The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
REPORT NO.: RES55796
RESTRUCTURING PAPER
ON A
PROPOSED PROJECT RESTRUCTURING
OF
MG-ELECTRICITY SEC OPERATIONS & GOVERNANCE IMPROVEMENT PROJECT(ESOGIP)
APPROVED ON MARCH 22, 2016
TO
MINISTRY OF ECONOMY AND FINANCE
ENERGY & EXTRACTIVES
EASTERN AND SOUTHERN AFRICA
Regional Vice President: Victoria Kwakwa
Country Director: Zviripayi Idah Pswarayi Riddihough
Regional Director: Wendy E. Hughes
Practice Manager/Manager: Erik Magnus Fernstrom
Task Team Leader(s): Tsiry Andriantahina, Justin Marie Bienvenu
Beleoken Sanguen
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
ABBREVIATIONS AND ACRONYMS
ADER Agence de Développement de l’Electrification Rurale/Rural
Electrification Development Agency
AF Additional Financing
ARELEC Autorité de Regulation de l’Electricité / Electricity Regulation Authority
CMS Commercial Management System
DCC Distribution Control Center
DMS Distribution Management System
EPC Engineering Procurement and Construction
ERP Enterprise Resource Planning
ESMAP Energy Sector Management Assistance Program
ESOGIP Electricity Sector Operations & Governance Improvement Project
FM Financial Management
HV High voltage
IDMS Integrated Distribution Management System
IPF investment project financing
JIRAMA Jiro sy Rano Malagasy / National Electricity Utility
kV Kilovolt
kWh Kilowatt-hour
LCDP Least Cost Power Development Plan
MV Medium voltage
NES National Electrification Strategy
O&M Operation and maintenance
PIU Project Implementation Unit
RAP Resettlement Action Plan
RPP Revenue Protection Program
SCADA Supervisory Control and Data Acquisition
TA Technical assistance
WBG World Bank Group
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
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BASIC DATA
Product Information
Project ID Financing Instrument
P151785 Investment Project Financing
Original EA Category Current EA Category
Partial Assessment (B) Partial Assessment (B)
Approval Date Current Closing Date
22-Mar-2016 30-Jun-2023
Organizations
Borrower Responsible Agency
Ministry of Economy and Finance
Project Development Objective (PDO)
Original PDO
The Project Development Objective is to improve the operational performance of the national electricity utility (JIRAMA)
and improve the reliability of electricity supply in the project area and, in the event of an eligible crisis or emergency, to
provide immediate and effective response to said eligible crisis or emergency.
OPS_TABLE_PDO_CURRENTPDO
Summary Status of Financing (US$, Millions)
Net
Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed
IDA-62800 14-Jun-2018 05-Oct-2018 29-Apr-2019 30-Jun-2023 40.00 17.33 20.93
IDA-57730 22-Mar-2016 08-Apr-2016 24-Aug-2016 30-Jun-2023 65.00 56.78 8.49
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
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
1. This paper seeks approval from the Country Director for a Level II restructuring of the Electricity Sector Operations &
Governance Improvement Project (ESOGIP), Credits No. 5773-MG (P151785) and No. 6280-MG (P164318), which will
cancel undisbursed amount.
2. Background: ESOGIP is an Investment Project Financing (IPF) that was approved on March 22, 2016, in the amount
of US$65 million equivalent, and became effective on August 24, 2016. An Additional Financing (AF) in the amount of
US$40 million was approved on June 14, 2018 and became effective on April 29, 2019. The Project’s closing date is June
30, 2023. The Project Development Objective (PDO) is " to improve the operational performance of the national electricity
utility (JIRAMA) and improve the reliability of electricity supply in the project area and, in the event of an eligible crisis or
emergency, to provide immediate and effective response to said eligible crisis or emergency.” ESOGIP consists of five main
components: (a) Improving electricity sector planning and financial sustainability (US$5.98 million); (b) Strengthening
operational performance and governance of JIRAMA (US$ 17.56 million); (c) Investing in enhanced reliability of electricity
(US$78.12 million), (d) Project Management (US$3.34 million); and (e) Contingent Emergency Response Component
(CERC) (US$ 0 million).
