Document of The World Bank Report No: 70936-MX RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE INTEGRATED ENERGY SERVICES PROJECT (IBRD 75010 TF 91733) DATED DECEMBER 11, 2007 IBRD LOAN IN THE AMOUNT OF US $15 MILLION AND GEF GRANT IN THE AMOUNT OF US $15 MILLION TO THE UNITED MEXICAN STATES October 4, 2012 Latin American and Caribbean Energy Sector Sustainable Development Network This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 1 ABBREVIATIONS AND ACRONYMS BANOBRAS National Bank for Public Works and Services (Banco Nacional de Obras y Servicios Públicos) CFE Federal Electricity Commission (Comisión Federal de Electricidad) CONANP National Commission for Protected Natural Areas (Comisión Nacional de �reas Naturales Protegidas) FM Financial Management FONAES National Fund for Business Support in Solidarity (Fondo Nacional de Apoyos para Empresas en Solidaridad) FONART National Fund for the Promotion of Handicrafts (Fondo Nacional para el Fomento de las Artesanías) FTE Fund for the Energy Transition and the Sustainable Use of Energy (Fondo para la Transición Energética y el Aprovechamiento Sustentable de la Energía) GHGs Greenhouse Gases GoM Government of Mexico CSF Centralized solar farms (Granjas Solares Isla) HDI Human Development Index HH Households IFRs Interim Financial Reports INAH National Institute of Anthropology and History (Instituto Nacional de Antropología e Historia) INEGI National Institute of Statistics and Geography (Instituto Nacional de Estadística y Geografía) IP Implementation Progress kW Kilowatt kWp kilowatt-peak LAERFTE Law on the Use of Renewable Energy and Energy Transition Funding (Ley para el Aprovechamiento de Energías Renovables y el Financiamiento de la Transición Energética) MIA Environmental Impact Assessment (Manifestación de Impacto Ambiental) NAFIN Nacional Financiera, S.N.C. OIC Internal Control Unit (Órgano Interno de Control) PAC Procurement Plan (Plan de Adquisiciones y Contrataciones) PAD Project Appraisal Document PDO Project Development Objective PEF Federal Expenditure Budget) (Presupuesto de Egresos de la Federación) PROFEPA Federal Environmental Protection Agency (Procuraduría Federal de Protección al Ambiente) PV Photovoltaic 2 QCBS Quality Cost-Based Selection RET Renewable Energy Technology SAGARPA Secretariat of Agriculture and Livestock, Rural Development, Fisheries and Food (Secretaría de Agricultura y Ganadería, Desarrollo Rural, Pesca y Alimentación) SEDESOL Secretariat of Social Development (Secretaría de Desarrollo Social) SEMARNAT Secretariat of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales) SENER Secretariat of Energy (Secretaría de Energía) SEPA Procurement Plan Execution System (Sistema de Ejecución de Planes de Adquisiciones) SFP Secretariatof Public Administration (Secretaría de la Función Pública) SHCP Secretariat of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) SICOP Accounting System (Sistema de Contabilidad) SOE(s) Statement(s) of Expenditure SPICs State Project Implementation Committees TESOFE Federal Treasury (Tesorería de la Federación) UREP Project Coordination Unit (Unidad Responsable Ejecutora de Proyectos) Wp Watt(s)-peak Vice President: Hasan A. Tuluy Country Director: Gloria M. Grandolini Sector Manager: Malcolm Cosgrove-Davies Task Team Leader: Karen Bazex 3 MEXICO INTEGRATED ENERGY SERVICES PROJECT PROJECT DATA SHEET Restructuring Restructuring Type: Level II Last modified on date: 10/04/2012 1. Basic Information Project ID & Name P088996 & P095038: Mexico Integrated Energy Services Country Mexico Task Team Leader Karen Bazex Sector Manager Malcolm Cosgrove-Davies Country Director Gloria M. Grandolini Original Board Approval Date 01/17/2008 Original Closing Date 06/30/2013 Current Closing Date 06/30/2013 Proposed Closing Date 06/30/2014 EA Category B-Partial Assessment Revised EA Category B-Partial Assessment EA Completion Date 09/15/2005 Revised EA Completion Date 03/27/2012 2. Revised Financing Plan (US$m) Source Original Revised BORR 60.00 91.83 IBRD 15.00 15.00 GEF 15.00 15.00 Private Sector 8.49 0.00 Total 98.49 121.83 3. Borrower Organization Department Location Secretaría de Hacienda y Crédito Mexico Público (SHCP) 4. Implementing Agency Organization Department Location Secretaría de Energía (SENER) Mexico 4 5. Disbursement Estimates (US$m)1 Loan Actual amount disbursed as of 05/01/2012 0.0375 Fiscal Year Annual Cumulative 2008 2009 2010 0.0375 0.0375 2011 0.0375 2012 0.0375 2013 0.0375 2014 14.9625 15.0000 SubTotal 15.0000 Grant Actual amount disbursed as of 05/01/2012 0.1994 Fiscal Year Annual Cumulative 2008 2009 2010 2011 0.1994 0.1994 2012 0.00002 0.1994 2013 10.0523 10.2517 2014 4.7482 15.0000 SubTotal 15.0000 TOTAL 30.0000 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from N the checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes Increase access to efficient and sustainable integrated energy services in predominantly indigenous rural areas of Mexico (See PAD [Report No: 39196-MX B.2]). 7b. Revised Project Development Objectives/Outcomes [if applicable] The PDO is not amended, but there is a need to adjust the wording of the PDO in the legal agreements as there was an inconsistency with the wording of the PDO in the PAD at the time of approval. 1 Fiscal year 2008 started on July 1st, 2007 and finished in June 30, 2008. 2 The Designated Account had a balance of USD $250,000 as of March 12, 2012, which was reimbursed to the Bank on June 14, 2012. 5 MEXICO INTEGRATED ENERGY SERVICES PROJECT CONTENTS Page A. SUMMARY ........................................................................................................................... 7 B. PROJECT STATUS .............................................................................................................. 8 C. PROPOSED CHANGES ...................................................................................................... 