Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00003784 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-48420/ IDA-50550/ TF011297/ TF011962) ON A IDA CREDITS (IDA-48420 & IDA-50550 IN THE AMOUNT OF SDR 20.7 MILLION (US$ 32 MILLION EQUIVALENT) A GLOBAL PARTNERSHIP ON OUTPUT BASED AID GRANT (TF011297) IN THE AMOUNT OF US$ 10 MILLION AND A GLOBAL ENVIRONMENT FACILITY GRANT (TF011962) IN THE AMOUNT OF US$ 1.45 MILLION TO THE Ministry of Land, Mines & Energy FOR A/THE LIBERIA Electricity System Enhancement Project (LESEP) March 30, 2018 Energy & Extractives Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective Mar 22, 2018) Currency Unit = Liberian Dollar 131.30LRD = US$1 US$ 1.454380 = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Makhtar Diop Country Director: Henry G. R. Kerali Senior Global Practice Director: Riccardo Puliti Practice Manager: Wendy E. Hughes Task Team Leader(s): Joseph Tawiah Quayson ICR Main Contributor: Fernando Lecaros ABBREVIATIONS AND ACRONYMS AfDB African Development Bank AFREA Africa Renewable Energy Access trust fund CAS Country Assistance Strategy CFL Compact Fluorescent Light CFO Chief Financial Officer CLSG Cô te d’Ivoire, Liberia, Sierra Leone, and Guinea CST Crude Storage Terminal DA Designated Account EBIT Earnings Before Interest and Tax EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization ECOWAS Economic Community of West African States EIA Environmental Impact Assessment EIB European Investment Bank EIRR Economic Internal Rate of Return EITI Extractive Industries Transparency Initiative EPA Environmental Protection Agency EPP Emergency Project Paper ERL Emergency Recovery Loan ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESW Economic and Sector Work FIRR Financial Internal Rate of return FM Financial Management GAC General Audit Commission GEF Global Environment Facility GEMAP Governance and Economic Management Program GoL Government of Liberia GoN Government of Norway GPOBA Global Partnership on Output Based Aid HFO Heavy Fuel Oil IDA International Development Association IFC International Finance Corporation IFMIS Integrated Financial Management Information System IFR Interim (unaudited) Financial Statements or Reports IPP Independent Power Producer IVA Independent Verification Agent JICA Japan International Cooperation Agency KfW Kreditanstalt fur Wiederaufbau (German Development Aid Agency) kV kilo Volt kVA kilovolt-Ampè re LACEEP Liberia Accelerated Electricity Expansion Project LEC Liberia Electricity Corporation LED Light Emitting Diode LESEP Liberia Electricity System Enhancement Project LIRENAP Liberia Renewable Energy Assess Project LPRC Liberian Petroleum Refinery Company LV Low Voltage MC Management Contract MHI Manitoba Hydro International MLME Ministry of Lands, Mines and Energy MPEA Ministry of Planning and Economic Affairs MV Medium Voltage MW Megawatt NEP National Energy Policy NOCAL National Oil Company NORAD Norwegian Agency for Development Corporation NPV Net Present Value ORAF Operational Risk Assessment Framework PDO Project Development Objective PEMFAR Public Expenditure Management and Financial Accountability Review PFMA Public Financial Management Act PFMU Project Financial Management Unit PPA Project Preparation Advance PPC Public Procurement and Concessions PPCA Public Procurement and Concessions Act PPCC Public Procurement and Concession Commission PST Product Storage Terminal PV Photovoltaic RAP Resettlement Action Plan REFUND Rural Energy Fund RPF Resettlement Policy Framework RREA Rural and Renewable Energy Agency SAIFI System Average Interruption Frequency Index SDR Special Drawing Rights SOEs Statement of Expenditures SSMF Sustainable Solar Market Facilitation SSMP Sustainable Solar Market Packages TOR Terms of Reference UNDP United Nations Development Program USAID United States Agency for International Development WAPP West Africa Power Pool TABLE OF CONTENTS DATA SHEET .................................................................................................................................... 1 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES............................................................. 6 A. CONTEXT AT APPRAISAL ................................................................................................................... 6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ........................................... 14 2. OUTCOME .............................................................................................................................. 20 A. RELEVANCE OF PDOs ...................................................................................................................... 20 B. ACHIEVEMENT OF PDOs (EFFICACY) ............................................................................................... 21 C. EFFICIENCY ...................................................................................................................................... 26 D. JUSTIFICATION OF OVERALL OUTCOME RATING ........................................................................... 26 E. OTHER OUTCOMES AND IMPACTS (IF ANY).................................................................................... 27 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME..................................... 28 A. KEY FACTORS DURING PREPARATION ............................................................................................ 28 B. KEY FACTORS DURING IMPLEMENTATION ....................................................................... 29 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ................................................................................................................................... 31 A. QUALITY OF MONITORING AND EVALUATION (M&E) ................................................................... 31 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ........................................................... 32 C. BANK PERFORMANCE .............................................................................................................. 33 D. RISK TO DEVELOPMENT OUTCOME ............................................................................................... 34 5. LESSONS AND RECOMMENDATIONS........................................................................... 35 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ................................................................. 37 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION .............................. 46 ANNEX 3. PROJECT COST BY COMPONENT................................................................................... 48 ANNEX 4. EFFICIENCY ANALYSIS ................................................................................................... 49 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ....... 57 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ............................................................................ 58 ANNEX 7. MAP .............................................................................................................................. 59 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P120660 LIBERIA Electricity System Enhancement Project (LESEP) Country Financing Instrument Liberia Emergency Recovery Loan Original EA Category Revised EA Category Partial Assessment (B) Related Projects Relationship Project Approval Product Line Supplement P110723-GPOBA W3 - 21-Dec-2011 Recipient Executed Activities Liberia Electricity Access Parent P120660-LIBERIA 30-Nov-2010 IBRD/IDA Electricity System Enhancement Project (LESEP) Supplement P124014-Lighting Lives 26-Jan-2012 Global Environment Project in Liberia Additional Financing P129097-Additional 26-Jan-2012 IBRD/IDA Financing Liberia Electricity System Enhancement Project Organizations Borrower Implementing Agency LIBERIA ELECTRICITY CORPORATION, Rural and Ministry of Land, Mines & Energy Renewable Energy Agency Page 1 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Project Development Objective (PDO) Original PDO The objective of the project is to improve and increase access to quality electricity services. Revised PDO To reduce greenhouse gas emissions when compared with Liberia‘s emissions growth baseline. FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing P120660 IDA-48420 10,000,000 9,997,686 9,772,094 P120660 IDA-50550 22,000,000 21,919,862 20,570,477 P120660 IDA-48420 10,000,000 9,997,686 9,772,094 P120660 IDA-50550 22,000,000 21,919,862 20,570,477 P124014 TF-11962 1,454,540 1,433,440 1,433,440 Total 65,454,540 65,268,536 62,118,582 Non-World Bank Financing Borrower 0 0 0 US: Agency for International 2,000,000 2,000,000 2,000,000 Development (USAID) NORWAY: Norwegian Agency for Dev. Coop. 29,000,000 29,000,000 29,000,000 (NORAD) Total 31,000,000 31,000,000 31,000,000 Total Project Cost 96,454,540 96,268,537 93,118,582 KEY DATES Project Approval Effectiveness MTR Review Original Closing Actual Closing P120660 30-Nov-2010 07-Jul-2011 28-Feb-2015 16-Jun-2014 31-May-2017 P110723 21-Dec-2011 19-Mar-2012 16-Jun-2014 31-May-2017 P120660 30-Nov-2010 07-Jul-2011 28-Feb-2015 16-Jun-2014 31-May-2017 Page 2 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) P124014 26-Jan-2012 20-Mar-2012 28-Feb-2015 31-Dec-2014 31-May-2017 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 26-Jan-2012 1.73 Additional Financing Change in Results Framework Other Change(s) 24-Jun-2014 10.19 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories 03-Dec-2014 20.78 Change in Loan Closing Date(s) 11-Mar-2015 21.79 Change in Loan Closing Date(s) 11-Dec-2015 24.53 Change in Components and Cost Change in Loan Closing Date(s) Cancellation of Financing Reallocation between Disbursement Categories Change in Implementation Schedule 09-May-2017 29.24 KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Highly Satisfactory High RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 27-Mar-2011 Satisfactory Satisfactory 0 02 08-Jan-2012 Satisfactory Satisfactory .30 03 26-Nov-2012 Satisfactory Satisfactory 3.94 04 08-Jun-2013 Satisfactory Satisfactory 4.24 05 04-Jan-2014 Satisfactory Satisfactory 7.94 Page 3 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 06 30-Nov-2014 Satisfactory Satisfactory 15.21 07 19-Aug-2015 Moderately Satisfactory Moderately Satisfactory 22.99 08 22-Mar-2016 Moderately Satisfactory Moderately Satisfactory 25.62 09 22-Nov-2016 Moderately Satisfactory Moderately Satisfactory 28.33 10 07-Jun-2017 Moderately Satisfactory Moderately Satisfactory 29.24 SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 100 Oil and Gas 28 Public Administration - Energy and Extractives 9 Energy Transmission and Distribution 63 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Urban and Rural Development 0 Urban Development 100 Services and Housing for the Poor 100 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Makhtar Diop Country Director: Ishac Diwan Henry G. R. Kerali Senior Global Practice Director: Jamal Saghir Riccardo Puliti Practice Manager: Lucio Monari Wendy E. Hughes Fanny Kathinka Missfeldt-Ringius, Task Team Leader(s): Joseph Tawiah Quayson Zayra Luz Gabriela Romo Mercado ICR Contributing Author: Page 4 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Page 5 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL (i) Country context 1. After many years of violent conflict that started with a coup in 1989, Liberia stabilized with the Accra Comprehensive Peace Agreement of August 2003. Free legislative and presidential elections took place in 2005, and the country was the first African nation to elect a woman President, Ellen Johnson Sirleaf. In mid- January 2006, the new Liberian Government took office facing severe challenges. Fifteen years of civil war had destroyed much of Liberia’s physical and human capital and severely damaged its institutions, including those of the electricity sector. The new Government endorsed programs aimed at improving governance, building capacity, and managing post conflict recovery through establishing policies to stabilize the economy and support economic reconstruction. At appraisal in 2010, although progress had been substantial (broad price stability, and accomplished structural reforms to reinforce public financial management), the Government still faced many challenges: per capita GDP was estimated at US$195 in 2007, still below prewar levels, and 64% of the population lived below the poverty line, with about 48% living below the extreme poverty line1. (ii) Sector Context 2. Electricity before and after the war: From 1973 until late 1989 and before its civil war, Liberia had a total installed generation capacity of 177 MW (of which 98% available around Monrovia) and approximately 35,000 customers, mostly in Monrovia. The hydropower plant at Mount Coffee supplied 63 MW during the wet season and 5 MW during the dry season. Outside Monrovia, ten small isolated power systems supplied rural areas. The electricity subsector operated through a single public power company, the Liberia Electricity Corporation (LEC), which had the mandate for generation, transmission and distribution of electricity throughout the country. In 1987, about 13% of the country’s population had access to electricity. The system was challenged in its further expansion due to LEC’s financial difficulties, which were largely caused by technical and commercial inefficiencies. Frequent blackouts and load shedding were also common. By the end of the civil war in 2003, almost all the electricity infrastructure had been destroyed due to warfare. By 2005, the remainder was destroyed as a result of looting. This included the complete destruction of the hydropower plant at Mount Coffee, and all the transmission lines and distribution network. LEC ceased operations in 2005. 3. Post-war electricity development in Monrovia: The new Government that came into office in 2006 worked towards the reconstruction of the electricity sector both at the urban, rural and regional level. One of the President’s 150-day plans in 2006 was to install streetlights and connect a small number of customers in downtown Monrovia. In response to this plan, an international donor consortium consisting of USAID, the European Union, the World Bank, the Republic of Ghana, and the Government of Norway, formulated and implemented two multi-phase Emergency Power Programs (EPPI and EPP II) between June 2006 and 1 Republic of Liberia. April 2008. Poverty Reduction Strategy Page 6 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) November 2009. The EPP I in 2006 helped reestablish LEC’s operations and allowed for the construction of four small isolated distribution networks (grids) each supplied by High Speed Diesel Generators (HSDG) installed at existing but destroyed substations in Bushrod Island (2MW), Kru Town (5MW), Paynesville (0.64MW) and Congo Town (2MW), all within Monrovia. 4. EPP II financed by USAID and the EU: In 2008, the USAID provided funds that was used to convert the purely Low Voltage network to 22/0.4kV distribution network. The EU also provided funds for: (i) the rehabilitation of four 66/22kV substations at Bushrod, Kru Town, Paynesville and Capital; (ii) the reconstruction of 66kV radial transmission lines from Bushrod to Kru Town, Bushrod to Paynesville with a tee-off at Stockton Creek to Capital and (iii) the expansion of the 22kV distribution lines. These rehabilitation works that were still ongoing during the preparation of the LESEP project were meant to interconnect the substations the isolated grids and to facilitate their synchronization. 5. These EPP generators provided electricity supply to government buildings, commercial operations, hospitals, schools, street-lighting, and private consumers in the capital, Monrovia equivalent to about 2,162 customers in total (less than one percent of Monrovia’s population in 2010). The remainder of the population depended on expensive, inefficient and polluting sources of energy such as small gasoline and diesel generators, firewood, charcoal, candles, kerosene, and palm oil lamps. Even though the price of electricity supplied by LEC was high (0.43 US$/kWh, among the highest in the world) it was significantly lower than the non-grid alternatives: electricity from small gasoline/diesel generators (cost US$3.96/kWh), kerosene lamps (cost US$1.53/kWh), candles (cost US$8.27/kWh), and dry cells (cost US$74.01/kWh). 