The World Bank Solar Energy in Local Communities (P164435) REPORT NO.: RES55768 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SOLAR ENERGY IN LOCAL COMMUNITIES APPROVED ON FEBRUARY 28, 2020 TO REPUBLIC OF BURUNDI ENERGY & EXTRACTIVES EASTERN AND SOUTHERN AFRICA Regional Vice President: Victoria Kwakwa Country Director: Albert G. Zeufack Regional Director: Wendy E. Hughes Practice Manager/Manager: Julia M. Fraser Task Team Leader(s): Thierno Bah, Juliette Suzanne Georgette Besnard The World Bank Solar Energy in Local Communities (P164435) ABBREVIATIONS AND ACRONYMS ABER Agence Burundaise d'Electrification Rurale HC Health Center MINHEM Ministère de l'Hydraulique, de l'Énergie et des Mines PCU Project Coordination unit WFP World Food Program The World Bank Solar Energy in Local Communities (P164435) BASIC DATA Product Information Project ID Financing Instrument P164435 Investment Project Financing Environmental and Social Risk Classification (ESRC) Substantial Approval Date Current Closing Date 28-Feb-2020 01-Mar-2026 Organizations Borrower Responsible Agency Republic of Burundi Project Development Objective (PDO) Original PDO The objective of the Project is to expand access to energy services for households, enterprises, schools and health centers in rural areas of Burundi. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D5670 28-Feb-2020 05-Mar-2020 03-Sep-2020 01-Mar-2026 100.00 9.78 87.36 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Solar Energy in Local Communities (P164435) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background 1. The Project was approved by World Bank (WB) Board on February 28, 2020. The Project Agreements were signed on March 5, 2020 and the Project was declared effective on September 3, 2020. The project has suffered significant implementation start-up delays mainly due to the COVID-19 pandemic in the beginning, the lack of capacity, delay in the environmental and social safeguard studies (these were not conducted during project preparation) and low capacity of the implementing agency. The project is slowly getting back on track, with extensive support being provided by the WB project team to the project coordination unit (PCU) to undertake required technical and safeguard studies, prepare and launch bidding documents and manage signed contracts among others. B. Implementation Status 2. The PCU is now fully operational with all key recruitments being finalized, such as the solar and off grid experts and two additional engineers. The project governance, as defined in the operations manual, has not been fully set up yet with the two key bodies (Steering Committee and Technical Committee) still to meet on a regular basis. The PCU is in the process of mobilizing these committees as per what was agreed upon, to allow better coordination and consultation of stakeholders involved in the project. The project implementation arrangements as defined during appraisal, with one PCU at the level of the Ministry of Energy, and another PCU at the level of the Burundian Rural Electrification Agency (ABER). With the cancellation of Component 2, the creation of the PCU at the level of ABER is cancelled. ABER will however benefit from capacity building under Component 4 to build its capacity and prepare it to implement future projects. 3. Component 1: For the supply of energy services to schools, a contract was signed with World Food Program (WFP) on September 28, 2021 for a total of US$ 3.5 million to supply canteen stoves for 400 schools. The first tranche of US$ 1.5 million was disbursed on November 8, 2021 and the second tranche is expected to be disbursed in June 2023. The construction of stoves in the first phase for 122 schools (in the priority provinces of Karuzi, Makamba, Muyinga, Rumunge, Rutana and Buriri) commenced in October 2022 and is expected to be finalized in June 2023. As of March 31, 2023, 67 schools out of the 122 targeted had shelters built to protect the stoves. WFP committed to ensuring that the work of the first lot will be fully finalized by end of June 2023, in order to be able to launch the second lot of 350 schools in Q1 FY24. The bidding documents for the electrification of schools are being prepared and are expected to be launched by end of June 2023. 4. Regarding the electrification of the Health Centers (HCs), the contract for the first phase (161 HCs in six priority provinces: Bujumbura, Karuzi, Makamba, Muyinga, Rumonge and Rutana) was recently signed in May 2023. The bidding process for the second phase (209 HCs in nine provinces: Bubanza, Bururi, Cankuzo, Cibitoke, Gitega, Kayanza, Mwaro, Ngozi and Ruyigi) was launched in March 2023 and the contracts for the three lots are expected to be signed in August 2023. The bidding documents for equipping the Maintenance Centers at national and district level as well as the development and roll-out of a national training program about maintenance are being finalized and will be launched in June 2023. A consultancy firm for the supervision of the solar PV installations at schools and HC is in the process of being hired by the PCU by Q1 FY24 to strengthen its supervision and monitoring capacity. 5. Component 2: The site selection for the first lot of mini grids is finalized. Technical and environmental impact studies for the first phase ( 33 sites) are almost finalized and results are being discussed with the counterparts. The transaction advisor to support this activity has been hired. Consultants have been hired to prepare the detailed design and safeguards documents for these sites and work is progressing well. The procurement process for a first batch of sites The World Bank Solar Energy in Local Communities (P164435) was expected to be launched soon; however, pursuant to the Government’s request for partial cancellation of the financing and given that the procurement process for that component has not been launched yet, that component will be cancelled for now with the aim to support it through future projects. 