3. Project performance to date: Progress towards achieving the PDO is rated Moderately Satisfactory (MS), and
Implementation Progress (IP) is rated MS. Financial Management is currently rated Moderately Unsatisfactory (MU),
Procurement is rated satisfactory. There are no pending audits. The project was restructured on December 22, 2021, and
the project closing date extended from December 31, 2021, to June 30, 2023, after the critical issue related to the audit
on asset management has been resolved, giving more time to complete two activities that are at the heart of the project:
(i) dispatching and control center (ii) transmission line. However, the Client is still facing issues on implementation of these
same remaining activities. Firstly, the SCADA and the acquisition and installation of the transmission line has continued
facing complications during the procurement process. The completion by the closure date of the project has been
reassessed to be not achievable in the frame of this project and the Government decided to cancel this activity. Secondly,
the first three lots of 4 for the transmission line activity has been evaluated to be not all completed by the end of the
project as it depends on the implementation of the RAP which is not planned to be completed this semester. The
Government decided to cancel this activity. Also, based on the conclusion of the evaluation of JIRAMA's performance-
based compensation system conducted by the external auditor, it was concluded that the system implemented by JIRAMA
needs much improvement. This led to the non-continuation of this activity given the timeframe of the project.
Although two major activities will not be finalized before the project's closing date of June 30, 2023, the activities carried
out have improved JIRAMA's operational performance as well as its electricity supply. The PDO has been reached at more
than 90 percent. Indeed, in terms of loss reduction, from 35% (in 2015), the project was able to reach 26.9% (February
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
2023) out of an initial target of 24%. The number of annual interruptions has been reduced by more than half from 870
interruptions per year (in 2015) to 402 interruptions per year (February 2023) out of a target of 450 interruptions. Also,
the number of direct beneficiaries of the project has been reached at 94 percent with a value of 330,000 out of a target
of 350,000 since the beginning of the project. The project was also an essential support for the improvement of the sector
planning as well as the implementation of tariff reforms. In particular, the project has financed the sector's least-cost
development plan and the tariff studies that led to the new tariffs for residential and industrial customers.
4. Status of implementation: Overall disbursement as of February 28, 2023, is US$74.10 million, which represents 72
percent of the available funds. To date, the four project components have progressed as follows:
a) Component 1: Improving electricity sector planning and financial sustainability: Strategic assessments were
completed under this component, (a) Least Cost Development Plan (LCDP) providing the roadmap for the
development of least cost generation projects and associated transmission networks; (b) National
Electrification Strategies (NES) defining the technical, institutional, and financial arrangements to scale-up
sustainable provision of electricity services; (c) development of a tariff study to address sector financial
viability; (d) strengthening capacity of public agencies responsible for least-cost planning and electrification
(Ministry of Energy, Electricity Regulation Authority [ARELEC], Rural Electrification Development Agency
[ADER], and JIRAMA ; (e) provision of technical assistance, capacity building, and consultancy service for the
development of ten (10) small hydro” to prepare tenders for high-priority small hydropower plants (assessed
under the ESMAP funded TA). This includes reviewing pre-feasibility works for sites, finance detailed
engineering, environmental and social studies needed to prepare bankable feasibility studies, and provision
of transaction support and advisory services required to ensure competitive and transparent procurement
processes.
b) Component 2: Strengthening operational performance and governance of JIRAMA: the activities completed
under component 2 are: (iii)implementation of integrated management and geographic information system
MATSELAKA; (iv) implementation of the Revenues Protection Program; (v) the preparation of the performance
improvement program for JIRAMA.
i. Implementation of the integrated management and geographic information system for GIS
management called MATSELAKA : In line with the Governance Improvement Program (GIP), this
component supported the procurement and installation of the GIS system, which include a Commercial
Management System (CMS), an Integrated Distribution Management System (IDMS) and an Enterprise
Resource Planning (ERP) system, to improve the efficiency, transparency and accountability of processes
and development activities in all business areas. This includes operation and maintenance (O&M) of
electricity supply assets, customers’ complaint handling, commercial functions, and enterprise resource
management. The installation and use of the GIS system was complemented with maintenance.
