31-Mar-2024 Organizations Borrower Responsible Agency Republic of Sierra Leone Project Development Objective (PDO) Original PDO The Project Development Objective is to improve the operational performance of the national electricity distribution utility. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-64110 17-May-2019 17-Jun-2019 14-Oct-2019 31-Mar-2024 50.00 47.00 2.31 IDA-53330 18-Dec-2013 17-Jan-2014 15-Dec-2014 31-Dec-2022 40.00 36.40 0 The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background 1. The parent project/original financing of the Sierra Leone Energy Sector Utility Reform Project (ESURP) with an amount of US$40 million (IDA-53330) was approved on December 18, 2013, became effective on December 15, 2014, and closed on December 31st, 2022. The additional financing (AF) of ESURP with an amount of US$50 million (IDA-64110) was approved on May 17, 2019, and became effective on September 30, 2019. The AF complements the original financing with a project development objective (PDO) of improving the operational performance of the national distribution utility which is now known as EDSA. The financing supports investments to strengthen the infrastructure, build capacity, improve efficiency and reliability of the distribution network owned and operated by EDSA. The project comprises of the following components: (i) Distribution Utility Capacity Enhancement and Performance Improvement (IDA US$16 million equivalent); (ii) Improvement of Electricity Supply in Urban Areas (IDA US$51 million equivalent); (iii) Sector Planning Assistance, Project Implementation Support and Monitoring and Evaluation (US$7 million equivalent); (iv) COVID-19 emergency response component (IDA US$17 million equivalent); and (v) Contingent Emergency Response Component (IDA US$0 million equivalent). B. Implementation Status 2. The Progress towards achievement of the PDO, the overall Implementation Progress and overall safeguard ratings are rated Moderately Satisfactory while overall risk is rated Moderate. The Financial management is also rated Moderately Satisfactory, and there are no overdue audit reports or Interim Financial Reports (IFRs). Disbursements are at 97.3 percent with an outstanding balance of US$2,231m as of March 21, 2024. Procurement performance is rated Satisfactory while compliance with Environmental and Social Standards (ESSs) is rated Moderately Satisfactory, with the Environmental and Social Risk Rating of Substantial. ESURP has five components and the detailed description of the progress of ESURP by its components is presented below. 3. Component 1: Distribution Utility Capacity Enhancement and Performance Improvement – Completed. a) EDSA Management: The Board of Directors has appointed an experienced Director General with management expertise to oversee management of the utility and its operations. A strong leadership with clear vison for the sector is crucial. This is especially important considering the government of Sierra Leone’s (GOSL) decision to have Private Sector Participation (PSP) in distribution utility. The transaction advisor for PSP in EDSA has been hired following completion of the options study report to prepare EDSA for PSP involvement. The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) b) Network quality improvement and status of technical, commercial and collection losses: The reliability of the distribution network has improved substantially resulting in improvement on key performance indicators of the PDO. The distribution capacity of the 33 kV and 11 kV network increased from 40 MW in 2016 to 78 MW in 2023. The Aggregate Technical, Commercial losses are at 43 percent. The implementation of the Integrated Management System (IMS) has helped significantly in putting systems in place as it went live on February 2023. It has been utilized as a platform for transparency in terms of billing, revenue collection and other operational activities. EDSA is also implementing their loss reduction plan which includes rolling out of prepaid meters, Advanced Metering Infrastructure (AMI), combating illegal abstraction and regularizing customers with wrong tariff allocations. The customer base has increased significantly from 185,000 in 2018 to 320,000 users by December 2023. 4. Component 2: Improvement of Electricity Supply in Urban Areas – Ongoing. This relates to: (i) the reinforcement, rehabilitation, and extension of the primary medium voltage (33 kV) distribution network; and (ii) the reinforcement, rehabilitation, and extension of priority secondary (11 kV) and low voltage distribution network. a) Original financing. This component funded the construction works for 11/0.4kV Distribution lines and Customer Connections and the replacement of switchgear in substations. All construction activities were completed, commissioned, and lines operational. Disbursement under the original financing completed in April 2023. b) Additional financing: This component is funding the supply and installation of (i) 33/11kV Substations, and (ii) 33kVSub-transmission Lines. Works are being implemented under two separate Engineering Procurement and Construction (EPC) contracts. These contracts were signed in December 2020. The overall progress of the construction works is at 70%. Implementation of these contracts have been slower than expected due to a number of challenges which include: i) the COVID pandemic; (ii) the supply chain constraints due to Russia’s invasion of Ukraine and conflicts in the Middle East; (iii) implementation of curfew between November and December 2023; ii) electioneering process; iii) failure to acquire full right of way for the sub transmission lines; iv) the prolonged rainy season from June to October year on end; and (v) delays in acquiring construction work permits in the central business district. Despite these challenges, EDSA has implemented measures to reduce the risk and progress works to the level achieved today. The EPC contracts under this component will not be completed by the current closing date of March 31, 2024. The works are scheduled to complete by end of May 2024. 5. Component 3: Sector Planning Assistance, Project Implementation Support and Monitoring and Evaluation – Completed. This component funded the capacity building of Ministry of Energy’s Planning Unit and staff of the MoE. The Planning Unit and the World Bank have worked together on creating a National Electrification Platform that provides the least cost path to universal electrification. The platform looks at grid extension, densification, mini-grids, and other off-grid solutions as well. A long-term vision for the planning unit is paramount to sustain planning activity in the Ministry and the Ministry of Energy should consider institutionalizing the planning unit and its integration in its organigramme. The salaries of the planning unit staff were paid through the ESURP project, and discussions are ongoing with the Ministry of Energy to allow for adoption of the planning unit under the Ministry’s organigramme so that the unit’s expenses are covered by the GoSL’s budget at the closing of the ESURP project. 