6. Component 3: The contract for the Grants Administrator for the result-based financing mechanism “Fond pour les Energies Solaires et de Cuisson” (FESEC) was signed in September 2022. The FESEC was officially launched in March 2023. FESEC’s strategic and operations documentation is being reviewed and finalized. The first call for proposals for solar is scheduled by June 2023. In parallel, the procurement of the Technical Assistant to the Private Sector Facility has been delayed due to a lack of interested and qualified firms. The recruitment of the Technical Assistant is expected to be completed in June 2023. On the supply of cookstoves for households, the Centre de Recherche Universitaire sur les Energies Alternatives (CRUEA) of the Department of Physics of the University of Burundi was recruited and has completed the cookstove baseline tests. 7. Component 4: The preparation of the National Electrification Strategy (started in September 2022) as well as electrification studies for secondary centers are experiencing delays. The PCU and the WB are closely monitoring the implementation of these studies to ensure adequate contract management in consultation with the procurement experts. The market development support, including the strengthening of the enabling environment for off-grid energy service provision, and the empowering and education of sector players, including women, is yet to start. These activities are expected to start in Q1 FY24. C. Rationale for Restructuring 8. The restructuring of the project will streamline implementation and turn around the project performance. It aims at accelerating the project implementation (including disbursements) while adjusting the scope of activities in order to meet the Project Development Objective and the revised targets set in the results framework and move some activities to future projects such as the Access to Sustainable and Clean Energy Technologies in Eastern and Southern Africa Regional Multi-Phase Programmatic Approach (ASCENT AFE MPA) (P180547), which is at an advanced stage of preparation and is expected to be approved by the Board in November 2023. More precisely, the restructuring will consist of: a. clarification of some eligible expenses in the Financing Agreement; b. cancellation of component 2 for which procurement has not started yet and transfer activities to future projects such as the ASCENT AFE MPA (P180547); and c. adjustment of project implementation arrangements and results framework. 9. Without the restructuring, the implementation of component 2 could affect and further delay the pace of implementation of the project. It would also not guarantee the sustainability of the project activities in the medium and long terms with a risk that activities stop when the project closes. Lastly, it would not maximize the potential socio- economic impacts of the electrification of for schools and health service centers which would represent a missed opportunity. 10. This revised scope of work was discussed and agreed with the counterpart and two official requests for restructuring were sent to the Bank on May 16, 2023 and June 15, 2023 from the Ministry of Finance, Budget and Economic Planning. Given the current status of the other Project activities, it has been agreed to cancel USD 37 million out of the USD 50 million requested in the Government letter in order to not compromise the PDO of the Project. 11. The restructuring will strengthen the long-term sustainability approach under Component 1, beyond the project’s lifetime. This means that the project will not only provide investments in the pure electrification of HCs and schools, but it also designs and rolls-out a package of electric appliances and maintenance measures that will contribute to long-term The World Bank Solar Energy in Local Communities (P164435) sustainability. Those include, inter alia, (i) the purchase of selected electric appliances to improve service provision and ensure socioeconomic impacts of rural electrification on livelihoods, (ii) the construction and equipment of Maintenance Centers across the country from where maintenance technicians will ensure the preventive and curative maintenance, (iii) the development and roll-out of a national training program for maintenance technicians, and (iv) the provision of Maintenance Grants for activities related to maintenance, replacement and expansion of the solar PV systems and selected electric appliances provided for HC and schools. These measures are embedded in a strong cross-sectoral collaboration at various levels between MINHEM and the respective line Ministries of Health and Education (a Memorandum of Understanding between the energy and health sectors is expected to be finalized/signed by the end of May), including respective WB sector teams, as well as leveraging lessons learned from past and ongoing development partners’ programs. This approach will create a blue-print for similar activities by Government and development partners and it will be a front-runner in terms of maintenance and service provision among similar WB projects. 