6. By 2010, the existing isolated grids constructed under EPP had were having serious operational challenges. The radial 22/0.4kV distribution networks were seriously overloaded due to inappropriate network design (LV distribution with very long LV lines instead of MV distribution) and illegal connections leading to high losses. The EPP generators had also deteriorated as result of running them continuously on base load without adequate routine maintenance. They were on the verge of total collapse unless they were urgently overhauled. The new Management Service Contractor (MSC) for LEC was faced with serious financial challenges resulting from high overhead cost and very low customer or revenue base. 7. There was thus the urgent need to: (i) reconstruct the transmission and distribution network to bring electricity from power plants to the customers; (ii) develop power generation options that would over time lead to a lower cost of electricity; and substantially increase customer connections to broaden the revenue base of the utility. The donors (World Bank, USAID, EU, GoN and JICA) responded by pledging to support different elements of reconstructing the electricity infrastructure as follows: Generation: donor commitments included: (i) IDA’s finance to urgently rehabilitate the EPP HSDG to save the existing power system from total collapse; (ii) Government of Norway (GoN): Finance the supply and installation of additional 3 MW High Speed Diesel Generator (HSDG) units at Bushrod Island by mid-2010; (iii)USAID: Finance the installation of 10 X 1MW HSDG units at Bushrod by end of 2010; Page 7 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) (iv) JICA funding committed for the addition of 10 MW of Heavy Fuel Oil (HFO)-fired generation plant by the end of 20132; (v) IDA funding to rehabilitate the existing dilapidated HFO storage facility at the Bushrod Island complex and the pipeline connecting it to the oil jetty at the port to make HFO fuel readily available for use by the HFO plants envisaged to be constructed. Distribution Network Enhancement: Manitoba Hydro International, the Management Service Contractor that took full control over LEC’s operations3 in July 2010 prepared an investment program in the amount of US$53.5 million, which provided the basis for their contractual connection targets (of 33,000 over the course of the management contract) set as part of their competitive bid. The contributors to this overall envelope included IDA, GPOBA, GoN and USAID. The investments were for the extension of the distribution network, customer connections including for low-income households, investments to enhance supply options, and technical assistance for LEC. A breakdown of the indicative financing as presented in the Management Contract is presented in Table1. Table 1. Financing Sources for the Annual Investment Plans of the LEC Management Contract for the Distribution Network Expansion Year Year Year Year Donor Year 5 Total (MUS$) 1 2 3 4 GoN 3.0 6.0 6.0 7.0 7.0 29.0 4 USAID 8.5 1.5 1.5 11.5 IDA 3.0 3.0 GPOBA 2.5 2.5 2.5 2.5 10.0 Total Financing 14.5 10.0 10.0 9.5 9.5 53.5 (iii) Rationale for Bank involvement 8. Limited distribution infrastructure, high tariffs, and lack of financing for new connections as outlined in para. 7 above severely constrained LEC’s ability to increase its customer base to sustain technical and financial operations. Thus, the project was designed in strong collaboration with USAID, GoN and JICA to improve and increase access to electricity in Monrovia and the rural communities. The Bank’s intervention was in support of the Government’s broad power sector development agenda outlined in the National Energy Policy (NEP) of 2009 whose objective was to promote universal and sustainable access to affordable and reliable energy supplies as a mean to foster Liberia’s economic, political, and social development. The project was also consistent with Country Assistance Strategy (CAS) for Liberia presented to the World Bank’s Board of Executive Directors in 2009 that identified the energy sector as one of its key priorities. 2 The financing of the proposed plant by JICA was preconditioned on the successful rehabilitation of the HFO Storage Tanks and the pipeline with World Bank finance 3 The scope of operation of the Management Service Contractor was limited to the Capital Monrovia 4 At the request of the Government, USAID allocated US$9.5m towards the purchase of 10 X 1MW HSDG for installation at Bushrod Island Page 8 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) The IDA support was geared towards Component A (enhancing delivery of distribution services in Monrovia) and component B (Enhancing option for power generation). 9. The GPOBA was designed to complement the activities of Component A, which was not only critical to complete the funding envelope needed for rebuilding Monrovia’s distribution network and reaching the envisaged connection target by the MSC but also to help ensure broad-based and inclusive access to electricity and significantly improved living conditions among the poor. The GPOBA-funded activities contributed to three out of four of the NEP’s pillars, namely: (i) universal energy access; (ii) least -cost production of energy and protection of most vulnerable households; and (iii) adoption of international best practices in the electricity sector. By subsidizing connection of low-income households, the project helped to scale up electrification and raise LEC’s customer base to the minimum needed to operate efficiently. At the time of preparation of LESEP, final approval of the GPOBA financing (US$10 million) was pending approval of the “Commitment Paper5” by the Panel of Experts of the GPOBA trust fund. The project targeted connecting 16806 poor households in 21 priority low-income neighborhoods as listed in table 8. 10. The contribution from the Government of Norway was in support of Component A primarily to reinforce, rehabilitate and expand the medium and low voltage distribution grids supplying urban areas of Monrovia, including the strengthening and rehabilitation of substations as part of the investment financing foreseen in support of LEC’s Management Contract. The contribution from Norway was parallel co - financing for which accounts separate to those used for the IDA financing was established. 11. Rural access to modern energy services: The Government’s National Energy Policy (NEP) of 2009 defined all areas outside of Monrovia as rural and almost all were without access to public electricity or alternative modern energy services. With no immediate plan to extend the grid to the rural areas, the county capitals would remain without electricity from the grid for the foreseeable future. GoL recognized the need to supply rural areas with modern energy services and so established the Rural and Renewable Energy Agency (RREA) in mid-2009 with the support of the World Bank under the Africa Renewable Energy Access (AFREA) trust fund-supported Catalyzing New Renewable Energy in Rural Liberia program. The long-term goal of the RREA is to facilitate the economic transformation of rural Liberia by accelerating the commercial development of modern and renewable energy services in rural areas. Component C of the LESEP project represented Phase Two of the AFREA program6 that focused on supporting the Rural and Renewable Energy Agency (RREA) to provide off-grid modern energy services including solar-lighting options and micro- hydro power. 12. The Bank was equipped to respond to the urgency at the supply and distribution levels to avoid a collapse of the still-precarious achievements under the EPP programs. The LESEP project was prepared in accordance with Operational Policy/Bank Policy (OP/BP) 8.00, Rapid Response to Crises and Emergencies because: (a) the EPP generators needed to be urgently overhauled within a year to prevent the system to fail altogether; and (b) Financing for reconstructing the power sector (as agreed with the other donors in para. 7) needed to be fast-tracked, to ensure that the GoL’s efforts of putting the Management 5 GPOBA “Commitment Paper.” Set out the objectives and implementation process of the use of GPOBA fund an d was approved on December 21, 2011 6 At preparation, it was contemplated that certain activities under this component could also benefit from Global Environment Facility (GEF) financing. Page 9 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Service Contractor in place, as recommended by the World Bank Group, could bear immediate and demonstrable results. (iv) Project theory of change and results chain 13. The results chain set out in Table 2 presents the theory of change linking the project activities based on the project components, the expected outputs and outcomes, and the Project Development Objectives as identified at appraisal. Table 2: Original Project Results Chain for the Liberia Electricity System Enhancement Project The PDO is to: improve and increase access to electricity in Liberia GPOBA objective: to help ensure broad-based and inclusive access to electricity and significantly improved living conditions among the poor Activities Outputs PDOs/Outcomes Long term Outcomes Increasing Access to Electricity in Monrovia (IDA-48420, GPOBA) IDA Funds IDA Funds IDA Funds (i) Improved (i) Installation of 22kV and (i) 22/0.4kV Distribution (i) Enhanced Distribution socio-economic Low Voltage Lines and Network constructed and Network, thus improved development of Transformers; rehabilitated under the reliability of supply the people for (ii) Installation of meters in project; (ii) increased access to the sustenance urban households; (ii) People of Monrovia electricity for the people of post war (iii) Train staff of the energy connected to the grid; in Monrovia peace sector to implement the (iii) Staff of LEC, MLME, project RREA and EPA trained GPOBA GPOBA (iii) Low income people (ii) Improved GPOBA GPOBA provided access living conditions (iv) Service Connections in (iv) 16,806 low income electricity grid among the poor low income communities households connected in 21 priority areas Critical assumptions (i) The Management Service Contractor has the technical capacity and political support of the Government to implement the project (ii) NORAD7 would finance the expansion of the distribution network (iii) NORAD would provide initial seed money for the pre-financing of service connection in the poor communities (GPOBA component) Improving power supply to provide energy for new connections in Monrovia (IDA-48420) 7 The Government of Norway co-financed the project through NORAD Page 10 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) (i) Overhauling of four (i) Diesel Generators (i) Power supply to isolated EPP HSDG overhauled in first year of isolated grid improved Switch from (ii) Installation of the project; during in the period expensive diesel Synchronizers (ii) Isolated Grid 2010 – 2012. fuel generation to (iii) Rehabilitation of the (Generators) Synchronized; (ii) Enhanced evacuation cheaper HFO fuel Pipeline and Storage facilities (iii) HFO Transport and of power thus improving generation during for HFO fuel Storage Facilities power supply the dry season rehabilitated; (iii) Possibility for increased HFO power generation Critical assumptions • EU would continue to finance the Rehabilitation of the four 66/22kV Substations where the isolated generators are located and the construction of 66kV transmission lines to interconnect them to increase reliability of supply; • USAID would finance the installation of 10 X 1MW HSDG • JICA would finance the construction of 10 MW HFO power plant once the HFO Storage Facilities is constructed Improve Access to Modern Electricity in Rural Liberia (AFREA) (i) Rehabilitation of micro (i) 60kW micro hydropower Improved rural access to hydropower plant in in plant rehabilitated and modern energy services Yandohun in Kolahun households connected to Liberia to (ii) District, Lofa County renewable energy (mini become carbon Sustainable Solar Market grid) neutral by 2050 Facilitation (SSMF) (ii) Solar lanterns and systems sold to off-grid users Critical assumptions • The local community has technical capacity to operate and maintain the micro hydro plant • RREA has the technical capacity to implement the project Source: PAD, LEC and RREA (v) Project Development Objectives (PDOs) 14. The Project Development Objective was to improve and increase access to electricity in Liberia. The objective of the related GPOBA project was to help ensure broad-based and inclusive access to electricity and significantly improved living conditions among the poor. The LESEP Additional Financing (AF) that was approved in January 2012 maintained the original PDO but scaled up the activities of the components to increase the project’s impact and development effectiveness. The Global Environmental Objective of the GEF component approved together with the LESEP AF was: Page 11 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) to improve and increase access to electricity in Liberia8. (vi) Key Expected Outcomes and outcome Indicators 15. The PDO has two main interdependent outcomes: (a) Improve electricity power supply(Generation) and (b) Increase access to electricity in Liberia (the capital Monrovia and the rural areas9). The PDO level indicator for the original project was: a. Improve access10 to electricity in Monrovia after post-conflict (number of connections to electricity grid, number of urban households connected to electricity); and The intermediate results that will support achieving the PDO were: b. Construction of distribution network (number of transformers and auxiliary services installed); c. Securing power generation (first phase of main generating units overhaul completed); d. Enhancing options for power generation (HFO pipeline and storage facility operational); e. Demonstrating renewable power for modern energy services (micro-hydropower pilot built, SSMP delivered); f. Enhancing capacity to deliver electricity services (LEC staff trained). Following the project’s restructurings, the final key PDO level indicators and the intermediate results that were to support achieving the PDO are as summarized in Table 5 below. (vii) Project Components 16. The project included four components: (a) enhancing delivery of distribution services in Monrovia, including for low-income households; (b) enhancing options for power generation; (c) providing modern renewable energy services to off-grid users; and (d) technical assistance: Component A: Enhancing delivery of distribution services, including for low-income Households in Monrovia (Combined IDA US$6.8 million, US$10 million GPOBA, US$29 million Government of Norway): this component was made up of three related subcomponents as follows: a. Sub Component A1: Distribution network reinforcement and extension (IDA-48420, US$3.8M & IDA-50550, US$3.0M): The IDA finances were used mainly for the rehabilitation and extension of the backbone medium voltage (22kV) and low voltage distribution network in Monrovia. This made it easy for the subsequent network expansions and service connections; b. Sub Component A2: Connection of new low-income customers (GPOBA, US$10M): The GPOBA financing complemented the service connections aspect of the component by subsidizing access to electricity by the poor in Monrovia. The grant was performance based and so LEC first pre-financed the 8 The GEO objective in the GEF project paper was “To reduce greenhouse gas emissions when compared with Liberia’s emissions growth baseline”. 