6. Component 4: COVID-19 emergency response component – Completed. Procurement of distribution The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) materials for the electricity network, personal protective equipment (PPE), office equipment and Solar PV systems for Health Facilities was completed. 7. Component 5: Contingent Emergency Response Component. This component was not triggered. C. Rationale for Closing Date Extension 8. The Government of Sierra Leone has requested the World Bank to extend the closing date of IDA Credit IDA-64110 from March 31, 2024, to June 28, 2024. The justification provided for the extension is due to delays in shipment of materials and delays in full acquisition of the right of way for the power lines; and challenges in scheduling shutdowns for works in the central business district of Freetown without affecting many electricity consumers. 9. Without completing the construction works under component 2, the end targets for four out of five PDO indicators related to (i) Reduction of average duration of outages per year at the MV level; (ii) Reduction in average frequency of outages per year at the MV level; (iii) People provided with new and improved electricity service; and (iv) The increase in the distribution capacity of the 33 kV and 11 kV network will not be met. Completion of the activities will also have a positive impact on the Regional Emergency Solar Power Intervention Project (RESPITE, P179267) project by providing required infrastructure to evacuate power to all the load centers in Freetown. 10. Following extensive discussion between the Bank and the GoSL authorities, the major bottlenecks mentioned in paragraph (3) above have been resolved. Full acquisition of right of way is complete and the last shipment of materials has arrived in Sierra Leone on March 16, 2024. The contractors have submitted their respective implementation schedule and have committed to timelines that will have the works completed by end of May 2024. EDSA has also sent out public notices in the media communicating to the electricity consumers on the shutdown schedules in the Freetown that will last for one month which commenced on Saturday March 23, 2024, and will go on up to April 23, 2024. 11. Further, the requirements of the World Bank Investment Project Financing Policy and Directive regarding extension of closing date are met, specifically: (i) PDO continues to be achievable; (ii) the World Bank and the Recipient agree on actions to complete the project; (iii) the performance of the Recipient remains satisfactory; (iv) the project is not subject to suspension of disbursements; and (v) there are no outstanding audit reports or audit reports which are not satisfactory to the World Bank. Also, to date, the project has complied fully with the submission of timely, acceptable, IFRs. II. DESCRIPTION OF PROPOSED CHANGES 12. The closing date for IDA Credit IDA-64110 will change from March 31, 2024, to June 28, 2024. 13. The end target dates for PDO indicators and Intermediate indicators with an end target date of March 31, 2024, in the project Results Framework will be updated to June 28, 2024. The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications 31-Aug-2020, 31- IDA-53330 Closed 31-Dec-2018 Dec-2022, 15-Aug- 2023 30-Jun-2023, 31- IDA-64110 Effective 31-Dec-2022 28-Jun-2024 28-Oct-2024 Mar-2024 . The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) . Results framework COUNTRY: Sierra Leone Sierra Leone Energy Sector Utility Reform Project Project Development Objectives(s) The Project Development Objective is to improve the operational performance of the national electricity distribution utility. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Improve Operational Performance of EDSA Aggregate Technical, Commercial and Collection (ATC&C) Losses 51.00 30.00 of EDSA (Percentage) Action: This indicator has been Revised Average duration of outages per year at the MV level in the 117.00 45.00 project area (Hours) Action: This indicator has been Revised Average interruption frequency per year at the MV level in the 183.00 75.00 project area (Number) Action: This indicator has been Revised The distribution capacity of the 33 kv and 11 kV network 40.00 130.00 increased (Megawatt) Action: This indicator has been Revised People provided with new or improved electricity service (CRI, 0.00 625,480.00 Number) Action: This indicator has been Revised The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target People provided with new or improved electricity service - 0.00 318,995.00 Female (CRI, Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Component 1: Distribution Utility Capacity Enhancement and Performance Improvement Contractor for utility operation and management appointed No Yes (Yes/No) New Management Information System (MIS) installed (Yes/No) No Yes Component 2: Improvement of Electricity Supply in Urban Areas Substations constructed and rehabilitated under the Project 0.00 10.00 (Number) Action: This indicator has been Revised Distribution lines (33kV, 11kV and LV) constructed or 0.00 500.00 rehabilitated under the project (Kilometers) Action: This indicator has been Revised Distribution lines rehabilitated under the project (Kilometers) 0.00 300.00 Action: This indicator has been Revised Distribution lines rehabilitated under the project (Kilometers) 0.00 300.00 Action: This indicator has been Revised Energy Meters Replaced and Installed (Number) 0.00 20,000.00 The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Action: This indicator has been Revised Component 3: Sector Planning Assistance, Project Implementation Support and Monitoring and Evaluation Reports of Contractor’s performance submitted every year to the 0.00 2.00 Steering Committee (Number) Action: This indicator has been Revised Grievances resolved within the stipulated period of time 0.00 90.00 (Percentage) Action: This indicator has been Revised Beneficiary feedback surveys undertaken (Number) 0.00 1.00 Action: This indicator has been Revised Number of Staff Trained (Number) 0.00 50.00 Action: This indicator has been Revised IO Table SPACE The World Bank Sierra Leone Energy Sector Utility Reform Project (P120304) Note to Task Teams: End of system generated content, document is editable from here. 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