12. For Component 2, the technical and environmental and social studies were not undertaken prior to Board approval in February 2020. Therefore, the PCU had to first conduct surveys to select the appropriate locations for the implementation of mini-grids, prepare necessary technico-economic studies and undertake thorough analysis to properly size investments and activities – especially in a context where the decentralized renewable energy sector is very nascent in Burundi (with no benchmark data available from the Government of Burundi or other development partners). The studies are now at an advanced stage of preparation and the bidding documents for the construction of mini-grids are being prepared. However, given the urgent need for additional financing for the BI-JIJI AND MULEMBWE HYDROPOWER (P133610) and the Government’s request for the partial cancellation of funding up to an amount of up to US$ 50 million to provide part of the needed additional financing, and considering that this component is the only one that does not have committed funds yet, it is proposed to cancel the financing for that component for an amount of USD 37 million out of the USD 50 million requested in the Government letter in order to not compromise the PDO of the Project. In parallel, the Bank is working on a broader engagement to scale up access to electricity in Eastern and Southern Africa through a regional Multi-Phase Programmatic Approach (ASCENT AFE MPA - P180547) and Burundi is eligible for financing under that program. The financing of that component could therefore be raised at a later stage through the ASCENT AFE MPA, when the bidding documents are fully ready, if deemed relevant by the government. II. DESCRIPTION OF PROPOSED CHANGES 13. The proposed changes include the following: (a) changes to project components and cost ; (b) partial cancellation of financing, (c) changes to results framework; (d) changes to institutional arrangements; (e) changes to implementation schedule ; and (f) changes to disbursement estimates. There will be no change to the PDO or PDO indicators and there are no outstanding financial audit reports. 14. More precisely, the following changes are introduced: (a) Project components and cost: (i) Component 1: group all activities dedicated to sustainability, maintenance and improved service provision under one category (Category 6), make expenses eligible for the purchase of selected electric appliances to improve service provision and ensure socioeconomic impacts of rural electrification on livelihoods, allow for the construction and rehabilitation of selected Maintenance Centers (in addition to already equipping them nation-wide), simplify and strongly align the terms and conditions for the provision of Maintenance Grants with the existing mechanisms in the health and education sectors, as deemed feasible with respective sector The World Bank Solar Energy in Local Communities (P164435) teams and ministries, expand the envisaged energy-related services provided to the communities nearby through Selected Multi-services Hubs. (ii) Component 2: the financing for that component will be entirely cancelled for an amount of US$ 37 million. (iii) Component 4: add the establishment of a scholarship program on renewable energy, energy access and planning targeting women as a priority (including the payment of tuitions for selected candidates), strengthen and develop a curriculum on renewable energy, energy access and planning. Also add the provision of ‘perdiems’ to ABER staff to be seconded to the project for capacity building purposes. (b) Partial cancellation of financing: 15. An amount of US$ 37 million will be partially cancelled from the financing to reflect the cancellation of component 2. (c) Results framework: 16. The results framework has been revised to capture the newly introduced activities resulting from the changes to the project components and the partial cancellation of financing: (iv) Two new intermediate results indicators related to the maintenance activities under Component 1 are added to the results framework: (i) Number of maintenance centers constructed, refurbished and/or equipped (Number) and (ii) Number of maintenance grant transactions to schools and health centers (Number). (v) The following indicators are deleted: (i) Mini-grids constructed under project (Number); (ii) Households provided with access to electricity services by mini-grids (Number), (iii) Small and Medium enterprises provided with access to electricity service by mini-grids (Number), (iv) Renewable energy generation capacity of mini-grids constructed under the project (Megawatt) (d) Institutional arrangements 17. The institutional arrangements of Component 2 are being cancelled with the cancellation of the PCU that was supposed to be created at the level of the ABER. ABER would instead benefit from technical assistance under component 4 of the project. (e) Implementation schedule 18. The implementation schedule have been revised to take into account the start-up delays encountered so far. (f) Disbursement estimates 19. The disbursement estimates have been revised to match the revised implementation schedule. The World Bank Solar Energy in Local Communities (P164435) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Institutional Arrangements ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Loan Closing Date(s) ✔ Overall Risk Rating ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Solar Energy in Local Communities (P164435) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Energy Services for Schools and Energy Services for Schools and 27.00 27.00 Health Service Centers Health Service Centers Energy Services for Rural Energy Services for Rural 37.00 Revised 0.32 Communities Communities Energy Services for Households 17.00 Energy Services for Households 17.00 Technical Assistance, Capacity Technical Assistance, Capacity Building and Project 19.00 Building and Project 19.00 Implementation Support