ii. RPP (Revenue Protection Program) project: This activity identified in the ESOGIP Initial Financing’s (IF)
PAD consists of implementing the program for the sustainable reduction of non-technical losses in supply
(off-meter consumption) through the systematic remote recording and monitoring of consumption of
large users, as foreseen in the GIP. The initial phase of the RPP included a "high value" segment of about
8,500 meters, which accounts for 50 percent of total physical sales (kilowatt-hours) in 2014. This segment
is composed of all 1300 HV/MV customers and the 7200 users connected to LV grids with a monthly
demand higher than 500 kWh or with doubtful consumption situations. The contract was awarded to ZTE
as an EPC with the supply, installation, and commissioning of 8500 smart meters. The contract was
completed in July 2021. As a reminder, 40% of the revenue from electricity activities is generated by
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
HV/MV customers. Clear improvements were made in these resources just after the meters were
commissioned.
iii. Preparation of the performance improvement program for JIRAMA: The project supported the
recruitment of JIRAMA's senior management team completed in 2019. This included the Director General,
deputy CEOs, and Directors (including the Director of Human Resources). Also, the project evaluated the
Performance-Based Compensation programs implemented internally by JIRAMA. The first bonus
payments for 2020 and 2021 were carried out by JIRAMA under its own funding. An independent auditor
recruited at the end of 2021 in charge of the evaluation and the monitoring of the Performance Based
Compensation program proposed by JIRAMA delivered his report in 2022. The conclusion confirmed that
the system implemented by JIRAMA needs improvement.
c) Component 3: Investing in enhanced reliability of electricity
In the component 3 the main completed activity is: Andekaleka screening machine, Reinforcement of the existing 138 /
63kV substation, Rehabilitation and/or improvement of existing distribution networks, the rehabilitation of production
plants auxiliaries.
iv. ANDEKALEKA screening machine : The mobile automatic screening machine has been installed at the 96
MW Andekaleka Hydroelectric Plant. Functional and operational tests were successfully carried out with
the operating teams during the month of June-July 2021. It should be noted that this installation will solve
the problems of clogging of the dam’s grid of the power station during the periods of intense rain and
cyclones leading to the reduction or even the stop of the production of the power station for a few days
and which leads each time to load shedding at the level of the RIA with minimum losses of 600 KUS$ for
each occurrence of clogging.
v. Reinforcement of the existing 138 / 63kV substation: The two transformers provided by CHINT are in
operation since October 2022. The connection of the transformers with the grid coming from Andekaleka
has been successfully performed and the full power from the dam can be absorbed.
vi. Rehabilitation and/or improvement of existing distribution networks: 288km of the 300km (representing
96%) of distribution lines planned to be rehabilitated and constructed under the project are completed as
of February 28, 2023.
d) Component 4 - Project Management: All planned arrangements are in place, including the Project
Implementation Unit (PIU) housed in the Ministry in charge of Energy and JIRAMA are staffed and operational.
5. Activities to be cancelled:
e) RIA 90kV looping lines project, substations and 20kV passages in the regions: This activity concerns the
supply and installation of equipment, reinforcement and extension works of the RIA source substations,
adaptation of the medium voltage parts to allow the passage in 20 kV in the regions; and the supply and
installation of equipment and extension works of a part of the Antananarivo interconnected network by the
construction of two 90 kV lines (with a variant in 63 kV) connecting respectively: the Tana North substation to
the Ambodivona substation, and the Tana North substation to the Tana South substation. Negotiations
between JIRAMA and the tenders are completed for the 4 lots of the activity. However only the contract for
lot 4 has been signed with constructions and installations planned to be finalized by the end of the project.
The 3 other lots are still in the procurement phase since JIRAMA has changed his organization last quarter
2022 leading to the lack of the persons in charge of signatures. Also, given the multiple delays in implementing
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
the Resettlement of Affected Persons (RAP) and the lack of clear visibility, the cancellation of Lot No. 1, 2 and
3 relating to work on the 90 kV transmission line is considered.
f) Dispatching and BCC project: This activity allows for the centralised management of generation, transmission
and distribution networks, in particular to reduce energy production costs and intervention times on the
electricity networks throughout Madagascar. The procurement process for the building was finalized and the
construction phase has started in September 2022. The structural works of the building show good progress
and will be finalized by the end of the closing date of the project. Regarding the SCADA system, the project is
facing procurement delays due to procurement issues. And considering the uncertainties as to the date of
signature of the contract and the remaining time of the project, the completion of this activity won’t be
achieved.
g) Performance-Based Compensation programs: Based on the conclusion of the evaluation of JIRAMA's
performance-based compensation system conducted by the external auditor, it was concluded that the
system implemented by JIRAMA needs much improvement. This led to the non-continuation of this activity
given the timeframe of the project.
