The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) REPORT NO.: RES52467 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NIGER SOLAR ELECTRICITY ACCESS PROJECT (NESAP) APPROVED ON JUNE 7, 2017 TO GOVERNMENT OF THE REPUBLIC OF NIGER ENERGY & EXTRACTIVES WESTERN AND CENTRAL AFRICA Regional Vice President: Ousmane Diagana Country Director: Clara de Sousa Regional Director: Riccardo Puliti Practice Manager/Manager: Kwawu Mensan Gaba Task Team Leader(s): Emmanuel Py, Abdoulaye Magagi Daga The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) ABBREVIATIONS AND ACRONYMS ANPER Agence Nigérienne de Promotion de l’Electrification en milieu Rural (Nigerien Agency for the Promotion of Rural Electrification) ANERSOL Agence Nationale d’Energie Solaire (National Agency for Solar Energy) DGOFR Direction Générale des Opérations Financières et des Réformes (Directorate General of Financial Operations and Reforms in the Ministry of Finance) M&E Monitoring and Evaluation MFI Microfinance Institution MoE Ministry of Energy MoF Ministry of Finance NIGELEC Sociéte Nigerienne d’Electricité (Nigerien Electricity Company) PIU Project Implementation Unit PFIs Participating Financing Institutions The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) BASIC DATA Product Information Project ID Financing Instrument P160170 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 07-Jun-2017 31-Jan-2024 Organizations Borrower Responsible Agency Government of the Republic of Niger Project Development Objective (PDO) Original PDO The objective of the project is to increase access to electricity through solar energy in rural and peri-urban areas of the Republic of Niger. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-60820 07-Jun-2017 27-Jun-2017 01-Dec-2017 31-Jan-2024 45.55 30.05 16.75 IDA-D1980 07-Jun-2017 27-Jun-2017 01-Dec-2017 31-Jan-2024 4.30 0 4.54 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. Project background and scope. The Niger Solar Electricity Access Project (P160170; NESAP) was approved on June 7, 2017 and became effective on December 1, 2017. The project was restructured in May 2020 to (i) reallocate funds among disbursement categories; (ii) downscale some activities under Components 1 and 2; (iii) adjust the results framework; and (iv) introduce a Contingency Emergency Response Component (CERC) to enable quick response to COVID-19. The closing date is January 31, 2024. The project is financed by an IDA Credit (6082-NE) in amount of EUR 42.7 million and an IDA Grant (D198-NE) in amount of SDR 3.2 million. The Project Development Objective (PDO) is to increase access to electricity through solar energy in rural and peri-urban areas of the Republic of Niger. It has five (5) components: (i) Component 1: Market Development of Stand-alone Solar System; (ii) Component 2: Rural Electrification through Service-based Solar Hybrid Mini-grids; (iii) Component 3: Solar PV Hybridization of Isolated Thermal Mini-grids and Expansion of Access; (iv) Component 4: Implementation Support and Technical Assistance. (v) Component 5: Contingency Emergency Response Component. 2. Implementation progress. As per the last Implementation Status and Results Report (dated April 2022), NESAP was rated Moderately Satisfactory for both overall implementation progress and progress towards achievement of PDO. As of July 20, 2022, aggregate disbursement under the IDA Credit and the IDA Grant is EUR 29.34 million or 56% of the total project financing. Despite implementation challenges and delays experienced by the project, it is expected that implementation of the activities will accelerate. 3. The Mid-Term Review (MTR) mission, which took place in January 2020, concluded the project is on track and PDO is still achievable by the project closing date. Implementation delays have occurred since then (notably as a result of the COVID-19 pandemic and its impact on global supply chains) but with this restructuring, it is believed the project would be on track for a January 31, 2024 closing given that, as of today, more than 70 percent of the total financing is committed. 4. A detailed update on the status of the project’s components is as follows: 5. Component 1. Market Development of Stand-alone Solar Systems (US$5 million): Initially, the activities of this component experienced delays following the resignation of the financial specialist in charge of the implementation of the line of credit (LoC) at the DGOFR. With the close follow up by the team, the management, and the CMU, DGOFR and ANPER have completed the recruitment of a new financial specialist. Furthermore, the new agreement with BAGRI, for an amount of CFAF 500 million, was signed on March 17, 2022, which resulted in the commitment of 100% of the line of credit. The transfer of unused fund by Capital Finance, which performance was unsatisfactory, to SONIBANK, which showed a good performance, resulted in the signing of the amendments with the two institutions in June 2022.With these critical actions completed, the disbursement rate of the LoC increased from 70.82% to 89.15% and is expected to reach 100% after the withdrawal of the remaining amount to SONIBANK. The utilization rates of the funds provided to SONIBANK have increased from 64% (~640 M FCFA) to 100% (~1000 M FCFA). The utilization