9 The National Energy Policy (NEP) of June 2009 defines all areas outside of the capital Monrovia as Rural Areas 10 The exclusion of the “increase access” outcome was a notational error in the PAD that was corrected during the preparation of the AF Page 12 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) connections. The GPOBA then reimbursed LEC for the connections that met the agreed criteria after verification by an Independent Verification Agent (IVA). The Government of Norway through NORAD provided the seed money for the pre-financing of the connections by LEC; c. Sub Component A3: Distribution Network Reinforcement and Extension (Government of Norway, US$29 million): The objective of this activity was to reinforce, rehabilitate and expand the medium and low voltage distribution networks supplying urban areas of Monrovia, including the strengthening and rehabilitation of substations as part of the investment financing foreseen in support of LEC’s Management Contract. The GoN later provided additional funds (about US$10) for the rehabilitation of the remaining 66kV transmission Network11 that was to transform the 66kV transmission lines12 constructed with EU funds in 2011 into a ring. Component B: Enhancing Options for Power Generation (IDA-48420, US$4.7M & IDA-50550, US$16M): The purpose of this component was: a. To assist in urgent overhaul of the overrun generators installed in 2006 under EPP to supply four isolated low voltage distribution networks. It also financed the installation of Synchronizers that made it possible to synchronize the generators in the isolated grids for improved power supply when the EU financed rehabilitation of the four 66/22kV substations and the interconnecting 66kV transmission lines was completed; b. Initially, the Component proposed to finance the rehabilitation of the dilapidated HFO Pipeline from the port and Storage facility at LEC’s Bushrod Island Yard for the use of HFO power plants. This was a precondition on JICA’s proposed construction of new HFO plants. The activity was restructured to change the activity to the Design of the facilities on the premise that the actual construction of the HFO Transport and Storage facilities would be finance under the World Bank funded Liberia Accelerated Electricity Expansion Project (LACEEP); c. The component also financed the construction of a new 10MW HFO power plant in addition to the 10MW HFO plant financed by JICA. Component C: Providing Modern Renewable Energy Services to Off-Grid Users (AFREA, US$2.0M & GEF, US$1.45M): a. Initially, with funding from AFREA (US$2.0M, TF099017)13, the component: • used both a Sustainable Solar Market Packages (SSMP) and “Lighting Africa” approach to deploy an aggregation of solar lanterns and systems in targeted rural areas with the aim of rendering their usage both sustainable and sustained; and • the component rehabilitated a pre-war micro-hydropower plant at Yandohun in Kolahun District, Lofa County; b. Later, with GEF funds (US$1.45M), the component financed: 11 The rehabilitation work was begun but not completed by LEC because the funds run out. Those works are now being financed by the EU and the World Bank under the Monrovia Consolidation and LACEEP AF respectively. 12 Rehabilitation of the four 66/22kV Substations where the generators supplying the isolated 22/0.4kV grid are located and the construction of 66kV transmission lines to link them, financed by the EU was already progressing at appraisal 13 The Catalyzing New Renewable Energy in Rural Liberia (Phase 2) project funded by AFREA closed on March 31, 2014 and its evaluation is not considered in this report. US$2 million was allocated and US$1,54 million was disbursed by grant closing date. ref. AFREA Phase I Completion Summary Report Page 13 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) • a program entitled Lighting lives in Liberia that was intended to catalyze private businesses to market and sell, on a large scale, solar lanterns • Technical assistance to strengthen the capacity of RREA to develop policy foundation and strategy work to implement Component C of the project Component D: Technical Assistance (IDA-48420, US$0.8M & IDA-50550, US$0.5M): • This component financed technical assistance for the implementation of the project. This included training for staff of LEC, MLME, RREA and EPA, implementation of measures prescribed in the ESMF and RPF of this project, and financing for the financial audits of the project; • It also financed assistance in capacity building targeted at the Department of Energy at MLME to enable it to perform its role in supporting the project and replicating best practices in future projects. This component was implemented by LEC Table 3. Estimated and Actual Cost (in million US$) per Components with World Bank Funding IDA 48420 (2010) IDA-50550 (2012) GPOBA, (2011) GEF, (2012) GoN (2010) Component Estimate Actual Estimate Actual Estimate Actual Estimate Actual Estimate Actual Component A.1: 3.80 5.60 3.00 5.17 10.00 9.98 29.00 29.00 Distribution Services Component B: Enhancing Options 4.70 2.60 16.00 14.39 for Power Generation Component C 1.45 1.43 0.00 0.00 Component D: 0.80 1.19 0.50 0.87 Technical Assistance Unallocated 0.70 0.00 2.50 0.00 Cancelled 0.00 0.04 0.00 0.02 0.00 0.02 0.00 0.02 0.00 0.00 (Undisbursed) Total 10.00 9.43 22.00 20.45 10.00 10.00 1.45 1.45 29.00 29.00 *The difference between the estimated and actual total project costs for the IDA credits was due to US$ to XDR exchange rate losses B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) The PDO of the project remained unchanged throughout the implementation of the project. However, some of the PDO Outcome and Intermediate Indicators were changed during the following project restructurings: 17. Additional Financing (approved on January 26, 2012): The additional financing did not change the project components but broadened their scope with additional activities. IDA US$22 million was allocated to: (a) Component A (US$3M) for the establishment of system control and dispatch system for easy dispatch of power from the synchronized EPP and USAID HSDG to the newly connected customers; (b) Component B (US$16M) for the installation of 10MW HFO plant and associated safeguard studies; and Component D (US$3M) for Technical Assistance and contingencies. A US$1.45M GEF fund was also allocated to Component C for the implementation of the Lighting Lives in Liberia program and technical assistance to RREA. Page 14 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Table 4. Revised Indicators after Additional Financing (January 26, 2012) PDO Level Indicators Original Revised Baseli Revised or New Original Indicator target target Comment ne Indicator (a) Revised indicator to limit it to Monrovia where Connections to No. of connections to 4,066 LEC’s connections took 2162 electricity grid in 20,000 electricity grid14 place Monrovia (b) Revised target to reflect additional funding People in urban areas Introduced as a better No. of urban 10,165 provided with access estimator of project households connected 4,992 50,000 to electricity under the benefits, directly connected to electricity15 project to the first indicator Translates the number of Electrification rate in connections into a measure - 4.42% - Monrovia of overall effect on access to electricity System Average Interruption Frequency The new indicator was - - Index (SAIFI) for 15 introduced to track the customers in Monrovia quality of electricity service (per month) Direct project Revised at ICR to include beneficiaries16 128,600 - beneficiaries of mini grid (number), of which (50%) and lanterns female (percentage) Intermediate Indicators Revised or New Original Indicator Comments Indicator No. of transformers Transformers and (no and auxiliary services 0 375 auxiliary services change) supplied supplied 14 The number of connections is an equivalent number of customers comprising both non-households (government buildings, commercial operations, hospitals, schools, street-lighting, etc.) and households. At preparation, it was assumed that only about half of the total number of connections in Monrovia were household connections (as per LEC’s commercial data at the time). 15 An average household size of 5 persons (based on statistical service 2010 population census) was used to estimate the number of people (beneficiaries). 16 At preparation of the AF, only the 50,000 grid connected beneficiaries in Monrovia was indicated. However, based on comments of the Peer Reviewers, the number was revised to account for both the target beneficiaries of the mini grid (600) and solar lanterns (78,000) as well. Page 15 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) First Phase of main First phase generating unit (no change) Yes completed overhaul completed HFO HFO pipeline and pipeline and storage facility storage (no change) operational facility Yes operational Introduced to track the Thermal Power Plant Yes implementation of the new Installed power plant Generation capacity of Micro hydro-power renewable energy New indicator is more 0 1 0.06 pilot built constructed under the accurate project (MW) SSMP delivered 1 SSMF delivered 1 Lighting Africa - 0 - approved solar lanterns 100,000 in use LEC staff trained People trained under 0 50 54 (cumulatively) the project The closing date of the original IDA credit was extended by 18 months to allow for more time to complete the additional activities. The closing of the IDA credits and the Trust Funds were as follows: IDA Credit 48420 31 December 2014 IDA Credit 50550 (AF) 31 December 2014 GPOBA 16 June 2014 (No Change) AFREA TF 31 March 2014 (No Change) GEF 31 December 2014 18. June 23, 2014 restructuring: the restructuring was carried out to: (a) reallocate resources among components due to savings in the procurement of the contract for the construction of the 10MW HFO thermal power plant (12.5M out of US15M) and the reduction in scope from rehabilitation of HFO pipeline and storage facilities to the designing same; (b) an extension of the closing date; and (c) changes to the results framework There was no change in the PDO and GEO. However, in view of additional resources reallocated and the proposed changes on Component B, the following indicators were revised: • The original intermediate indicator “HFO pipeline and storage facility operational” was revised to “Design of HFO pipeline and storage facility finalized” • Connections to electricity grid in Monrovia (number): target revised from 20,000 to 26,100; • People in urban areas provided with access to electricity under the project (number): target revised from 50,000 to 112,700; • Electrification rate in Monrovia (percent) target was increased from 4.42% to 9.97%; Page 16 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) • Direct project beneficiaries (number), of which female (percentage): target was increased from 128,600, of which female 50% to 191,30017 of which female 50%. The closing date of the IDA credits and Trust funds were extended to the following dates: IDA Credit 48420 30 June 2015 IDA Credit 50550 (AF) 30 June 2015 GPOBA 15 December 2015 GEF 31 December 2014 Other Changes 19. The Ebola Virus Disease (EVD) outbreak in 2014 triggered the restructuring of March 6, 2015 and December 10, 2015 that extended the closing dates of the project. The GoL declared a State of Emergency in July 28, 2014 due to the Ebola outbreak in Liberia and most of the contractors declared Force Majeure and left the country. As such all contract activities of the project came to a halt. The IVA for the GPOBA stopped the field verification of connections even though LEC continued making connections. The retailers for the Solar Lanterns could not continue the commercial distribution of the lanterns and this resulted in many of them losing their capital. To accommodate the overall delays in implementation of the projects, the LESEP, GPOBA and GEF closing dates were extended to May 31, 2016, December 15, 2015 and June 30, 2016, respectively. As of December 2015, the effects of the Ebola pandemic were still being felt and this triggered the restructuring of the project to extend the closing dates for all the IDA and TF funds to May 31, 2017 after the midterm review of the project, which took place in September 2015. Rationale for Changes and Their Implication on the Original Theory of Change 20. Additional Financing. By 2012 the refurbished EPP diesel generators had been overrun (at base load) and their maintenance cost had begun rising again. The additional 10MW high speed diesel generators installed at Bushrod Island with USAID funding (USAID HSDG) were also being run constantly on base load thus shortening their lifespan. An ESW prepared by the Bank in 2010 and confirmed through the Master Plan for expanding LEC prepared in early 2011 estimated a power supply gap of at least 10 MW by 2013, that was likely to increase to 18 MW by 2014 and to 24 MW by 2015. The proposed JICA 10 MW HFO plant was expected to be commissioned by 2015. This clearly indicated the need for an additional 10 MW more permanent by 2014 when the HSDG would have to be decommissioned. Finally, given the organic way in which the power supply had been augmented, there was an urgent need for them to be coordinated so that the power available could be more efficiently dispatched to the newly connected customers. Even though the original LESEP was already providing support for synchronization of these existing generators to the power grid, a more structured dispatch system was urgently required. 21. June 23, 2014 restructuring: There were two unsuccessful attempts to procure contractors for the proposed rehabilitation of the existing dilapidated HFO Pipeline and Storage facilities at LEC’s Bushrod Island Yard. The direct project beneficiaries have been revised to account for the planned 600 beneficiaries of the 17 mini grid and 78,000 for the lighting Africa Lanterns Page 17 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Upon investigating the reasons for the unsuccessful procurements, it was found that it was more feasible to abandon the existing structures and construct a new one. Due to time constraints, it was decided to procure the services of a Consultant to undertake a detailed design of the new facility instead and for it to be constructed under the LACEEP project that was under preparation. The contract for the construction of 10MW HFO plant was procured at US$2.5 million less than budgeted. It was therefore necessary to reallocate the savings for the extension of distribution network. 22. Final PDO level Indicators and the Intermediate Results Indicators: The final key PDO level indicators and the intermediate results arrived after the Additional Financing (of 2012) and the restructuring in June 2014 are summarized in Table 5 below: Table 5: Final PDO level Indicators and the Intermediate Results Indicators Baseline Final Origin Revised (original Revised Indicator al Target or at Target Target (2012 AF) AF) (Jun 2014) PDO Level Indicators Electrification rate in Monrovia 0.44 4.42 9.97% System Average Interruption Frequency Index 20 15 15 (SAIFI) for customers in Monrovia (per month) Connections to electricity grid in Monrovia 2160 4066 20,000 26,100 People in urban areas provided with access to grid 4,992 10,165 50,000 112,70018 electricity under the project Direct project beneficiaries (number) 4,992 164,600 191,300 Female beneficiaries (percentage) 50% 50% 50% Lighting Africa approved solar lanterns in use 0 100,000 100,000 Intermediate Indicators Transformers and auxiliary services supplied 0 375 375 375 First Phase of main generating units overhaul No Yes Yes Yes completed Design of HFO pipeline and storage facility No Yes Yes finalized Thermal Power Plant Installed No Yes Yes Generation capacity of renewable energy 0 0.06 0.6 0.06 constructed under the project (MW) 18 At preparation, it was assumed that only about half of the total number of connections would be households (comprising 5 persons per household). However, as implementation progressed, the connections became predominantly household (residential) connections and so an average of about 4.3 persons per household was assumed for all connections to obtain the beneficiaries Page 18 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) SSMP delivered 0 Yes 1 1 People trained under the project 0 50 54 54 23. Impact of the restructuring on the theory of change: The impact of the Additional Financing on the project’s theory of change was clearly the increase in the effectiveness of the outcomes resulting from the addition of activities to component A, B and C. The June 23 restructuring reduced the outcome of component B but the released funds were used to enhance further the distribution network under Component A, thus promoting an increase in access to electricity. The December 2015 restructuring also dropped the establishment of the System Control and Load Dispatch System (LDS) for the Design of a comprehensive SCADA and Load Dispatch System. This did not have any significant impact because the LDS was envisaged to evacuate power from the synchronized EEP generators. However, by December 2015 the EEP generators have been decommissioned leaving only the USAID 10MW HSDG at Bushrod Island. Therefore, the decision to design a comprehensive SCADA and LDS in anticipation of its implementation under LACEEP when more generating stations including Mt. Coffee Hydro and the remaining 66/22kV substations had been rehabilitated is considered as a positive long-term outcome. The final theory of change resulting from the restructuring is provided in Table 6. Table 6: Final Project Results Chain for the Liberia