II. DESCRIPTION OF PROPOSED CHANGES
6. Cancellation of non-used credit. SDR 19.8 million non-used credit related to (i) dispatching and control center, (ii)
transmission line, and (iii) performance-based compensation will be cancelled.
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III. SUMMARY OF CHANGES
Changed Not Changed
Results Framework ✔
Components and Cost ✔
Cancellations Proposed ✔
Reallocation between Disbursement Categories ✔
Disbursement Estimates ✔
Implementing Agency ✔
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
DDO Status ✔
Project's Development Objectives ✔
PBCs ✔
Loan Closing Date(s) ✔
Disbursements Arrangements ✔
Overall Risk Rating ✔
Safeguard Policies Triggered ✔
EA category ✔
Legal Covenants ✔
Institutional Arrangements ✔
Financial Management ✔
Procurement ✔
Implementation Schedule ✔
Other Change(s) ✔
Economic and Financial Analysis ✔
Technical Analysis ✔
Social Analysis ✔
Environmental Analysis ✔
IV. DETAILED CHANGE(S)
OPS_DETAILEDCHANGES_COMPONENTS_TABLE
COMPONENTS
Current
Current Proposed Proposed
Cost Action
Component Name Component Name Cost (US$M)
(US$M)
Improving electricity sector Improving electricity sector
planning and financial 5.98 No Change planning and financial 5.98
sustainability sustainability
Strengthening operational Strengthening operational
performance and governance of 17.56 Revised performance and governance 17.56
JIRAMA of JIRAMA
Investing in enhanced reliability Investing in enhanced
78.12 Revised 78.12
of electricity reliability of electricity
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
Project management 3.34 No Change Project management 3.34
Immediate Response
Immediate Response Mechanism 0.00 No Change 0.00
Mechanism
TOTAL 105.00 105.00
OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE
CANCELLATIONS
Value Reason
Current Cancellation New
Ln/Cr/Tf Status Currency Date of for
Amount Amount Amount
Cancellation Cancellation
Disburs UNDISBURSE
IDA-57730-
ing&Re XDR 47,100,000.00 6,300,000.00 28-Apr-2023 40,800,000.00 D BALANCE
001
paying AT CLOSING
UNDISBURSE
IDA-62800- Disburs
XDR 27,900,000.00 13,500,000.00 28-Apr-2023 14,400,000.00 D BALANCE
001 ing
AT CLOSING
OPS_DETAILEDCHANGES_REALLOCATION _TABLE
REALLOCATION BETWEEN DISBURSEMENT CATEGORIES
Financing %
Current Allocation Actuals + Committed Proposed Allocation
(Type Total)
Current Proposed
IDA-57730-001 | Currency: XDR
iLap Category Sequence No: 1 Current Expenditure Category: GD,WK,NCS,CS,TR & OC Pt 1;4.1
1,300,000.00 1,078,591.23 1,300,000.00 100.00 100.00
iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,TR & OC Pt 2;3;4.2
44,800,000.00 36,140,606.26 38,500,000.00 100.00 100.00
iLap Category Sequence No: 3 Current Expenditure Category: PPF REFINANCING
1,000,000.00 303,498.14 1,000,000.00
iLap Category Sequence No: 4 Current Expenditure Category: Emergency Expenditures Pt 5
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
0.00 0.00 0.00 100.00 100.00
Total 47,100,000.00 37,522,695.63 40,800,000.00
IDA-62800-001 | Currency: XDR
iLap Category Sequence No: 1 Current Expenditure Category: GD,WK,NCS,CS,TR & OC Pt 1.2&4.1
2,900,000.00 2,612,309.05 2,900,000.00 100.00 100.00
iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,TR & OC Pt 2.2;3;4.2
22,200,000.00 6,790,846.88 10,800,000.00 100.00 100.00
iLap Category Sequence No: 3A Current Expenditure Category: GD,WK,NCS,CS,TR & OC Pt 2.2
700,000.00 0.00 700,000.00 100.00 100.00
iLap Category Sequence No: 3B Current Expenditure Category: PERFORMANCE BASED INCENTIVE PT 2.2
2,100,000.00 0.00 0.00 100.00 100.00
iLap Category Sequence No: 4 Current Expenditure Category: IRM
0.00 0.00 0.00 100.00 100.00
Total 27,900,000.00 9,403,155.93 14,400,000.00
OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE
DISBURSEMENT ESTIMATES
Change in Disbursement Estimates
Yes
Year Current Proposed
2016 255,060.00 521,035.00
2017 3,821,155.00 17,157,370.00
2018 5,330,325.00 15,046,241.00
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
2019 13,792,510.00 9,568,125.00
2020 27,025,490.00 11,632,689.00
2021 37,350,445.00 5,656,517.00
2022 17,425,015.00 2,946,269.00
.