rate of BSIC is at 32.5% (~326 M FCFA). BSIC showed prospects that will bring its utilization rate to 61% (610 M FCFA). The performance of the micro-finance institution, CAPITAL FINANCE, remained sluggish with a utilization rate below 6% (~11 M FCFA) with CFAF 324,5 million undisbursed. With the new financial analyst onboard, DGFOR will be able to revise the agreement with CAPITAL FINANCE by reallocating the undisbursed amount to SONIBANK. As per the last ISR all agreed actions were completed including: (i) The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) regularize/update the reports on the line of credit; (ii) disbursement of 100% amount of BAGRI’s agreement; and (iii) finalize the amendments of the agreement with Capital Finance and SONIBANK and disburse the amount (CFAF 324,5 M) to SONIBANK. 6. Component 2. Rural Electrification through Service-based Solar Hybrid Mini-grids (US$6.7 million): Similar to Component 1, there have been significant initial delays in the implementation of this component primarily because it was a first experience implementing such an innovative business model in Niger, and time was required to learn from the market. Notwithstanding early delays, the negotiations with the two companies have started. The updated planning of this component could be achieved with the end of all activities by the project closing date with the following restructuring change (as mentioned by the client in the restructuring letter): Changing the implementation model with 100% financing from IDA and supporting the Government to sign a management, operation and maintenance contract with the private companies (single source procurement may be considered). There have indeed been significant initial delays in the implementation of Component 2 primarily because it was a first experience implementing such an innovative business model in Niger (i.e., a concession model for relatively small facilities), and time was required to learn from the market. Notwithstanding early delays, the negotiations with the two companies have started. The updated planning of this component could be achieved with the end of all activities by the project closing date with the following restructuring change. 7. Component 3. Solar Photo Voltaic (PV) Hybridization of Isolated Thermal Mini-grids and Expansion of Access (US$27.35 million): This component, consisting of the PV hybridization of 17 existing diesel-powered isolated mini grids operated by NIGELEC, has made noticeable progress since 2021. More than 3.5 billion FCFA (power plants equipment order and payment of the services of the owner’s engineer) had been disbursed. This brings the disbursement rate of the component to 52.3%. The construction works have started and well advanced on several sites both for lot 1 and lot 2 (Dirkou, Bilma,Timia, Fachi, Iferouane, Ingall and Tamaya,). The construction works for the two lots are expected to be completed by January 2023 rather than November and July 2022 respectively for lot 1 and 2, which is one year before the project closing date. The activities were impacted by the maritime transport crisis related to COVID-19, the deterioration of the security situation for the sites in the Tahoua and Tillabery regions and the difficulties with the customs administration on exemptions. These delays and the COVID- 19 crisis led to amendments of contracts with financial implications which are expected to be financed by the resources of component 2 through this project’s restructuring. The financial resources of the component have already been committed at more than 90%. A restructuring of the project is thus necessary for the reallocation of resources between Component 2 (which has available resources) and Component 3 subject to the outcomes of the assessment. 8. Component 4. Implementation Support and Technical Assistance (US$8.05 million). The communication firm started the communication activities in November 2021. Communication activities are under implementation. It is expected that the communication activities will revitalize the credit line. 9. Component 5. CERC (US$2.78 million): This component was introduced following the first restructuring of the project in May 2020 to support the government’s response to the COVID-19 pandemic. 73 priority health centers (out of a total of 483 non-electrified centers) were identified for electrification and the procurement process was completed. The construction work in the 73 health centers has been divided in 4 lots awarded to 3 local companies. After delays observed in the beginning, the implementation pace has peaked up in Year 2021. One of the three companies is well advanced in the equipment shipping and construction works. The first health center is in place. The other two companies experienced delays in their order because some of the health center from The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) their batch had been replaced due to security constraint in some areas. Overall, most of the activities will be completed by September 2022. 