Electricity System Enhancement Project INPUTS/ACTIVITIES OUTPUTS OUTCOMES Increase Access to Electricity in Monrovia (IDA-48420 & IDA-50550, GPOBA) (i) Installation of 22kV and Low (i) 22/0.4kV Distribution Network (i) Enhanced Distribution Network, Voltage Lines and Transformers; constructed and rehabilitated under thus improved reliability of supply (ii) Installation of meters in urban the project; (ii) increased access to electricity for households; (ii) People of Monrovia connected to the people in Monrovia; (iii) Train staff of the energy sector the grid; to implement the project (iii) Staff of LEC, MLME, RREA and EPA trained GPOBA GPOBA (iv) Service Connections in low GPOBA (iii) Low income people provided income communities (iv) 16806 Low income households access electricity grid connected in 21 priority areas Improve Electricity Supply in Monrovia (IDA-48420 & IDA-50550) (i) Overhauling of four isolated EPP (i) Diesel Generators maintained in (i) Power supply to isolated grid HSDG; first year of the project; improved in 2010 – 2012; (ii) Installation of Synchronizers; (ii) Isolated Generators (ii) Reliability of power supply (iii) Supply of Generator Parts for Synchronized improved maintenance including those (iii) 6000hrs and 12,000hrs planned (iii) Power supply from HSDG specifically procured during the maintenance of USAID HSDG sustained including during the Ebola Ebola outbreak completed and extra maintenance19 period; 19 The JICA HFO plant planned to be commissioned in December 2014 could not happen because of the Ebola. As such, the Government requested for extra maintenance of the HSDG to enable them to continue Page 19 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) (iv) Construction of 10MW HFO for the extended use during Ebola (iv) thermal Power increased, leading Power Plant period to improved electricity Supply in (v) Design of SCADA and Load (iv) 10MW HFO thermal power Monrovia; Dispatch System; plant installed (v) Comprehensive SCADA system (vi) Design of HFO Transport and (v) SCADA and Load Dispatch to be established under LACEEP to Storage Facilities System designed; improve power supply (vi) HFO Transport and Storage (vi) HFO Transport and Storage Facilities designed Facilities constructed under LACEEP thus leading to cheaper power generation and improved supply Improve Access to Modern Electricity in Rural Liberia (AFREA & GEF) (i) Rehabilitation of micro (i) 60kW micro hydropower plant Improved rural access to modern hydropower plant in in Yandohun in rehabilitated and 600 people energy services Kolahun District, Lofa County connected to renewable energy (ii) Sustainable Solar Market (mini grid); Facilitation (SSMF) (ii) SSMF delivered; (iii) Develop capacity of local (iii) local retailers created and retailers to market Lighting Africa Lighting Africa approved solar approved solar lanterns systems sold and in use Performance toward high level On the balance, project achievements toward high level objectives was objectives high. Source: Information collected from the ISRs, LEC and RREA 2. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 24. The relevance of the PDO is assessed against the current 2013-2017 Country Partnership Strategy (CPS). The CPS is based on three pillars (economic transformation, human development, and governance and public- sector institutions); the economic transformation pillar includes the energy sector, which is expected to contribute to the increase in the generation of, and access to, affordable and reliable electricity for businesses and households, in addition to improving access to alternate renewable generation methods in rural areas. The CPS expected further support for power sector improvements similar to those provided by the project from the two additional IDA credits for generation, transmission, and distribution. The CPS supports the efforts of the GoL to reduce the infrastructure gap, and focuses on roads, energy, and communication, sectors that are vital to the economic development and state- and peace-building agenda facing Liberia. to run until the commissioning of the HFO plants in November 2015 Page 20 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 25. The continued relevance of the project’s objective (improving power supply and increasing access) is demonstrated by the zeal with which the Government pursued the reconstruction of the Mt. Coffee Hydro Power (88MW) and the construction of its own 18MW HFO power plant in addition to the 10MW HFO plants each by the project and JICA. The LACEEP (US$95M) and LIRENAP (US$27M) by the World Bank, the Monrovia Consolidation Project by the EU and the LEEP project by AfDB that are all intended to improve and expand electricity access not only to the people of Monrovia but also those in the rural areas further demonstrates the relevance of the PDO currently. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 26. The objective of the project was to improve and increase access to electricity in Liberia . The theory of change of Table 2, and its subsequent evolution as shown in Table 6, provides a breakdown in terms of outcomes: (a) Connections (increased access to electricity in Monrovia and the linked GPOBA objective of increased access for low income households), (b) Improved Power supply in Monrovia (Secured Generation), and (c) Improved Rural Access to Modern Electricity (and the linked GEO objective of providing renewable energy to off-grid users). (a) Objective/Outcome: Increase Access to Electricity in Monrovia 27. Overall achievements exceeded project targets in the areas of the expansion of the distribution network and customer connections in Monrovia (which include those targeted by the GPOBA project). Key outputs generated under this objective were: (i) the extension of backbone 22kV distribution lines to all the selected 21 GPOBA communities; (ii) extension of 22/0.4kV network to additional 18 communities in Monrovia; and (iii) connection of about 42,000 households in Monrovia; 28. All output indicators were either achieved or exceeded (as indicated in Table 7 below) and this produced a remarkable increase in the number of people provided with access to electricity in Monrovia (from a base of 4,992 in 2010 to about 112,700 in 2017) and an expanded distribution network that would facilitate further connections. Table 7. Achievement of increase in access results against target indicators Final Actual % Actual Indicator Baseline Revised Achieved Achieved Target at ICR at ICR Electrification rate in Monrovia 0.44 9.97% 13.00% 130% Connections to electricity grid in Monrovia 1,160 26,100 42,000 161% People in urban areas provided with access to 4,992 112,700 210,000 186% electricity under the project Direct project beneficiaries (number) 4,992 191,300 289,000 151% Female beneficiaries (percentage) 50% 50% 50% 100% Page 21 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 29. Achievement of linked GPOBA objective.: overall, the achievement of the GPOBA project exceeded the total target. The GPOBA achievement is therefore rated High. A total of 17,165 low-income households out of the targeted 16,806 were connected and verified. Although the distribution of achievement per community is slightly different from the initial targets (see Table 8 below), the detailed analysis of achievement per community reveals that the project succeeded in connecting households in each of the 21 priority communities. Apart from “Vai Town Behind Store” community that had a low connection rate of 24% compared to the initial target, in all the other communities, the project achieved connection rates of at least 64%. The final targets were achieved in a period of 4.5 years as against the original 2 years primarily due to the non-availability of distribution materials for the connections but more particularly due to the inability of the IVA to validate the connections during the period of the EVD epidemic, a situation that created a huge backlog of unverified connections. The situation was compounded by the inadequate power generation in 2015 that forced LEC to shed load. Table 8. LEC household connection targets for low-income neighborhoods Target Number of Actual Number Low-Income Service Area % Success Connections of Connections West Point 1,476 1142 77% New Kru Town Rd 2,712 3140 116% Buzzi Quarter 228 213 93% Slipway 396 253 64% Clara Town 1,956 1508 77% Point Four 816 545 67% Newport St. Monrovia 516 487 94% Bassa Community 720 475 66% Public Health Pump (PHP) 720 516 72% Jallah Town 362 405 112% Saye Town 320 964 301% 12th Street Dead-End 320 805 252% Fiamah 720 789 110% Doe Community 1,080 721 67% Vai Town Behind Stores 1,080 257 24% Logan Town 1,080 2417 224% St. Paul Bridge Community 1,080 1472 136% Gbarnkay Town Community 288 235 82% Wroto Town Community 144 217 151% JFK Beach Community 360 349 97% Soniewein Community 432 460 106% Sub Total - Connections 16,806 17,370 103% List submitted by LEC 16,806 17361 103% Connections Validated by IVA 16,806 17165 102% Page 22 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Source: Verification report for Q3 and Q4 2016 – April 2017 by the IVA (Hydroconseil–IED-CSET) (b) Objective/Outcome: To Improve Electricity (Power Supply) in Monrovia 30. Key outputs generated under this objective were: (i) Overhauling of the four isolated EPP Diesel Generators; (b) rehabilitation of four 66/22kV substations, construction of 66kV lines to link them and the Installation of Synchronizers; (c) Supply of Generator Parts for the maintenance of the USAID HSDG; (d) Construction of 10MW HFO Power Plant; (e) Design of HFO Transport and Storage Facilities; and (f) Design of SCADA and Load Dispatch System. 31. At ICR, LEC had a total generation installed capacity of 126 MW for the Monrovia Grid. This consisted of three HFO power plants installed at Bushrod Island with finance by the Bank (10MW), JICA (10MW), and Government of Liberia (18MW), and the recently commissioned Mount Coffee hydro plant (88MW). As such, there is now about 100MW of power available during the rainy season when Mount Coffee can operate at full capacity, and 40MW in the dry season when generation from Mt. Coffee drops to a low of 10MW. Consequently, in the near term the system peak of around 30MW (a Bank ESW study in 2011 projected a peak of around 35MW by 2017) can easily be supplied with the existing facilities; in terms of potential demand it should be noted that prior to war, demand was around 65MW. The project’s contribution to the availability of generation included: (a) the overhauling of the High-Speed Diesel Generation (HSDG) installed under EPP to sustain its operation until the commissioning of the 10MW HSDG funded by USAID in 2011; (b) Synchronization of the isolated grids that improved the reliability of power supply; and (c) the 10MW HFO power plant. It initially included the pipeline to supply the generation site with HFO; the latter, together with a tank farm at Bushrod, are now being financed by the LACEEP follow-on project. LESEP provided funding for the design of the tank farm at Bushrod. Finally, the LESEP project provided continued maintenance of the USAID-funded 10MW HSDG through the period of Ebola all the way until the commissioning of the first permanent 10MW HFO plant funded by IDA. The corresponding project outcome has clearly been achieved. 32. Service Quality: The total System Average Interruption Frequency Index (SAIFI) for customers in Monrovia (per month) is an aggregate of: (a) the distribution Network SAIFI which is influenced directly by the intervention of the project (enhancement of the distribution network); and (b) the transmission network SAIFI which is influence by the state of the 66kV transmission network constructed under the EPP II. As shown in Fig. 1 below, almost all the recorded Distribution SAIFI were below 15 per month 20 in the period leading to and just beyond the project closing date of May 30, 2017. However, the total SAIFI figures were largely above the target 15 interruptions/month over the same period due to the unusually high values for the 66kV transmission network. The reason for this is that all the generated power (both from Mt Coffee and the 38MW HFO plants) were now transmitted from the Bushrod Power house through the radial 66kV transmission lines (constructed under EPP II emergency program) to the substations (for onward distribution). These transmission lines have now become unstable and trips easily especially when it is raining. LEC has 20 That for April was very high because a rain storm in late March destroyed some of the distribution network which were not restored until May Page 23 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) recalibrated the protection system and this has help reduced the number of outages. It is hoped that the reconstruction of the transmission network (financed by the EU and the WB funded LACEEP AF project) to convert the network into a loop coupled with the completion of the SCADA and Load Dispatch Center will further improve the indicator Figure 1. Comparison of 66kV transmission Line and 22kV Distribution Network SAIFI SAIFI - 66kV Vs 22kV 25 SAIFI (Interruptions/ Month) 20 21.2 15 15.1 10 12 12 11.6 10 10.9 5 8.4 8 8.8 8.9 3.9 0 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 AXIS TITLE SAIFI - 22kV SAIFI - 66kV (c) Objective/ Outcome: Improved Rural Access to Modern Electricity and achievement of GEO 33. The achievement of the project (in collaboration with other donors, EU, USAID, GoN, etc.) in building the institutional capacity of RREA and to distribute the Solar products was largely accomplished. Therefore, the achievement of the GEO is rated Substantial. At project closure in May 31, 2017, RREA had succeeded in creating 9 active Solar System Retail Partners that sold 76,637 out of the targeted 100,000 Lighting Africa-approved solar products thus providing improved lighting for over 59,800 people in Liberia. The lifetime direct GHG emissions avoided as a result this achievement is estimated at 211.10 tons of CO 2 equivalent21. The non-attainment of the target was largely due to the impact of the Ebola epidemic. There was a huge drop in distribution performance (about 60%) due to adverse economic situation imposed by the EBOLA outbreak. There was significant slowdown in the economic activities in the country, causing end users and retail partners to experience financial difficulties, which immensely impacted products’ distribution. However, the situation has begun to improve. By December 31, 2017, 18 more business institutions have joined the pool of Retail Partners and additional 9,273 (out of the remainder 23,363) units of solar products have been distributed to benefit a further 7,926 people with funds from the ongoing World Bank funded LIRENAP project. The enhancement of the capacity of RREA under the project would enable to them scale up the development of renewable energy for the improvement of energy access to the rural people. The indicators associated with the off-grid component of the project yielded the results (as at project closure) shown in Table 9. 21 Source: implementation completion report by RREA, December 2017 Page 24 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Table 9—Off-grid and Renewable Energy Achievement Target Achieved % Achieved Generation capacity of renewable 0.06 0.06 100% energy constructed (MW) Sustainable Solar Market SSM organized SSM 100% Facilitation (SSMF) delivered organized22 Lighting Africa approved solar 100,000 76,63723 76.6% lanterns in use (measured in SE4ALL units) People provided with electricity by 600 1000 167% offgrid/ minigrid/ renewables Justification of Overall Efficacy Rating Rating: Substantial The rating is based on the achievement of most of the project’s objectives as discussed beforehand, and summarized as follows: (a) Overall access to electricity in Monrovia: all the indicators were 100 percent achieved or exceeded by a significant margin and the corresponding rating for this objective is High; (b) GPOBA access target: this was achieved with variations among neighborhoods: nine achieved less than 90 percent of the target, three achieved between 90 and 100 percent, and 9 exceeded the target substantially; the corresponding rating is considered to be Substantial; (c) Improving the power supply in Monrovia: the target was fully achieved in terms of installed capacity to supply the load, but was not achieved in terms of service continuity as evidenced by the variations in the SAIFI index; as noted in the discussion, the latter is expected to improve in the short term with new investments and therefore the achievement is rated as Substantial; (d) Improved rural access and off grid renewable energy: the objective was fully achieved for three out of four indicators, and RREA was significantly strengthened; the project only fell short in the distribution of solar lanterns, and the achievement is rated as Substantial. The overall efficacy rating was justified as Substantial given that the four targets were rated at this level or above. 