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
.
Results framework
COUNTRY: Madagascar
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP)
Project Development Objectives(s)
The Project Development Objective is to improve the operational performance of the national electricity utility (JIRAMA) and improve the reliability of
electricity supply in the project area and, in the event of an eligible crisis or emergency, to provide immediate and effective response to said eligible crisis
or emergency.
Project Development Objective Indicators by Objectives/ Outcomes
RESULT_FRAME_TBL_PDO
Indicator Name PBC Baseline End Target
Reliability of electricity supply in the project area improved
Total electricity losses per year in the project area (Percentage) 35.00 24.00
Interruptions in electricity service per year in the project area
870.00 450.00
(Number)
Direct project beneficiaries (Number) 0.00 350,000.00
Female beneficiaries (Percentage) 0.00 50.00
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2
Improving electricity sector planning and financial sustainability
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
RESULT_FRAME_TBL_IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2
Completion of key studies: Least Cost
LCPDP and Tariff Studies completed
Power Development Plan (LCPDP), Tariff No
and published
Study (Text)
Percentage of total sales (kWh) covered
by the Revenue Protection Program 0.00 40.00
(RPP). (Percentage)
Competitive Bidding process for the
development of one priority small hydro 0.00 1.00
site launched (Number)
Strengthening operational performance and governance of JIRAMA
Percentage of technical positions held by
females that report directly to Directors 5% Increased by 15%
in JIRAMA (Text)
JIRAMA customer satisfaction survey
undertaken in project area and report on Second Customer Satisfaction Customer satisfaction survey
No survey First Customer satisfaction survey
customer feedback and how it was Survey administered by JIRAMA
addressed by JIRAMA (Text)
Installation of Management Information
MIS functioning and used for sector
System (MIS) at JIRAMA, and populated No
monitoring and reporting
with data (Text)
JIRAMA's Management Improvement JIRAMA business plan published,
MIP adopted by Government, key
Plan (MIP) completed and key Director-level and above
management positions advertised
management positions recruited (Text) competitively recruited
Public availability of customer
No Yes
satisfaction survey (Yes/No)
Investing in enhanced reliability of electricity
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
RESULT_FRAME_TBL_IO
Indicator Name PBC Baseline Intermediate Targets End Target
1 2
Dispatching Center and Distribution
Control Center constructed and No Yes
commissioned (Yes/No)
Action: This indicator has been Marked
for Deletion
Transmission lines constructed or
rehabilitated under the project 0.00 134.00
(Kilometers)
Transmission lines constructed under
0.00 34.00
the project (Kilometers)
Action: This indicator has been
Marked for Deletion
Transmission lines rehabilitated under
0.00 100.00
the project (Kilometers)
Distribution lines constructed or
rehabilitated under the project 0.00 300.00
(Kilometers)
Distribution lines constructed under
0.00 165.00
the project (Kilometers)
Distribution lines rehabilitated under
0.00 135.00
the project (Kilometers)
Contingent Emergency Response
Time taken for first disbursement of
funds requested by Government for an 0.00 8.00
eligible emergency or crisis (Weeks)
IO Table SPACE
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
The World Bank
MG-Electricity Sec Operations & Governance Improvement Project(ESOGIP) (P151785)
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