10. Project Management. The PIU has made significant effort constructing the project team. The completed recruitments include the position of the procurement specialist (ANPER) and the position of the financial analyst/ DGOFR. The recruitment of the environmentalist, the second accountant and the project coordinator for ANPER are in progress and should all be finalized soon. 11. Compliance with relevant legal, fiduciary, audit and safeguards requirements. All legal covenants and safeguards requirements have been complied with, and there have been no deviations from safeguards requirements during implementation. The project’s compliance with social and environmental safeguards is currently rated Satisfactory. Regarding financial management, acceptable financial reports were submitted regularly during the project implementation and annual audits were conducted since the beginning of project´s implementation. All audited financial statements were also received within the due date, with an unqualified opinion. Currently there are no outstanding audit reports. Financial management is rated Satisfactory, and Procurement Moderately Satisfactory given the delays in processing procurement packages. 12. Rationale for the restructuring. This is the second restructuring. The first restructuring was done in May 202 to (i) reallocate funds among disbursement categories; (ii) downscale some activities under Components 1 and 2; (iii) adjust the results framework; and (iv) introduce a Contingency Emergency Response Component (CERC) to enable quick response to COVID-19. This restructuring is for additional reallocations in disbursement categories and two additional changes in the results framework. There are no changes to the PDO. II. DESCRIPTION OF PROPOSED CHANGES 13. Specifically, this restructuring will entail the following changes: 14. Reallocation between disbursement categories. Funds from disbursement categories will be reallocated as follows:  Reallocation of one million two hundred fifty-four thousand two hundred ten (1,254,210) Euros from category 2 to category 4a;  Reallocation of three hundred ninety-five thousand one hundred and two (395,102) Euros from category 6 to category 4a. 15. As a result, the disbursement table in Section IV.A.2 of Schedule 2 to the Financing Agreement is proposed to be amended as shown in the table below: Disbursement categories Category Amount of Credit Amount of Grant Percentage of Allocated (in EUR) Allocated (SDR) expenditures to be financed (inclusive of taxes) (1) Sub-project Credits under Part 1 of the 4,600,000 0 100% Project The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) Category Amount of Credit Amount of Grant Percentage of Allocated (in EUR) Allocated (SDR) expenditures to be financed (inclusive of taxes) (2) Goods, works, non-consulting services, 5,445,790 0 100% Operating Costs, Training and consulting services under Parts 4.1, 4.3 and 4.4 of the Project (3) Goods, works, non-consulting services, 5,200,000 820,000 100% Operating Costs, Training and consulting services and Sub-project Grants under Part 2 of the Project (4) Goods, works, non-consulting services, 440,840 0 100% Operating Costs, Training and consulting services under Part 3 (a), 3 (c) and Part 4.2 of the Project (4a) Goods, works, non-consulting services, 24,605,472 1,900,000 100% Operating Costs, Training and consulting services under Part 3 (a), 3 (b), 3 (c) and Part 4.2 of the Project (5) Goods, works, non-consulting services, 0 0 Operating Costs, Training and consulting services under Part 3 (b) of the Project (6) Sub-project Grants under Part 4.3 of the 407,795 0 100% Project. (7) Refund of Preparation Advance 103 0 Amount payable pursuant to Section 2.07 of the General (8) Emergency expenditures under Part 5 of the 2,000,000 480,000 100% Project Total Amount 42,700,000 3,200,000 16. Changes to Results Framework. Due to the prevailing insecurity situation in the Tillabery Region, companies would not be able to travel to the municipality of Ouro on the Tientienga Fulbe site, therefore the following two intermediate indicators under component 2 would be adjusted accordingly: Intermediate indicator Original target Revised target Number of households with access to electricity through 2,000 1,700 a new solar mini-grid Annual production of electricity from renewable energy 1,300 1,000 (MWh/year) The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Reallocation between Disbursement Categories ✔ Overall Risk Rating ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ 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_REALLOCATION _TABLE The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-60820-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: SUB-PROJECT CREDITS PART 1 4,600,000.00 1,629,254.87 4,600,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: G/W/NCS/CS/OC/T PART 4.1,4.3,4.4 6,700,000.00 3,484,210.29 5,445,790.00 100.00 100.00 Current Expenditure Category: G/W/NCS/CS/OC/T AND SUB-PROJECT GRANTS iLap Category Sequence No: 3 PART 2 5,200,000.00 844,384.58 5,200,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: G/W/NCS/OC/T/C PART 3(A), 3(C), 4.2 440,840.00 440,838.35 440,840.00 100.00 100.00 iLap Category Sequence No: 4A Current Expenditure Category: G/W/NCS/OC/T/C PART 3 (A), 3 (B), 3 (C) 22,956,160.00 14,963,797.52 24,605,472.