22 Source: SSMP Liberia Final Report 23 All the 100,000 equivalent lanterns were successfully procured and disbursed but only 76,637 were sold and in use. The remaining 23,363 is being distributed under the World Bank funded LIRENAP project Page 25 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) C. EFFICIENCY Assessment of Efficiency and Rating Rating: Substantial 34. Economic evaluation of the Generation Component. The HFO power plant financed by the project derives its economic benefits from the savings it generates when compared to the counterfactual, which consists of power production based upon diesel fuel. The economic evaluation yields a rate of return that exceeds the 12 percent threshold commonly utilized for this purpose. The assumptions underlying the analysis are conservative and a higher rate should be achievable under less stringent conditions, namely through a higher plant factor in the future associated with increased demand growth. 35. Economic evaluation of the Network Extension and Connections component (including the GPOBA). The benefits of the project were assessed against a counterfactual that consists of using kerosene for lighting. The analysis yields an acceptable rate of return of 12 percent under conservative assumptions regarding the Willingness to Pay estimated as part of the study. The latter is an extremely uncertain parameter, which was estimated according to sensible (albeit conservative) assumptions regarding the transition of a consumer when switching to electricity, and the real value could exceed the results yielded by the analysis. 36. Economic evaluation of the Lighting Lives in Liberia project. A cost-effectiveness approach was adopted, comparing the costs of PV LED lights against dry-cell powered lanterns. The benefits of the PV products yield a Net Present Value of US$1.36 million compared to a cost of around US$484,000, hence a B/C ratio of 2.8. This parameter could be higher given that the ex-post assessment is conservative and doesn’t include benefits different from those of lighting (e.g. charging of mobile phones, improved security, improved education, etc.). 37. Justification of assessment of overall efficiency rating. The rating is based on findings that indicate: (a) that the project’s economics are sound and (b) that they are likely to improve during actual operations if the power sector grows in terms of load and consumers. They should also improve with further economic development and higher incomes that can fuel more consumption and a higher willingness to pay. D. JUSTIFICATION OF OVERALL OUTCOME RATING Rating: Satisfactory 38. The combination of High Relevance, Substantial Efficacy and Substantial Efficiency yields an overall rating of Satisfactory24. However, the ISRs ratings were Satisfactory until November 2014 (ISR Sequence 06), and Moderately Satisfactory until September 2017 when disbursements ceased. The downgrading of the rating was due to the late submission25 of the March 2015 and June 2015 Interim Financial Reports (IFR). Consequently, a split evaluation 24ICR Guidelines, Appendix H, “Deriving the Overall Outcome Rating”. 25LEC lost their Finance officer in May 2015 and did not get a replacement until October 2015. As a result, the submission of the March 2015 and June 2015 IFRs delayed leading to the downgrading of FM rating from S to MS Page 26 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) was performed to determine the achievement level and reconcile the difference in ratings. Table 10 summarizes the split-level evaluation which confirms the Satisfactory rating noted beforehand: Table 10 Split Evaluation for Overall Outcome Rating Until Nov 30 2014 After Nov 30 2014 Moderately Outcome rating: Satisfactory Satisfactory Numerical value 5 4 Disbursement (US$ million) 26.84 16.45 Share of disbursement (%) 62.0 38.0 Weighted value 3.10 1.52 Final Outcome Rating 4.62 or Satisfactory E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 39. Beneficiaries of the electrification component include 50 percent female. In Monrovia, some women took advantage of the power available to set up small stores, hair dressing saloons, tailoring shops, etc. in front of their houses. The installation of street lights in the project area improved the security particularly for those women who go out to the market before dawn and return home after dusk. For the Lighting Lives in Liberia project about 36% of the Local Retail Partners for Solar Products26 were made up of women groups. As part of the off-grid component, a gender assessment was conducted to identify key gender issues, risks, constraints and opportunities associated with a proposed energy activity to identify concrete actions that can help improve the delivery of and access to energy services for both men and women. Institutional Strengthening 40. The components that were implemented by LEC benefited from the expertise provided by the LEC management contract awarded to Manitoba Hydro International (MHI), which helped in reestablishing the various department LEC. However, the impact of the contract awarded MHI under the project build the capacity of the local staff was insignificant. The project was also significant in affording a first opportunity for RREA to implement its mission, and providing operational funds for launching it. Mobilizing Private Sector Financing 41. The project was not instrumental in mobilizing private financing for the generation and network improvements components. Private sector participation was supported through MHI, but the latter did not 26 Source: Lighting Lives in Liberia Consumer and Retail Survey Final Report 2016 Page 27 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) include financing. The rural component had a very important role in involving the private sector in the lantern and solar systems component. The program facilitated private sector involvement in the delivery of solar products by providing business development support, technical training, market intelligence, and consumer education, thereby reducing the cost and hurdles faced by RREA’s retail partners. Poverty Reduction and Shared Prosperity 42. The project has been extremely important in Liberia’s effort to return to becoming a normal modern society. The availability of electricity service has provided important security benefits such as street lighting to reduce petty crime, as well as complementing modern and extended services such as cell phone charging. It has also improved basic social services such as education by providing lighting to dwellings in the poorer areas of Monrovia with the GPOBA component. Other Unintended Outcomes and Impacts 43. None were detected 3. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 44. Realistic objectives: The project was prepared in the wake of the Emergency Power Programs I and II, which helped to identify the needs and the priorities for the reconstruction of the power grid and generation facilities in the Monrovia area. As a result, the main project objective, to improve access, and its components, including those of ensuring adequate electricity production, reinforcement of the network, coverage increases through customer connections in Monrovia, and supply to rural consumers, were realistic and attainable based on a good knowledge of the supply and demand issues involved. 45. Simple Design: The project’s design responded to the objectives identified during preparation (four components oriented towards network rehabilitation and customer connections, a rural energy component, and technical assistance), with clear execution responsibilities (LEC was responsible for all works in Monrovia, and RREA was responsible for all works outside Monrovia). 46. Well-designed results framework: The results framework in the PAD reflected the realistic objectives with monitorable indicators that closely reflected the achievements that the different components would contribute towards the PDO. 47. Favorable management context: On the basis of the principle of public-private partnership as set out in the NEP, GoL decided that in order to bring LEC to a level of pre-war operations, it would be important to bring in outside expertise. The decision was made to select a Management Contractor who would bring LEC to a level of full functionality as a power utility with fully trained staff, and build up the customer base to a target level of approximately 33,000 customers over a five-year period. The competitively selected Management Contractor was Manitoba Hydro International (MHI), which initiated its contract in July 2010 and took full control over LEC’s operations and investment program, including the proposed project. The Government of Norway funded the Management Contract. The International Finance Page 28 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Corporation (IFC) served as transaction advisor to the Government of Liberia. MHI’s experien ce in managing power utilities including in Nigeria and Kenya was well recognized. 48. Appropriate institutions for rural electrification: GoL recognized the need to supply rural areas with modern energy services and, as noted beforehand, the World Bank supported the establishment of the RREA since mid-2009 through the AFREA trust fund-supported Catalyzing New Renewable Energy in Rural Liberia program. As a result, the RREA was established in January 2010 to facilitate the economic transformation of rural Liberia by accelerating the commercial development of modern and renewable energy services in rural areas. 49. Readiness for implementation: At appraisal, the only short-run option was to supply power through costly diesel generation. Indeed, as per MHI’s assessment, the generators in place were at a risk of failure if they could not be urgently overhauled. Other longer-term options included HFO fired power plants (contingent on rehabilitating the oil jetty in the port and building a short pipeline to feed the plants), reconstruction of the Mount Coffee hydro plant, supply through the West Africa Power Pool (WAPP) Côte d’Ivoire-Liberia-Senegal-Guinea (CLSG) interconnection project, as well as a proposed 36MW biomass- fired power plant. A study to assess options for rehabilitation was procured and financed under the World Bank project preparation advance (PPA) for the WAPP Côte d’Ivoire, Liberia, Sierra Leone, and Guinea (CLSG) transmission interconnection project. An Economic Sector Work (ESW) undertaken by the World Bank showed that HFO- fired power plant was the least cost option in the medium-term and part of Liberia’s least cost expansion plan (World Bank, 2010). B. KEY FACTORS DURING IMPLEMENTATION (i) Factors Subject to Government of Liberia, LEC and RREA Control 50. Coordination: The project experienced a slow start due to delays in procurement and disbursement procedures. During the first year of implementation, putting in place appropriate mechanisms to ensure that funds could be properly disbursed was a challenge. The timely flow of information from procurement to the disbursement unit was poor, having an impact on the disbursement ratio of the project. A procurement specialist was hired and procurement processing times and quality improved. The problem was addressed by close monitoring by the TTL and the FM Specialist in the field and a recommendation to hire a financial officer was acted upon. 51. Human resources: technical skills were lacking. For example, preparing specifications for the 10MW thermal power plant was a challenge that was addressed by hiring an experienced generation engineer to address the technical specifications, evaluation criteria and assist LEC during the evaluation of the bids. A large hands-on training program of three years was approved by the Bank (US$1million) and was co- financed with Norway ($2.3 million). This training program was designed to address the lack of technical skills in Liberia, since over 14 years no training took place and few young people were educated, which impacted the implementation of the GoL’s target for electrification. 52. Procurement failures: Unresponsive bidding processes resulted in design modifications and restructuring: Page 29 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) a. Unresponsive bidding process for electrifying remote villages: The original approach for providing modern renewable energy to off grid users consisted of attracting a solar company to provide solar installations in rural areas. The tender did not attract any bidders, and the program was modified in 2012 to the Sustainable Solar Market Facilitation effort (SSMF) and the grant was extended to December 31st, 2013. SSMF drew from World Bank/IFC Lighting Africa program experience, and consisted of two components: (a) Creating an enabling market environment for the “Lighting Africa” Lighting products, including institutional capacity, policy and regulation, market facilitation, and quality standards, and (b) the “Lighting Lives in Liberia” (LLL) Pilot phase for rapid scale -up of access to modern lighting based on solar products. The LLL pilot was scaled up with GEF financing. b. Two unresponsive bidding processes for procuring the HFO storage and pipelin e: Two attempts did not elicit responses; as a result, the scope of the project was redefined and limited to the design of a new HFO and the pipeline and preparation of bidding document for the procurement of the works contractor (which were hitherto included in the procurement package). A contractor was subsequently procured and the construction of the pipeline and the storage tanks has now been completed under the World Bank funded LACEEP project. 53. Procurement delays and quality failings: LEC experienced some technical issues at the beginning of 2013, causing the connection rate for the GPOBA to fall dramatically, up to the point of connecting only 18 customers in Q2 of 2013. In addition to the lack of material for good part of the first semester of 2013 due to delays in ordering/delivery, the main problem detected was that around 40% of the meters installed were not properly functioning. It was discovered that there was a connection problem due to the use of aluminum conductor to make the connection to the meters, which was subsequently solved. (ii) Factors Subject to World Bank Control 54. Disbursement issues: The problems noted above were also on the side of the Bank, due to a lack of responsiveness on putting appropriate elements in place in order for the Client to be able to access Client Connection. On the side of the Client there were challenges in using Client Connection due to the slow speed of their Internet. The team worked closely with LEC to resolve the challenge. 55. Response to project financial requirements: The restructurings of 2014 and 2015 responded to financial needs by reallocating resources among categories and also among components. These reallocations were a consequence of savings obtained, e.g. in the implementation of the HFO power plant, the postponement of the implementation of the SCADA and Load Dispatch Center and the cancellation of the construction/rehabilitation of the HFO storage tanks. 56. Strong coordination with donors to maximize impact: The investment required to connect 16,806 households in the selected low-income neighborhoods under the GPOBA program, required the utility to pre-finance these investments. Donor commitments were key to the success of the program, since in a first phase funds from Norway complemented the effort of the GPOBA program by pre-financing the expansion of connections. The provision of funds by the EU for the rehabilitation of the substations and the 66kV transmission lines also ensured that adequate power could be transmitted for distribution to customers in the GPOBA areas. This allowed the GPOBA program to advance further in Monrovia, despite the challenging environment in which the program has been implemented. Page 30 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) (iii)Outside Control 57. The Ebola crisis. Liberia, together with Guinea and Sierra Leone, was one of the three most affected countries in West Africa; Liberia accounted for 37 percent of all cases in the region. The crisis lasted from mid-2014 to early 2015. Project activities were interrupted because: (a) LEC’s contractors for putting connections in place, who were based in Ghana, paused their activities during several months; (b) the MHI personnel left the country temporarily; (c) the contractor for the 10MW HFO plant left the country; (d) the GPOBA IVA suspended the verification of connections; and (e) RREA’s retail partners in the countryside could no longer distribute solar products. 