The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Power Sector Financial Recovery Program (P157571) EUROPE AND CENTRAL ASIA | Armenia | Energy & Extractives Global Practice | Requesting Unit: ECCSC | Responsible Unit: IECE1 IBRD/IDA | Program-for-Results Financing | FY 2016 | Team Leader(s): Artur Kochnakyan Seq No: 8 | ARCHIVED on 21-Dec-2020 | ISR44887 | Created by: Hiwote Tadesse on 09-Dec-2020 | Modified by: Artur Kochnakyan on 17-Dec- 2020 Program Development Objectives Program Development Objective (from Program Appraisal Document) The proposed Program Development Objective is to support the Borrower’s efforts to ensure adequate and reliable electricity supplythrough improvement of the financial standing of the state-owned power generation companies and the private power distribution company. Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Highly Satisfactory Highly Satisfactory Overall Implementation Progress (IP) Highly Satisfactory Highly Satisfactory Implementation Status and Key Decisions Implementation of all activities under the Power Sector Financial Recovery Program-for-Results, which is supported by the World Bank, is on track. As confirmed by the audit of financial statements of Yerevan Thermal Power Center (YTPC) and Armenian Nuclear Power Plant (ANPP) for 2019 neither entity has incurred any expenditures or borrowings, nor provided loans outside of its core business activities. Neither experienced cash shortages to cover operating expenses and meet their debt service requirements. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P157571 IBRD-86150 Effective USD 30.00 30.00 0.00 28.70 1.30 96% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P157571 IBRD-86150 Effective 27-Apr-2016 12-May-2016 19-Jul-2016 30-Jul-2021 30-Jul-2021 12/21/2020 Page 1 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) DLI Disbursement Achievement Disbursed amount in Disbursement % for DLI ID DLI Type Description Coc DLI Amount Status Coc DLI Loan: IBRD86150-001 DLI#1 Decision at 001 Regular USD 2,832,000.00 Fully Achieved 2,832,000.00 100 % shareholder meetings DLI#2 Liquidation of Partially 002 Regular USD 2,000,000.00 1,500,000.00 75 % Haigasard Achieved DLI#3 No new non-core 003 Regular USD 2,500,000.00 Fully Achieved 2,500,000.00 100 % busi expd of ANPP DLI#4 No new non-core 004 Regular USD 2,500,000.00 Fully Achieved 2,500,000.00 100 % busi expd of YTPC DLI#5 Reduc of princ amt 005 Regular USD 4,260,000.00 Fully Achieved 4,259,595.50 100 % of loan of ANPP DLI#6 Reduc of princ amt 006 Regular USD 2,300,000.00 Fully Achieved 2,300,000.00 100 % of loan of YTPC DLI#7 Reduc of gas 007 Regular USD 4,982,000.00 Fully Achieved 4,982,000.00 100 % payable of ANPP DLI#8 ENAs tariff margin 008 Regular USD 2,000,000.00 Fully Achieved 1,800,000.00 90 % for each period DLI#9 Tariffs for YTPC 009 Regular USD 2,000,000.00 Fully Achieved 1,799,999.99 90 % and Hrazdan TPP DLI#10 Elect supplied by Partially 010 Regular USD 4,551,000.00 4,151,000.00 91 % YTPC is maintai Achieved Program Action Plan Action Description Include the Program budget into the state budget for 2016. Source DLI# Responsibility Timing Timing Value Status Client Due Date 31-May-2016 Completed Completion Measurement Comments Include the Program review into the annual work-plan of the internal audit unit of the Ministry of Energy and Natural Action Description Resources. Source DLI# Responsibility Timing Timing Value Status Client Recurrent Yearly In Progress Completion Measurement Comments 12/21/2020 Page 2 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Moderate Moderate Sector Strategies and Policies Substantial Low Substantial Technical Design of Project or Program Low Moderate Moderate Institutional Capacity for Implementation and Moderate Moderate Moderate Sustainability Fiduciary Substantial Moderate Moderate Environment and Social Low Low Low Stakeholders Substantial Moderate Moderate Other Moderate Moderate Moderate Overall Substantial Moderate Moderate RiskComments Comments The risk of Sector Strategies and Policies is revised to Substantial considering that PSRC may not carry out in timely manner the regular adjustment of electricity tariffs. A decision may be made to postpone the adjustment of electricity tariffs due to deterioration of economic situation. The adjustment of tariffs would be required due to depreciation of AMD vs. US$, which increases: (a) the costs of debt service for sector companies, considering significant FX denominated debts; and (b) the gas price for thermal power plants (TPPs) because the gas tariff for TPPs is fixed in US$ and they pay the AMD equivalent at the rate prevailing during the time of invoice payments. The team will continue to closely monitor the situation considering the importance of the issue for overall financial standing of the power sector. Results PDO Indicators by Objectives / Outcomes Total annual electricity supply by ANPP is maintained IN00934536 ►Total annual electricity supply by ANPP is maintained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2300 