Implementation Support Contingent Emergency Contingent Emergency Response 0.00 0.00 Response TOTAL 100.00 63.32 OPS_DETAILEDCHANGES_CANCELLATIONS_TABLE CANCELLATIONS Value Reason Current Cancellation New Ln/Cr/Tf Status Currency Date of for Amount Amount Amount Cancellation Cancellation BORROWER' S REQUEST IDA-D5670- Disburs XDR 72,400,000.00 26,568,697.77 15-Jun-2023 45,831,302.23 FOR 001 ing COUNTRY REASONS OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-D5670-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD,WK,NCS,CS,TR,OC Expt Pt2 25,400,000.00 3,935,240.14 25,400,000.00 100.00 100.00 The World Bank Solar Energy in Local Communities (P164435) iLap Category Sequence No: 2 Current Expenditure Category: GD,WK,NCS,CS,TR,OC for Pt2 26,800,000.00 231,302.23 231,302.23 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: Maint Grants Prt 1B 8,700,000.00 0.00 8,700,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Subgrants Part 3 11,500,000.00 0.00 11,500,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: Emergency Expend Part 5 0.00 0.00 0.00 100.00 100.00 Total 72,400,000.00 4,166,542.37 45,831,302.23 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2020 778,800.00 0.00 2021 11,347,200.00 0.00 2022 19,078,400.00 5,500,000.00 2023 23,200,700.00 4,000,000.00 2024 21,155,300.00 30,000,000.00 2025 16,594,500.00 20,000,000.00 2026 7,845,100.00 3,820,000.00 . The World Bank Solar Energy in Local Communities (P164435) . Results framework COUNTRY: Burundi Solar Energy in Local Communities Project Development Objectives(s) The objective of the Project is to expand access to energy services for households, enterprises, schools and health centers in rural areas of Burundi. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 expand access to energy services for households, enterprises, schools and health facilities in rural People provided with new or improved electricity 0.00 118,000.00 353,073.00 service (CRI, Number) Action: This indicator has been Revised People provided with new or improved 0.00 59,800.00 117,690.00 electricity service - Female (CRI, Number) Action: This indicator has been Revised Health centers provided with new or improved 0.00 157.00 445.00 electricity services (Number) Health centers provided with new or improved electricity services by standalone systems 0.00 150.00 400.00 (Number) Health centers provided with new or improved 0.00 7.00 45.00 electricity services by mini-grids (Number) Schools provided with new or improved electricity 0.00 170.00 535.00 services (Number) The World Bank Solar Energy in Local Communities (P164435) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 Schools provided with new or improved electricity services by standalone systems 0.00 150.00 400.00 (Number) Schools provided with new or improved 0.00 20.00 135.00 electricity services by mini-grids (Number) Households provided with clean and efficient 0.00 100,000.00 300,000.00 cookstoves (Number) Schools provided with clean and efficient 0.00 150.00 400.00 cookstoves (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 Energy Services for Schools and Health Centers Renewable energy generation capacity of systems 0.00 0.50 1.50 installed at health centers (Megawatt) Renewable energy generation capacity of systems 0.00 0.01 installed at schools (Megawatt) Energy Services for Rural Communities (Action: This Component has been Marked for Deletion) Mini-grids constructed under project (Number) 0.00 4.00 9.00 Action: This indicator has been Marked for Deletion Households provided with access to electricity 0.00 2,200.00 4,700.00 services by mini-grids (Number) The World Bank Solar Energy in Local Communities (P164435) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 Action: This indicator has been Marked for Deletion Small and Medium enterprises provided with access to electricity service by mini-grids 0.00 297.00 670.00 (Number) Action: This indicator has been Marked for Deletion Renewable energy generation capacity of mini- 0.00 0.74 1.67 grids constructed under the project (Megawatt) Action: This indicator has been Marked for Deletion Finalization of bidding documents for mini-grids No Yes Yes Lot 1 (Yes/No) (Yes/No) Action: This indicator has been Marked for Deletion Energy Services for Households, including the poor and vulnerable Households provided with new electricity 0.00 19,500.00 65,000.00 connections by stand-alone systems (Number) Households provided with clean and efficient 0.00 90,000.00 300,000.00 cookstoves (Number) Volume of grants channeled to private solar and 0.00 1,620,000.00 5,400,000.00 CEC companies (Amount(USD)) Volume of results-based financing channeled to 0.00 2,400,000.00 8,000,000.00 private solar and CEC companies (Amount(USD)) Technical Assistance, Capacity Building and Project Implementation Support National Electrification Strategy and Plan prepared No Yes Yes and adopted (Yes/No) The World Bank Solar Energy in Local Communities (P164435) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 Geospatial analysis and planning platform No Yes Yes established and operational (Yes/No) Technicians trained in the provision of O&M 0.00 50.00 200.00 services for solar systems (Number) Consumer awareness program developed, with a focus on female members of households and No Yes Yes SMEs (Yes/No) Assessment of barriers to female entrepreneurship completed and action plan No Yes Yes delivered (Yes/No) Female employment of mini-grid operators 0.00 10.00 30.00 (Percentage) Earmarked grants for female enterprises 0.00 10.00 20.00 (Percentage) Grievances received addressed (Percentage) 0.00 100.00 100.00 IO Table SPACE The World Bank Solar Energy in Local Communities (P164435)