58. The Ebola outbreak disrupted LEC’s operations. This impacted the addition of new generation capacity, which resulted in LEC controlling electricity demand through peak-load shifting during periods of stress on the electricity grid. There was also a high rate of transformer and meter failures due to the use of non-standard installation practices by LEC as well as power theft. The Ebola crisis seems to have disrupted the normal procedures of data gathering and organizing, and it stopped the strengthening of the commercial department that had started to take the lead in the registration and follow up of new customers. 4. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E Design 59. The performance indicators chosen to monitor the project are a direct measure of its outcomes, such as the number of consumers connected and the access rate in Monrovia; monitoring project components through the associated intermediate indicators was also straightforward as the latter were directly associated to the implementation of different project activities. After the AF of 2012, the indicators were reviewed and improved to better focus on project objectives and outputs; they also included easily monitorable parameters, such as the commissioning of the power plant and the design of HFO transportation and handling facilities. 60. In the case of the GPOBA financing the associated M&E design included two levels for the project’s performance monitoring. The first was the monitoring of the IDA funding that financed the expansion and enhancement of the distribution network of LEC and rehabilitation of associated facilities for power generation. The second was the monitoring of the GPOBA funding that provided subsidies for low-income consumer connections. For GPOBA funding performance monitoring, LEC procured the materials required for connecting low-income consumers using World Bank procurement procedures and installed the connections. An Independent Verification Agent (IVA) certified the GPOBA’s connections. GPOBA paid for the outputs achieved, after confirmation of qualifying criteria by the verification agent. GPOBA disbursed the funds at regular intervals or when LEC achieved a critical number of connections. 61. The AFREA/GEF component was also designed to directly reflect the project’s objectives through easily monitorable indicators, such as the number of lanterns distributed. Page 31 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) M&E Implementation 62. Data collection for the M&E framework was adequate. LEC reported progress to the Bank regarding the different indicators. GPOBA’s IVA was competitively selected by the Bank and financed from the GPOBA Bank executed TF; the IVA verified the quantity and technical quality of connections based on a representative sample of connections realized during the payment period; the IVA delivered all verification reports in a timely manner except during the Ebola period; the IVA’s last report covered Q3 and Q4 of 2016 and was issued in April 2017. 63. M&E for RREA was straightforward; RREA procured materials and subsequently made them available to its Local Retail Partners (LRP) who were responsible for distributing the solar products. This gave RREA the opportunity to keep track of its inventories and materials that were being commercialized in the field. The weakness of the system lay in relying on the LRPs for the ultimate data on products sold; in this case LRPs were not accustomed to keeping proper accounting data and to providing regular and accurate reports. However, RREA provided training on managing a retail business, which proved effective in obtaining better quality information in the later years of the project. M&E Utilization 64. The M&E framework was used to inform Project progress and aided Project refinement during the course of implementation. The M&E framework was reviewed during the AF preparation to better reflect and track project activities. The Mid-Term Review (MTR) took place in September 2015; based on the project’s indicators, the MTR noted project progress and recommended measures to extend access beyond the original project targets, improvements in Financial Management, and verified the need to extend the closing date to complete scheduled activities; this recommendation was subsequently acted upon through the December 2015 restructuring. Justification of Overall Rating of Quality of M&E Rating: High 65. The M&E system proved appropriate to track project activities and results, with no significant shortcomings in either design, implementation, or utilization. The M&E framework was reviewed together with the changes in the Results Framework that were agreed together with the Additional Financing. It also included additional tracking data for the new GEF financing. The proposed rating reflects overall M&E design together with its implementation and capability for informing project progress to the agencies involved. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 66. Environmental and Social Safeguards: The safeguard category of the LESEP was determined as B since there were no significant and/or irreversible adverse environmental and social issues expected from electricity infrastructure components financed under the proposed project. The World Bank policies for Environmental Assessment (OP/BP 4.01) and Involuntary Resettlement (OP/BP 4.12) were nevertheless triggered. GoL prepared an Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF). With the AF, there was no change in the category of the project and it did not trigger any additional safeguard policies. The project complied with the safeguards policies; no issues arose in this regard during implementation.; rating during implementation was consistently Page 32 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Satisfactory for Overall Safeguards and Environmental Assessment or Highly Satisfactory for involuntary resettlement. 67. Financial management: LEC complied with the financial covenant and submitted annual audited financial statements. There were instances of delayed, qualified, and corrected audits; FM improved with the presence of the resident Bank Energy Specialist. The budgeting process was satisfactory and the tax team was particularly competent. FM monitoring was satisfactory. Disbursement delays originated in an excessive number of steps in the approval process within LEC, as well as management turnover. Disbursement improved towards the end of the project after series of interventions by the Bank’s Financial Management specialist. The FM rating at ICR was Moderately Satisfactory. C. BANK PERFORMANCE Quality at Entry 68. Bank performance at entry achieved a high level of quality through the project’s robust design, based upon solid background studies and establishing realistic objectives during project preparation. M&E arrangements were straightforward and ensured that results could be tracked easily, which is reflected in the high (H) overall rating for M&E. The project corresponded to a strategically critical element of country reconstruction benefiting households, commercial enterprises, and providing an essential service to jump-start practically any kind of manufacturing facility. The Bank team prepared the project in full cooperation with other donors, thereby ensuring a well-articulated execution from the start. The PDO did not require any revisions during implementation. No shortcomings were detected regarding quality at entry Quality of Supervision 69. The Bank team comprised experienced staff members with good knowledge of Liberia's electricity sector. They maintained a fluid working relationship with all the energy donors in Liberia, which facilitated complementing their efforts to implement the various elements of the project. Sufficient budget and staff resources were allocated for supervision activities. A resident Energy Specialist with a wide range of expertise (technical, procurement and financial management) and vast experience in project supervision and management joined the team just at the onset of the Ebola Epidemic in July 2014. This offered the Bank the opportunity to maintain effective communications with LEC and provide them with hands-on supervision support despite the trying conditions at the time. The MTR took place opportunely, soon after the crisis had passed, in September 2015, to keep the project on track and focused on achieving the PDO. The initial problems with disbursement difficulties were acknowledged and resolved. LEC and the Bank recognized early on the need for reinforcing the installed generation capacity in order to reduce production costs and to avoid load shedding at a critical moment in restoring electricity service to Monrovia. The Bank team prepared the follow-on LACEEP project incorporating lessons from the LESEP project to continue supporting the power sector. No shortcomings were detected regarding quality of supervision. Justification of Overall Rating of Bank Performance Page 33 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Rating: Highly Satisfactory 70. This rating reflects (a) the absence of shortcomings both regarding quality at entry and quality of supervision, and (b) the satisfactory (S) overall outcome rating. D. RISK TO DEVELOPMENT OUTCOME Rating: Substantial 71. This ICR rates risks to the sustainability of the development outcomes as Substantial due to the financial sustainability of LEC. Given that the electricity system in Monrovia is being rebuilt from a state where no service existed, commercial performance could be expected to be adequate given the opportunity to install a modern metering system and prepaid meters for smaller customer. This has not been the case, and LEC has sustained energy losses in excess of 30 percent. In the short term this situation is sustainable because LEC lacks substantial capital obligations given that different governments and multilateral agencies have donated its infrastructure. However, this is unsustainable on a medium or long-term basis and is ultimately likely to require continued and significant GoL support. The poor commercial performance can be traced throughout MHI’s tenure as manager, which faced important challenges in terms of putting together a local management team that had disbanded during the war. The implementation and verification of results under the GPOBA program highlighted the need to strengthen the commercial department in LEC, in addition to the operational and IT capacity. 72. Key challenges for GoL are to improve sector performance by seeking to reinforce management capacity with a view to better commercial results, which should include clear accountability and the willingness of each level of authority to fulfill its mandate scrupulously. Sustainability also requires a continued emphasis on adding on customers until demand grows to a point whence it can cover the large fixed charges of the electricity system infrastructure. It is also necessary to continue extending access in rural areas where coverage continues to be minimal. 73. The challenges to sustainability are being taken up by two follow-up operations: (a) The Liberia Accelerated Expansion Project (LACEEP—P133445), which is continuing the implementation of the LESEP activities, and executing some of those that were modified, such as the HFO pipeline and tank farm at Bushrod Island, and the dispatch center and SCADA; The LACEEP AF has a component to implement modern management information systems made up of a Commercial Management System (CMS) and an Incidents Management System (IMS) which will help LEC to improve its operational performance in the key areas of commercial management and attention and resolution of incidents in electricity supply to its customers; (b) The Renewable Energy Access Project (P149683), which continues to support RREA in its long-term goal to kick start a larger, sustainable, private sector led, commercial market for solar products; and (c) The continuing dialogue among donors surrounding the strengthening of LEC helped to address the shortfalls in the MHI contract (during Apr 2010-Dec 2016) through the new management service contract that assumed fiduciary responsibility of LEC in January 2018. Page 34 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 5. LESSONS AND RECOMMENDATIONS 74. Cooperation and coordination amongst development partners are critical particularly in the fragile country context. The post war reconstruction efforts were closely coordinated amongst development partners to minimize duplication of efforts and maximize impacts. IDA, GPOBA, AFREA, GEF, USAID, the EU, and the Government of Norway channeled their resources towards the rehabilitation of LEC’s generation, sub transmission, and distribution infrastructure in a well-coordinated manner with each partner taking on a specific role for addressing the complexities of a sector-wide reconstruction. 75. Long Term Strategic Engagement is important for impact. The Bank’s Long-term continuing engagement in a country is necessary for building institutions and achieving development results particularly in fragile country context. The long-term approach of the Bank gives the Government the flexibility to accommodate changing priorities and adapt to an evolving environment. Urgent activities can be taken on first with the less urgent but important activities deferred to subsequent operations. For example, the construction of the HFO transport and storage facilities and the implementation of SCADA were transferred from LESEP to LACEEP and LACEEP AF respectively thus releasing funds under LESEP to scale up the much-needed connections to utilize the availability of increased generation capacity from the rehabilitated Mt. Coffee Hydro Power. 76. Grid and Off-grid Solutions in one project enhances impacts: LESEP was a good example of a project that combined grid and off-grid solutions in the same project made it possible to reach out to a broad spectrum of consumers. 77. Better knowledge of consumption patterns helps improve design of access projects : The M&E of the number of households connected to the grid alongside the consumption pattern of the households for the first three months in the GPOBA program made it possible for the timely identification and resolution of issues arising after the connections, such as meter malfunctioning, unavailability of continues power supply, high minimum pre-paid credit per transactions etc. 78. Arranging for pre-financing is critical for success of GPOBA Program in Fragile Countries : The GPOBA program required the utility to pre-finance the investment for the connections before they are reimbursed by the fund after successful verification. The GoN provided the fund that enabled LEC to pre- finance the initial connections for the low-income households. When the funds from the GoN were exhausted, IDA resources under project continued to pre-finance the connections for the target customers. Another innovation in the LESEP project was that IDA funds under the project was used to extend the backbone Medium Voltage network to the targeted communities in general. This made it possible for LEC to connect the more affluent customers within the catchment area that were not eligible for connection under the GPOBA program. This provided a decent revenue base for LEC providing incentives for LEC to roll- out the GPOBA program. Such effective collaboration should be factored in future project designs involving GPOBA programs to booster the enthusiasm of the utilities in the program. 