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: SUB-PROJECT GRANTS PART 4.3 802,897.00 0.00 407,795.00 100.00 100.00 iLap Category Sequence No: 7 Current Expenditure Category: PPF REFINANCING 103.00 102.57 103.00 100.00 100.00 iLap Category Sequence No: 8 Current Expenditure Category: G/W/NCS/OC/T/C PART 5 2,000,000.00 1,225,539.10 2,000,000.00 100.00 100.00 The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) Total 42,700,000.00 22,588,127.28 42,700,000.00 OPS_DETAILEDCHANGES_SORT_TABLE SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating at Approval Current Rating Political and Governance  Substantial  Moderate Macroeconomic  Substantial  Moderate Sector Strategies and Policies  Substantial  Moderate Technical Design of Project or Program  High  Moderate Institutional Capacity for Implementation and  High  Moderate Sustainability Fiduciary  High  Substantial Environment and Social  Moderate  Moderate Stakeholders  Moderate  Moderate Other  Low  High Overall  High  Substantial . The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) . Results framework COUNTRY: Niger Niger Solar Electricity Access Project (NESAP) Project Development Objectives(s) The objective of the project is to increase access to electricity through solar energy in rural and peri-urban areas of the Republic of Niger. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 To increase access to electricity through solar energy in rural and peri-urban areas of Niger People provided with new or improved electricity service 0.00 0.00 16,000.00 50,000.00 100,000.00 150,000.00 200,000.00 230,000.00 (Corporate Results Indicator) (Number) of which females (percentage) 0.00 0.00 50.00 50.00 50.00 50.00 50.00 50.00 (Percentage) To increase access to electricity through solar energy in rural and peri-urban areas of Niger Generation capacity of energy constructed or rehabilitated (Corporate 0.00 0.00 1.50 3.50 4.50 6.50 7.00 7.00 Results Indicator) (Megawatt) PDO Table SPACE The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 Component 1:Market Development of Stand-alone Solar Systems Number of Lighting Africa-certified solar 0.00 0.00 10,000.00 20,000.00 30,000.00 40,000.00 50,000.00 50,000.00 products sold (Component 1) (Number) People provided with electricity access from 0.00 0.00 20,000.00 40,000.00 90,000.00 100,000.00 150,000.00 150,000.00 solar standalone systems (Component 1) (Number) Number of solar companies financed by 0.00 0.00 2.00 4.00 6.00 8.00 10.00 10.00 the Project (Component 1) (Number) Number of farmers acquiring solar pumps through solar companies 0.00 0.00 100.00 400.00 600.00 8,600.00 1,000.00 1,000.00 financed by the Project (Component 1) (Number) Volume of Project Funding: Line of Credit - Solar Energy Sector 0.00 42,700.00 1,275,000.00 2,125,000.00 3,000,000.00 4,000,000.00 5,000,000.00 5,000,000.00 (Households and Enterprises) (Component 1) (Amount(USD)) Component 2: Rural Electrification through Service-based Solar Hybrid Mini-grids Number of households 0.00 0.00 200.00 500.00 1,000.00 1,500.00 1,700.00 1,700.00 provided with electricity The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 access from new solar mini-grid systems (Component 2) (Number) Action: This indicator has been Revised of which women headed households 0.00 0.00 16.00 16.00 16.00 16.00 16.00 16.00 (percentage) (Percentage) Annual electricity output from renewable energy 0.00 0.00 100.00 350.00 750.00 1,000.00 1,000.00 1,000.00 (Component 2) (MWh/year) Action: This indicator has been Revised Number of Private operators managing solar 0.00 0.00 0.00 1.00 2.00 4.00 6.00 6.00 mini-grids in rural areas (Component 2) (Number) of which percentage of women workers of the operators 0.00 0.00 15.00 15.00 15.00 15.00 15.00 15.00 (percentage) (Percentage) Component 3: Solar PV Hybridization of Isolated Thermal Mini-grids and Expansion of Access Households provided with new electricity 0.00 0.00 800.00 5,000.00 5,800.00 7,500.00 7,500.00 7,500.00 access from solar The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 hybridization of existing NIGELEC mini-grids (Component 3) (Number) of which women headed households 0.00 0.00 16.00 16.00 16.00 16.00 16.00 16.00 (percentage) (Percentage) Households provided with additional hours of electricity from solar 0.00 0.00 500.00 1,500.00 2,400.00 3,000.00 3,000.00 3,000.00 hybridization of existing NIGELEC mini-grids (Component 3) (Number) of which women headed households 0.00 0.00 16.00 16.00 16.00 16.00 16.00 16.00 (percentage) (Percentage) Annual electricity output from renewable energy 0.00 2,500.00 2,500.00 5,900.00 7,900.00 9,700.00 10,700.00 (Component 3) (MWh/year) Average electricity generation cost (US$/kWh) of isolated 0.38 0.38 0.37 0.29 0.24 0.24 0.24 0.24 grids in hybridized mini- grids (Component 3) (Amount(USD)) Number of productive 0.00 0.00 80.00 150.00 200.00 325.00 400.00 500.00 users provided with The World Bank Niger Solar Electricity Access Project (NESAP) (P160170) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 electricity access from mini-grid systems (Number) Component 4: Implementation Support and Technical Assistance Project-related grievances registered under the project 0.00 5.00 15.00 35.00 60.00 80.00 100.00 100.00 grievance redress mechanism and addressed (Percentage) ANPER published reports on beneficiary feedback and how it has been No No Yes Yes Yes Yes Yes Yes incorporated in the Project (Yes/No) IO Table SPACE The World Bank Niger Solar Electricity Access Project (NESAP) (P160170)