GWh 2029.0 GWh 1890.0 GWh 2300 GWh Date 01-Feb-2016 31-Dec-2019 30-Sep-2020 31-Dec-2020 Comments Total annual electricity supply by YTPC is maintained IN00934508 ►Total annual electricity supply by YTPC is maintained (Text, Custom) 12/21/2020 Page 3 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Baseline Actual (Previous) Actual (Current) End Target Value 1400 GWh 1541.1 GWh 1010.7 GWh 1400 GWh Date 01-Feb-2016 31-Dec-2019 30-Sep-2020 31-Dec-2020 Comments Average interruption frequency per year in the project area is maintained IN00934509 ►Average interruption frequency per year in the project area is maintained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.10 1.45 1.25 at least 1.1 Date 01-Feb-2016 31-Dec-2019 30-Jun-2020 31-Dec-2020 Comments IN00934537 Customers served in the project area (Number, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 1,040,000.00 1,042,000.00 1,042,000.00 1,040,000.00 Direct project beneficiaries IN00934510 ►Direct project beneficiaries (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3,018,000.00 2,957,728.00 2,957,728.00 3,038,000.00 Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 31-Dec-2020 Will be updated after estimated of population for 2020 becomes available from UN publications. Comments IN00934538 Female beneficiaries (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 1,618,000.00 1,566,459.00 1,566,459.00 1,628,368.00 Intermediate Results Indicators by Results Areas Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00934539 ►No new non-core business related expenditures, borrowing and lending incurred by ANPP (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes 12/21/2020 Page 4 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Date 01-Mar-2016 30-Jun-2019 30-Jun-2019 30-Jun-2021 This would be confirmed by the auditor of ANPP annual financial statements for 2020, which will be Comments submitted to the Bank by June 30, 2021. Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00934540 ►No new non-core business related expenditures, borrowing and lending incurred by YTPC (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Mar-2016 30-Jun-2019 30-Jun-2019 30-Jun-2021 This would be confirmed by the auditor of YTPC annual financial statements for 2020, which will be Comments submitted to the Bank by June 30, 2021. Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00934541 ►Liquidation of Haigasard (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Liquidation is The court proceedings completed and Revaluation of assets is are underway. The list Value No registered by the completed. of creditors is being authorized state finalized. agency Date 01-Feb-2016 30-Jun-2018 01-Dec-2020 31-Dec-2020 Comments Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00934542 ►Reduction of cash deficit of ANPP due to the Program (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 18.50 No deficit No deficit No deficit Date 01-Mar-2016 31-Dec-2019 31-Dec-2019 31-Dec-2020 This would be confirmed once the audit of ANPP annual financial statements for 2020 is completed and Comments submitted to the Bank by June 30, 2021. Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00934543 ►Reduction of cash deficit of YTPC due to the Program (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 12/21/2020 Page 5 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Value 85.40 29.80 29.80 44.80 Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 31-Dec-2020 This would be confirmed once the audit of YTPC annual financial statements for 2020 is completed and Comments submitted to the Bank by June 30, 2021. Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00934544 ►Reduction of the principal amount of outstanding commercial loans of ANPP to be refinanced under the Program (million US$) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.50 8.50 8.50 Date 01-Feb-2016 31-Dec-2018 31-Dec-2018 31-Dec-2017 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00934545 ►Reduction of the principal amount of outstanding commercial loans of YTPC to be refinanced under the Program (milion US$) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.60 4.60 4.60 Date 01-Feb-2016 31-Dec-2018 31-Dec-2018 31-Dec-2017 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00934546 ►Recovery of ANPP’s receivables from ENA (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 15.00 15.00 15.00 Date 01-Feb-2016 31-Dec-2018 31-Dec-2018 31-Dec-2016 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00934547 ►Recovery of YTPC’s receivables from ENA (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 25.00 25.00 25.00 12/21/2020 Page 6 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Date 01-Feb-2016 31-Dec-2018 31-Dec-2018 31-Dec-2016 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00934548 ►Reduction of YTPC's gas payable under Contract referred to in Supplemental Letter No. 3 (in billion AMD) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 12.16 2.52 2.52 3.86 Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 31-Dec-2020 Comments End-user tariffs reflecting changes of electricity supply costs IN00934549 ►Loss (profit) at the private power distribution company due to difference between actual and forecast cost of electricity purchased. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No profit (loss) at power No profit (loss) at power distribution company due distribution company to forecast cost of due to forecast cost of Value Yes No purchased electricity purchased electricity exceeding the actual exceeding the actual cost. cost. Date 01-Feb-2016 31-Dec-2019 30-Sep-2020 31-Dec-2020 Comments End-user tariffs reflecting changes of electricity supply costs IN00934550 ►Loss (profit) at YTPC due to US$/AMD exchange rate fluctuation driven changes to AMD denominated payments for natural gas. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No profit (loss) at YTPC No profit (loss) at YTPC due to change in gas due to change in gas Value Yes price caused by price caused by No fluctuation of AMD/US$ fluctuation of AMD/US$ exchange rate. exchange rate. Date 01-Mar-2016 31-Dec-2019 30-Sep-2020 31-Dec-2020 Comments End-user tariffs reflecting changes of electricity supply costs IN00934551 ►Percent of tariff-setting related questions and inquiries (gender-disaggregated) responded to by PSRC within stipulated service standards for response time (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 12/21/2020 Page 7 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Value 100% 100% 100% 100% Date 01-Mar-2016 31-Dec-2019 31-Dec-2019 31-Dec-2020 Comments Maintaining the generation capacity of the gas turbine at YTPC’s CCGT plant IN00934552 ►Overhaul of the gas turbine at YTPC’s CCGT plant (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The overhaul was The overhaul was Value n/a completed in September completed in Overhaul is c 2018. September 2018. Date 01-Feb-2016 31-Dec-2018 31-Dec-2018 31-Dec-2018 Comments Disbursement Linked Indicators DLI_IND_TABLE ►DLI 1 DLI 1: Decision at the shareholder meetings of ANPP and YTPC, prohibiting the non-core business related expenditures, lending and borrowing by the above companies. (Output, 2,832,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No decision Decision was made Decision was made -- Date 01-Feb-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 2 DLI 2: Liquidation of Haigasard (Output, 2,000,000.00, 75%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Liquidation is Revaluation of assets is Revaluation of assets is registered by the Value Exists as legal entity completed completed authorized state agency Date 01-Mar-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 3 DLI 3: No new non-core business related expenditures, borrowing and lending incurred by ANPP (Output, 2,500,000.00, 76%) 12/21/2020 Page 8 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 ANPP incurs non-core Value business related Yes Yes Yes expenditures Date 01-Feb-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 4 DLI 4: No new non-core business related expenditures, borrowing and lending incurred by YTPC (Output, 2,500,000.00, 76%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 YTPC incurs non-core Value business related Yes Yes Yes expenditures Date 01-Feb-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 5 DLI 5: Reduction of principal amount of outstanding commercial loans of ANPP (in million US$) (Output, 4,260,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 0.00 8.52 8.52 -- Date 01-Feb-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 6 DLI 6: Reduction of principal amount of outstanding commercial loans of YTPC (in million US$) (Output, 2,300,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 0.00 4.60 4.60 -- Date 01-Feb-2016 31-Jul-2018 31-Jul-2018 -- Comments ►DLI 7 DLI 7: Reduction of YTPC's gas payable under Contract referred to in Supplemental Letter No. 3 (in AMD) (Output, 4,982,000.00, 100%) 12/21/2020 Page 9 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 12,161,962.00 2,515,290.00 2,515,290.00 3,858,962.00 Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 -- Comments ►DLI 8 DLI 8: ENA’s margin for each new tariff period fully reflects the loss (revenue) accrued due to difference between the forecast and actual cost of electricity purchased by ENA during the preceding tar (Output, 2,000,000.00, 70%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No Yes Yes Yes Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 -- Comments ►DLI 9 DLI 9: Tariffs for YTPC and Hrazdan TPP for each new tariff period fully reflect the loss (revenue) resulting from difference between forecast and actual cost of purchased natural gas due to fluctuati (Output, 2,000,000.00, 70%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No Yes Yes Yes Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 -- Comments ►DLI 10 DLI 10: Electricity supplied by YTPC (Output, 4,551,000.00, 74%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 1400 GWh 1541.1 GWh 1541.1 GWh 1400 GWh Date 01-Feb-2016 31-Dec-2019 31-Dec-2019 -- Comments 12/21/2020 Page 10 of 10