79. The minimum amount of credit allowed for customers to purchase per transaction is critical for the success of the GPOBA program. During the mid-term review of the project, it was noticed that the US$10 Page 35 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) minimum credit purchase allowed per transaction was making it difficult for the poor-income households to make the mandatory 3 purchases within three months to be eligible for validation. The situation was compounded by the inadequate power generation during the period following the Ebola pandemic which forced LEC to ration power supply. When LEC reduced the $10 minimum credit purchase to $5 to accommodate the budget of low income customers and the power supply improved at the end of 2015, the project witnessed a rapid increase in the verified connections. This brings into sharp focus the need to revise the minimum consumption requirement in the future. With the rise in use of mobile money transaction, future project design may try to eliminate the cap in the minimum credit purchase to allow the poor purchase any amount of electricity as they would with kerosene or batteries for their lamps. The availability of constant power supply and their implication on the success of the program should also be considered in future project designs. 80. The definition of “poor-customer” for the purpose of targeting for connection subsidies need to be flexible and country-context specific. A significant part of Liberia population lives in poverty and there is a large informal economy. The definition of ‘poor’ needs to take into account the country context. During midterm review, it emerged that the criterion of excluding any household that had some type of economic activity was very constraining because many poor households in Monrovia have also some type of economic activity on their premises (mom and pop store, or meals services for instance). 81. Strengthening capacity of Planning/Engineering Departments of utilities are critical for project success: The precarious financial position of LEC resulted in inadequately staffed Planning Department responsible for project implementation. Frequent staff rotation within various departments impede the capacity of the planning department to implement projects. A dedicated PMU with adequate funding to recruit and train technical staff can be an effective way to build institutional capacity building. The recruited staff of the PMU could be financed by the project during the implementation period with the understanding that they would be absorbed by the utility after project closing. 82. Project Supervision is essential in the context of weak implementing agency. Initially a Supervising Engineer was engaged to supervise the construction of the 10MW HFO plant. However, the supervisor left when construction work was suspended due to the Ebola Pandemic. A post construction audit on the installation works indicated that the supervision was poor. The contractor has accepted and had begun correcting the defects at the time of ICR. The lesson going forward is not to allow construction work to proceed without a project-funded Supervision Consultant for such complex projects in countries with weak technical capacities. It is also recommended that Bank teams should take more interest not only in the qualification and capabilities of contractors hired by client countries but also in the Supervision Consultants. Bank Teams should also include specialized professionals in their supervision missions for such specialized contracts. 83. Private sector participation should not be launched prematurely. The failed tender for solar services launched by RREA is a good lesson for acquiring a better knowledge of the issues involved in new and untried processes before actually attempting to accomplish the initiative through a private sector partner. . Page 36 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS • RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Increase Access to Electricity in Monrovia Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Electrification rate in Monrovia Percentage 0.44 4.20 9.97 13.00 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Comments (achievements against targets): Target exceeded: The change from installation of SCADA System to just the design of the system released funds that helped further expand the network and connect more people. The GPOBA program also exceeded its target connections and this contributed to the success Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Connections to electricity grid Number 2160.00 20000.00 26100.00 42000.00 in Monrovia 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Comments (achievements against targets): Target exceeded: The change from installation of SCADA System to just the design of the system released Page 37 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) funds that helped further expand the network and connect more people. The GPOBA program also exceeded its target connections and this contributed to the success Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion People in urban areas provided Number 4992.00 50000.00 112700.00 210000.00 with access to electricity under the project by household 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 connection Comments (achievements against targets): Target exceeded: The change from installation of SCADA System to just the design of the system released funds that helped further expand the network and connect more people. The GPOBA program also exceeded its target connections and this contributed to the success Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion People provided with new or Number 4992.00 164600.00 191300.00 289000.00 improved electricity service 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 People provided with access Number 4992.00 50000.00 112700.00 210000.00 to electricity by hhold connections-Grid 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Ppl provided wth elec. by Number 0.00 1000.00 600.00 1000.00 hhold conn.–Offgrid/minigrid– Only renewable sources 30-Nov-2010 16-Jun-2014 30-Jun-2015 31-May-2017 Page 38 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Comments (achievements against targets): Objective/Outcome: Improve Electricity Supply in Monrovia Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion System Average Interruption Number 20.00 15.00 15.00 20.00 Frequency Index (SAIFI) for customers in Monrovia 26-Jan-2012 31-Dec-2014 31-Dec-2014 31-May-2017 Comments (achievements against targets): Target missed: Reasons: The targets were missed due to the high SAIFI values for the 66kV transmission network. The reason for this is that all the generated power (both from Mt Coffee and the 38MW HFO plants) were now transmitted from the Bushrod Power house through the radial 66kV transmission lines (constructed under EPP II emergency program) to the substations (for onward distribution). These transmission lines have now become unstable and trips easily especially when it is raining. LEC has recalibrated the protection system and this has help reduced the number of outages. Objective/Outcome: Improve Access to Modern Electricity in Rural Liberia Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of Lighting Africa Number 0.00 100000.00 100000.00 76637.00 approved solar lanterns in use 20-Mar-2012 31-Dec-2014 30-Jun-2015 31-May-2017 Comments (achievements against targets): Partially Achieved: The Ebola pandemic disrupted the marketing of the lanterns in the field. Even though RREA imported all the 100,000.00 lateens, only 76,637.00 were purchased and sold by the retailers. The remainder would be sold under the World Bank funded LIRENAP Unlinked Indicators Page 39 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Direct project beneficiaries Number 4992.00 164600.00 191300.00 289000.00 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Female beneficiaries Percentage 50.00 50.00 50.00 50.00 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Comments (achievements against targets): Target exceeded: The change from installation of SCADA System to just the design of the system released funds that helped further expand the network and connect more people. The GPOBA program also exceeded its target connections and this contributed to the success Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Average interruption frequency Number 20.00 15.00 15.00 24.50 per year in the project area 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Customers served in the Number 2162.00 10000.00 26100.00 42200.00 project area 30-Nov-2010 31-Dec-2014 30-Jun-2015 31-May-2017 Comments (achievements against targets): A.2 Intermediate Results Indicators Page 40 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Component: Component D: Technical Assistance Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion LEC staff trained Number 0.00 54.00 54.00 55.00 30-Nov-2010 16-Jun-2014 31-May-2017 31-Mar-2017 Comments (achievements against targets): Component: Component A: Enhancing Delivery of Distribution Services Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Number of transformers and Number 0.00 375.00 375.00 820.00 auxiliary services supplied. 01-Jan-2011 16-Jun-2014 30-Jun-2015 31-Mar-2017 Comments (achievements against targets): The change from installation of SCADA System to just the design of the system released funds that helped further expand the network and install more transformers Component: Component B: Enhancing Options for Power Generation Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Thermal plant installed Yes/No N Y Y Y 26-Jun-2012 31-Dec-2014 30-Jun-2015 31-Mar-2017 Page 41 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Generation capacity installed Megawatt 0.00 10.00 10.00 10.00 26-Jun-2012 31-Mar-2017 Comments (achievements against targets): Target achieved: the 10MW HFO plant was commissioned in Nov 2015 instead of the target December 2014 date because of the delays caused by the Ebola pandemic. Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion First phase of main generating Text No Yes Yes Yes overhaul completed 01-Jan-2011 16-Jun-2014 16-Jun-2014 31-Mar-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Design of HFO pipeline and Text No Yes Yes Yes storage facility finalized 23-Jun-2014 31-Dec-2014 31-Dec-2014 31-Mar-2017 Comments (achievements against targets): Component: Component C: Providing Modern Renewable Energy Services to Off-Grid Users Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Page 42 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Generation Capacity of Megawatt 0.00 0.06 0.06 0.06 Hydropower constructed or rehabilitated under the project 30-Nov-2010 16-Jun-2014 16-Jun-2014 31-Mar-2017 Generation Capacity of Megawatt 0.00 0.06 0.06 0.06 Hydropower constructed under the project 30-Nov-2010 16-Jun-2014 31-May-2017 31-Mar-2017 Comments (achievements against targets): Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Micro hydro-power pilot built Text No Yes Yes Yes 01-Jan-2011 16-Jun-2014 30-Jun-2015 31-Mar-2017 Comments (achievements against targets): Page 43 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) A. KEY OUTPUTS BY COMPONENT Component A: Increase Access to Electricity in Monrovia 1. Electrification rate in Monrovia increased from a base of 0.44% to 13% Outcome Indicators 2. Connections to electricity grid in Monrovia: 42000 households (including 16806 low income) 1. Number of transformers and auxiliary services supplied Intermediate Results Indicators Key Outputs by Component 1. 210,000 people in Monrovia had access to grid electricity an (linked to the achievement of the Objective/Outcome 1) increase from a base of 4992 people Component B: Improve Electricity Supply in Monrovia 1. System Average Interruption Frequency Index (SAIFI) for customers Outcome Indicators in Monrovia 1. First phase of main generating overhaul completed Intermediate Results Indicators 2. 10MW HFO plant installed and commissioned 3. Design of HFO pipeline and storage facility finalized 1. Electricity supply improved in the first year Key Outputs by Component 2. Generation capacity increased thus enhancing power availability (linked to the achievement of the Objective/Outcome 2) 3. Cheaper generation option Component C: Improve Access to Modern Electricity in Rural Liberia Outcome Indicators 1. 1000 People in rural areas connected mini grid Page 44 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) 2. 76,637 Lighting Africa approved solar lanterns distributed in rural Liberia Intermediate Results Indicators 1. 60kW Pico hydro plant rehabilitated in rural Liberia. 1. about 79000 people in rural Liberia provided with modern Key Outputs by Component improved access to electricity (linked to the achievement of the Objective/Outcome 2) Page 45 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Joseph Tawiah Quayson Task Team Leader(s) Komana Rejoice Lubinda Procurement Specialist(s) MacDonald Nyazvigo Financial Management Specialist Jonathan David Pavluk Counsel Clemencia Torres De Mastle Team Member Raima Oyeneyin Team Member Luis M. Schwarz Team Member Nightingale Rukuba-Ngaiza Counsel Zubair K.M. Sadeque Team Member Rahmoune Essalhi Team Member Juliet Pumpuni Team Member Pedro Antmann Team Member Yeyea Gloria Kehleay Nasser Team Member Collins S. Umunnah Team Member David Vilar Ferrenbach Team Member Sekou Abou Kamara Environmental Safeguards Specialist Akhilesh Ranjan Social Safeguards Specialist (iv) STAFF TIME AND COST Page 46 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY10 25.011 186,409.74 FY11 23.932 115,835.60 Total 48.94 302,245.34 Supervision/ICR FY11 19.069 92,868.47 FY12 40.853 398,507.07 FY13 16.486 333,030.63 FY14 34.466 246,427.71 FY15 28.952 77,589.90 FY16 23.312 68,926.45 FY17 16.545 84,301.62 FY18 8.804 22,374.60 Total 188.49 1,324,026.45 Page 47 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 3. PROJECT COST BY COMPONENT Table A3-1 Project Costs by Component (US$M) PAD AF Final Percent of AF A. Distribution Services 42.80 45.8 60.49 132% B. Enhancing Options 4.70 21.20 16.69 79% for Power Generation C. Providing Modern Renewable Energy 2.0 3.45 2.99 87% Services D. Technical Assistance 0.8 1.3 6.79 522% Unallocated 0.70 3.20 0 0 Total 51.00 74.95 86.96 116% Table A3-2 Financing by Source (US$M) PAD AF Final Percent of AF IDA 10.00 32.00 32.59 102% GPOBA 10.00 10.00 10.35 103% AFREA 2.00 2.00 1.54 67% GEF 0.0 1.45 1.45 94.5% Norway 29.00 29.5 41.04 139% Total 51.00 74.95 86.97 116% Page 48 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 4. EFFICIENCY ANALYSIS The analysis will be performed separately for the different components of the project, namely (a) the generation component, (b) the Monrovia grid reinforcement and the extensions of service (including the GPOBA component), and (c) the off-grid component executed by RREA. Power generation component This component of the LESEP project consisted of the installation of a 10MW HFO-based Power plant. The economic evaluation will consist of examining the situations with and without the project in order to identify and quantify its benefits. In this case the situation without the project consists of running the high-speed Diesel engines using high cost diesel fuel, which were rehabilitated through the project, more hours than would be warranted if the HFO plant were available. Consequently, the benefits of the power plant can be estimated as the savings associated with generating with HFO rather than using diesel fuel. The basic data are as follows: Medium Speed Diesel engine: Average efficiency: 43% (8.23 MJ/kWh) HFO (IFO 180) price FOB Rotterdam: US$350/tonne HFO (IFO 180) price CIF Monrovia (est.): US$450/tonne Heat content: 44MJ/kg Equivalent running cost: $0.082/kWh Capital cost: $1,400/kW based on investment costs and spare parts Capital cost per year (@12% discount, 15-year life): $205/kW per year O&M: 3% of capital cost = $42/kW per year High Speed Diesel engine: Average efficiency: 35% (10.2 MJ/kWh) Gas oil (diesel) price Monrovia: US$0.83/liter Heat content: 38.7 MJ/L Equivalent running cost: $0.22/kWh O&M: $30/kW per year Capital cost: 0, assuming the units consist of existing and overhauled Cummins engines at Bushrod Island Figure A2-1 illustrates the annual cost for each alternative, based upon the number of running hours per year. If the units are idle, the lowest cost unit is the high-speed diesel; at around 1,580 hours per year the medium speed diesel becomes less expensive. This corresponds to a load factor of 18 percent. Therefore, the economic justification for the power plant lies in examining the likely hours of operation during its lifetime that it will exceed the cutoff load factor. A strict Page 49 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) economic evaluation treats the power plant as a marginal unit, and thereby it should be justified under the assumption that it is dispatched after the other (JICA and GoL) HFO units and before the GoL Diesel units. Annual Cost ($) High Speed Diesel Medium Speed Diesel 247 Hours 30 1580 8760 Figure A4-1 Screening curve for HFO and Diesel power plants The peak load informed by LEC is around 30MW during the evening as of January 2018. During the wet season Mount Coffee is likely to cover most of the load, whilst during the dry season the thermal plant will be required to supply most of the demand. Peak demand is in many ways a controllable variable through the extension of the distribution grid. In a system with substantial unsatisfied demand very high growth rates are possible. Indeed, previous analyses predicted loads on the order of 60MW for 2016, as in the LACEEP project. Assuming that during the dry season Mount Coffee output is on the order of 5MW, and that overall generation availability is around 90 percent, a thermal demand of about 40MW could be supplied by the three Bushrod HFO units. Load growth reaching this level of demand is likely to be attained within three years if increased connections are maintained. Assuming a load factor of 60 percent during five months of the dry season, Bushrod HFO output would be about 88 GWh, resulting in a 75 percent plant Page 50 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) factor for the three power plants. This would yield a dry season generation of 27 GWh for the Bank-financed HFO unit, equivalent to a yearly utilization of 2,700 hours, which would justify the investment from an economic point of view. The corresponding cost-benefit analysis is shown in Table A4-1 Table A4-1 Power Plant Cost Benefit Analysis 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019-2030 Costs Investment M$ 5.7 5.7 2.9 Fixed O&M M$ 0.42 0.42 0.42 0.42 Total Fixed Costs 5.7 5.7 2.9 0.42 0.42 0.42 0.42 Hours Operation 500 500 1000 3200 Availability 0.9 0.9 0.9 0.9 Average Available MW 9 9 9 9 Production MWh 4500 4500 9000 28800 Plant Factor % 5.14% 5.14% 10.27% 32.88% Benefits HFO running cost $/kWh 0.082 0.082 0.082 0.082 Diesel running cost $/kWh 0.22 0.22 0.22 0.22 Differential $/kWh 0.138 0.138 0.138 0.138 Benefit (M$) 0 0 0 0.621 0.621 1.242 3.9744 Net Benefit (M$) -5.7 -5.7 -2.9 0.201 0.201 0.822 3.5544 The values in the table yield an IRR of 12% with a final dispatch of 3200 hours, corresponding to a plant factor of 33%, which is a relatively low, attainable, value. With a plant factor of 50% (4400 hours), the IRR increases to 16%. Monrovia grid reinforcement and service extension project Methodology. In the LESEP case, electrification was oriented towards households. The following benefits result from the availability of electricity in a home: (a) improvements in lighting quality and quantity extend the working day and allow for income-generating activities after dark, and lead to better conditions under which children can read and study, (b) access to radio and television, (c) reduction of indoor pollution, contributing to improved health, and (d) access to refrigeration (small refrigerators) with food conservation benefits. For the ex-post economic evaluation, only benefits (a) and (b) will be quantified because of the lack of information on other sources of benefits. Lighting benefits. The assumed counterfactual is that beneficiaries have been using kerosene lamps for lighting in the absence of electricity. Expenditures on kerosene amount to a cost of around 44 liters per year per lamp, at a price of US$0.66 per liter27, in addition to the purchase cost of the lamp. Dry cell batteries are used to power radios, and can cost around US$4 to US$5 per month. Electricity brings about important qualitative changes; for example, a 15W compact fluorescent lamp (CFL) produces around 800 lumens, while a kerosene lamp will produce only 27 See also Kojima, Masami et.al. “Petroleum Markets in Sub-Saharan Africa”, The World Bank, March 2010 Page 51 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) around 60-70 lumens at best28. In terms of useful illumination (measured in terms of lux, i.e. lumens per square meter), the CFL produces 122 lux, while the kerosene lamp provides only 10 lux. Consequently, economic benefits associated with better lighting derive from two sources: (a) savings from the substitution of kerosene and batteries by lower cost power, and (b) the benefits of additional consumption derived from the higher illumination provided by electricity. Figure A3-1 illustrates the benefits as represented by a consumer demand function. Figure A4-2 Demand Function for Lighting In Figure A3-1, (PK, QK) is the initial point of consumption (based on kerosene), and (PE, QE) is the final point of consumption, based on electricity. Areas A+B+D represent total (gross) surplus in the initial situation, where B+D is the cost of kerosene and dry cell batteries; the net initial surplus is therefore area A. At the final point of consumption, gross surplus increases to (A+B+C+D+E); areas D+E are the costs of supply with electricity, and areas B+C yield the net consumer surplus gain to beneficiaries. With the assumptions noted above, the following values were obtained, and the corresponding Willingness to Pay (WTP) for electricity service: Pk = 2.98 10-4 $/lumen-hour PE = 7.01 10-6 $/lumen-hour Qk = 223,380 lumen-hours QE = 2,628,000 lumen-hours Gross Consumer Surplus: Area A $1.51 28 Mills, Evan. Technical and Economic Performance Analysis of Kerosene Lamps and Alternative Approaches to Illumination in Developing Countries, Lawrence Berkeley National Laboratory, June 2003. Page 52 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Area B $64.96 Area D $1.57 Area C $174.82 Area E $16.86 Total WTP $259 per household per year Communications benefits. Lighting benefits can be estimated with some degree of assurance, as there exists a quantifiable alternative (kerosene lamps); no such information is available for benefits such as watching TV (hearing the radio has the associated cost of dry cell batteries). Also, consuming TV is a one-off experience, i.e. there is no continuum of consumption. The benefits of TV availability have been estimated from willingness to pay studies in developed countries. For example, in the UK a survey commissioned by the Radio Communications Agency in 2000 (later Ofcom) assessed the WTP for radio and TV29. It found a WTP on the order of £10 per month per household (around US$13 per month). At the time, income in the UK for poor households was on the order of US$12,000/year30. They would be willing to pay up to around 1.5% of disposable income for TV. Although extrapolating this value to another country, such as Liberia, is debatable, it would represent a WTP of around $12 per year based on a self-reported household income of $781 per year31.. Total WTP. The analysis assumes that households connected to the grid replace two kerosene lamps with two CFLs, with a resulting gross consumer surplus of around $259 per household per year. Added to the WTP of communications benefits, this would result in a total WTP of $271 per year per household. Ex-post economic evaluation. Table A4-2 summarizes the corresponding flows of costs and benefits. Table A4-2 Economic Costs and Benefits of Network Extension and Connections 2010 2011 2012 2013 2014 2015 2016 2017-2030 2018 2019 2020 2021 2022-2035 Benefits Users 2,162 5,158 11,000 15,000 22,100 30,485 36,500 42,000 Beneficiaries 2,996 8,838 12,838 19,938 28,323 34,338 39,838 39,838 39,838 39,838 39,838 39,838 WTP per beneficiary ($) 271 271 271 271 271 271 271 271 271 271 271 271 Gross Surplus (M$) $0.81 $2.40 $3.48 $5.40 $7.68 $9.31 $10.80 $10.80 $10.80 $10.80 $10.80 $10.80 Costs Investment M$ 14.00 14.50 10.00 15.50 3.00 3.48 0 0 0 0 0 0 Cumulative Investment M$ 14.00 28.50 38.50 54.00 57.00 60.48 60.48 60.48 60.48 60.48 60.48 60.48 O&M M$ 0.42 0.86 1.16 1.62 1.71 1.81 1.81 1.81 1.81 1.81 1.81 1.81 Lighting kWh per hh 49.28 49.28 49.28 49.28 49.28 49.28 49.28 49.28 49.28 49.28 49.28 49.28 Appliance kWh per hh 54.75 54.75 54.75 54.75 54.75 54.75 54.75 54.75 54.75 54.75 54.75 54.75 Appliance penetration % 10% 10% 10% 10% 10% 10% 10% 20% 40% 60% 70% 80% Total consumption MWh 147.6 435.5 632.6 982.4 1,395.6 1,692.0 2,181.1 2,399.2 2,835.5 3,271.7 3,489.8 3,707.9 Upstream cost ($/MWh) 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 200.0 Upstream Cost (M$) 0.030 0.087 0.127 0.196 0.279 0.338 0.436 0.480 0.567 0.654 0.698 0.742 Total cost 14.45 15.44 11.28 17.32 4.99 5.63 2.25 2.29 2.38 2.47 2.51 2.56 Net Benefit -13.64 -13.05 -7.80 -11.91 2.69 3.67 8.55 8.50 8.41 8.33 8.28 8.24 29Aegis Systems, Survey to Determine the Consumer’s Surplus Accruing to Radio Listeners and TV Viewers , Final Report, prepared for the Radio Communications Agency of the Department of Trade and Industry, October 2000. 30 Joseph Rowntree Foundation 31Gallup survey, December 2013. http://www.gallup.com/poll/166211/worldwide-median-household-income- 000.aspx Page 53 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) The resulting economic indicators are: NPV Costs (@12%): 59.1M$, NPV Benefits (@12%): 57.9M$, B/C ratio: 0.98, EIRR=12%. These results merit the following comments: a. The costs include the Government of Norway contribution, IDA, and GPOBA; they include not only the actual connection costs but the network infrastructure as well; b. Consumption per beneficiary is likely to grow over time, reflecting the availability of electricity for more uses and the effects of economic growth, thereby yielding greater benefits and improved economic statistics. The WTP approach in this sense is very conservative. Sensitivity. The WTP is the critical value that determines the economic justification of the project. In the base case shown above, the EIRR at 12% validates the economics of the project; a reduction in the WTP would yield a lower EIRR. Ex-post financial evaluation. The financial sustainability of the project is analyzed from LEC’s point of view. The costs incurred by LEC for providing service to the connected consumers of the project include (a) the O&M costs of the network connections in Monrovia (b) the variable generation costs associated with the Bushrod power plant units, and (c) the share of fixed O&M costs of the generation plant including Mount Coffee. From a financial point of view practically all capital investment costs can be ignored because all of them are grants or IDA-type loans. Under these conditions LEC’s cash flow associated with the project is predictably positive, as shown in Table A4-3. Table A4-3 Financial flows of network extension and connections component 2011 2012 2013 2014 2015 2016 2017-2035 2018 2019 2020 2021 2022-2035 Fixed O&M Costs (M$) 0.42 0.86 1.16 1.62 1.71 1.81 1.81 1.81 1.81 1.81 1.81 1.81 Unit variable cost ($/MWh) 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 80.00 Unit consumption kWh/month 30.00 30.45 30.91 31.37 31.84 32.32 32.80 33.30 33.79 34.30 34.82 35.34 Sales (MWh) 1,079 3,229 4,761 7,506 10,822 13,317 15,682 15,917 16,156 16,398 16,644 16,894 Loss rate percent 15 15 15 15 15 15 15 15 15 15 15 15 Required generation 1,269 3,799 5,602 8,830 12,732 15,667 18,449 18,726 19,007 19,292 19,581 19,875 Total Costs 0.52 1.16 1.60 2.33 2.73 3.07 3.29 3.31 3.33 3.36 3.38 3.40 Price ($/MWh) 340 340 340 340 340 340 340 340 340 340 340 340 Income (M$) 0.37 1.10 1.62 2.55 3.68 4.53 5.33 5.41 5.49 5.58 5.66 5.74 Net Benefit (M$) -0.05 0.24 0.46 0.93 1.97 2.71 3.52 3.60 3.68 3.76 3.84 3.93 Using a financial discount rate of 6%, the resulting financial indicators are: NPV Costs (@12%): 20.24M$, NPV sales (@12%): 57.54M$, B/C ratio: 2.8. This positive result is subject to controlling losses and to not encountering large oil price increases. It is also the result of an extremely high price (US$340/MWh), which could be reduced to around US$240/MWh and still maintain a B/C ratio of 1.0 Off-grid PV lantern distribution The analysis borrows from the follow-on Liberia “Renewable Energy Access Project” (P149683), which uses a cost-effectiveness analysis to address the evaluation. Since the quality of light from alternative sources varies, the cost-effectiveness analysis compares the cost of equal lighting output measured in dollar per thousand kilo-Lumen hours ($/kLh). The estimated cost per kLh light output of the alternative lighting sources and the analytical process for obtaining these cost estimates is presented in Table 5 below. The estimated cost per unit light output of the using solar lighting sources was found to be the lowest (0.04 – 0.08 $/kLh) compared to equivalent Page 54 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) lighting provided by alternative sources. There is a clear cost advantage for pico-PV products on the basis of equivalent lighting provided, as shown in Table A4-4. Table A4-4 Economic Analysis of Lighting Alternatives Lantern PV LED PV LED lamp powered by dry Kerosene Lamp Candles lamp cell batteries 1*3W LED 4*3W LED (3 * type D) 1 lamp every 1 pack Consumption / 1 pack every 5 1 lamp per year year 49 units per every 5 From: Anthony D. Waylea anthonyw@rrealiberia.org replacement yrs. 6 batt per month 3.45 l per month yrs. Subject: RE: Information for completion report Date: 16 October 2017 at 08:18 month Light To: Fernandooutput Lecaros fernandolecaros@gmail.com, RREA anthonyway425@gmail.com 110 200 61 45 8 (lumens) Greetings Daily usage Fernando, 4 7 7 5 4 Annual service 160,600 511,000 155,855 82,125 11,680 provided Kindly(lumens) find the below info: First and recurrent $30 every $175 every 5 $5 for lamp $1 for lamp $0.19 per unit costs 1. AFREA 5 financing yrs. yrs. $1 each batt $1.45/ltr Output cost Annualized Es' mated Cost Amt Spent $7.91 $46.16 $77.00 $57.38 $111.72 (10% Disc. rate) Unit cost ($/kLh) $0.045 $0.09 $0.49 $0.70 $9.57 Benefits in the economic analysis of the component are estimated as the avoided costs of the services to be replaced by the solar products. The replacement of one lantern powered by dry cell batteries by two solar lamps equals an economic benefit of approximately US$61 per year (see Table A4-4). The benefits of the units distributed through the Lighting Lives in Liberia project are summarized in Table A4-6. The achievements are accounted for through “SE4ALL” units; the Total with Wattage of LED lamps is2,000,000.00 equivalence shown in Table A4-5. 1,539,042.21 Table A4-5 Equivalence between SE4ALL units and Watts of PV Devices 2. GEF Financing SE4ALL Equivalent (#) Approximate PV (WaI ) With equivalence, 5 SE4ALL units are approximately equal to a 3W PV device. thisregards, Best Anthony From: Fernando Lecaros [mailto:fernandolecaros@gmail.com] Sent: Friday, October 13, 2017 2:12 PM To: RREA; RREA Subject: Information for completion report Page 55 of 61 Hello Anthony I did call last night but hadn’t reckoned with the time difference; I saw your message early this morning. The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Table A4-6 Lighting Lives in Liberia Benefits Year 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-92019 2019-2020 2020-2021 SE4ALL units (cumulative) 10856 27832 50205 59171 76641 SE4ALL units / year 10856 16976 22373 8966 17470 SE4ALL units in operation 10856 27832 50205 59171 76641 65785 48809 26436 17470 3W LED lamps equivalent 1085.6 2783.2 5020.5 5917.1 7664.1 6578.5 4880.9 2643.6 1747 Benefit (US$) $66,408 $170,254 $307,115 $361,962 $468,829 $402,421 $298,575 $161,715 $106,868 The NPV of this component yields a benefit of US$1.36 million, for a cost of roughly US$ 484,000, yielding a B/C ratio of 2.8. The analysis provides a lower bound for the economic benefits, because it does not account for the fact that the solar systems provide a greater level of service by providing more lumens of better quality light and allow for mobile phone charging. It also does not take into account the environmental and health benefits in comparison with the alternatives based on fossil fuel or disposal batteries. Page 56 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Page 57 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) • Project Appraisal Document, LESEP and LESEP AF • Restructuring papers of the project, June 2014, March 2015 & December 2015 • Aide-memoires of supervision missions, 2010 - 2017 • Implementation status and results reports, 2011 -2017 • Implementation completion report by RREA, December 2017 • LLL Consumer and Retail Survey Final Report 2016 • SSMP Liberia Final Report • AFREA Phase I Completion Summary Report • Verification report for Q3 and Q4 2016 – April 2017 by the IVA (Hydroconseil– IED-CSET) Page 58 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) ANNEX 7. MAP Page 59 of 61 The World Bank LIBERIA Electricity System Enhancement Project (LESEP) (P120660) Page 60 of 61