8 D. APPRAISAL SUMMARY................................................................................................. 16 ANNEX 1: RESULTS FRAMEWORK AND MONITORING ............................................. 19 ANNEX 2: IMPLEMENTATION ARRANGEMENTS ......................................................... 21 ANNEX 3: FINANCIAL MANAGEMENT ............................................................................. 30 ANNEX 4: PROCUREMENT .................................................................................................. 34 ANNEX 5: SAFEGUARD POLICIES ..................................................................................... 38 ANNEX 6: LOCALITIES.......................................................................................................... 42 6 MEXICO INTEGRATED ENERGY SERVICES PROJECT RESTRUCTURING PAPER A. SUMMARY 1. This restructuring paper seeks the approval of a restructured Mexico Integrated Energy Services Project (P088996 and P095038), hereafter referred to as the “Project.� The restructuring is proposed to reflect the following: (i) the focus would be solely on simpler, more reliable photovoltaic (PV) technology in the form of centralized “solar farms (CSF)�, feeding distribution lines to supply electricity to households (other renewable energy technologies in the original Project, including biomass gasifiers, micro- hydropower and micro-wind generators would not be included as they have proved more complex to organize install and maintain, compared to PV technology3); (ii) although the number of target households would decrease in the restructured Project the electricity capacity per household would increase nearly tenfold, thus significantly improving the beneficiaries’ quality of life and standard of living; the limited capacity provided for individual households in the original plan is considered a major cause of the generally lukewarm social acceptance for that Project; (iii) the Secretariat of Energy (Secretaría de Energía, SENER) as the Project Implementing Agency has designated the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) as the operator of Part 2 (Rural Energy Subprojects4), thus bringing in an important counterpart due to CFE’s proven experience in planning, design and engineering, and construction of solar power projects, as well as maintenance and operation of this type of facilities; (iv) the Project closing date would be extended from June 30, 2013 to June 30, 2014; and (v) funds originally allocated to activities that are already being implemented with Government funding would be reallocated to Part 2 (Rural Energy Subprojects). The expectation that all 34,000 individual dispersed households would have been connected to the PV systems was quite optimistic, and therefore one of the main GEF objectives (carbon emissions reductions) was difficult to achieve. Project indicators are being adjusted accordingly. 2. The proposed restructuring would not create any additional environmental or social impacts or trigger any additional safeguard policy. However, it would amend the 3 PV technology is a far simpler to install and maintain technology as, among other factors, it does not require any fuel, can be mounted in almost any site with solar radiation, operates in a reliable manner – without need to be repaired – for longer periods of time and escalating it generally can be done by installing more panels which are widely commercialized. 4 For purposes of this project, “Rural Energy Subprojects� shall be understood as the “centralized solar farms� (CSF) that would be built in each community using photovoltaic technology to generate electricity. One CSF would be installed per locality and would satisfy the electricity needs of the whole community (including households, productive activities and services facilities) through a grid to be constructed also as part of the Project. Photo-voltaic modules will feed the distribution lines through dc/ac current inverters as well as a bank of batteries capable of supplying electricity for 48 hours without sun. Distribution lines will supply electricity to final consumers and public lighting. A control room housing the bank of batteries will include all control, protection and operating equipment for whole solar farm. 7 Project Development Objective (PDO) in the legal documents to make it identical to the PDO in the Project Appraisal Document (PAD). B. PROJECT STATUS 3. The Project was signed in December 2008 and was declared effective on July 16, 2009. By May 2012 it had only disbursed 1.3 percent (US $0.1994 million) of the US $15 million GEF grant and 0.25 percent (US $0.0375 million) of the US $15 million IBRD loan. 4. The progress toward achieving the PDO and the Implementation Progress (IP) are rated Unsatisfactory. The restructuring proposal would address complex institutional arrangements that have delayed implementation and the consequent disbursements. C. PROPOSED CHANGES Changes in the Project Scope 5. The Restructured Project would be part of the Government of Mexico’s (GoM’s) wider rural electrification program (the “Program�) for providing access to modern electricity services to rural communities with over 100 inhabitants throughout the country. The GoM, through SENER and CFE, has identified 702 localities in Mexico to be included in the Program using conventional and non-conventional technologies (such as renewable sources) with an estimated cost of US $239 million. This Restructured Project would focus on about 86 communities that would be served with electricity from renewable sources – solar power generation – in which Bank and GEF funds are estimated to finance the costs for systems in about 36 of these communities.5 6. The Restructured Project would serve approximately 4,432 households (17,578 inhabitants) with about 1.2 kilowatt-peak (kWp) average per household, compared to 0.1 kWp planned in the original Project. The total aggregated installed capacity in the restructured Project would be around 6,205 kW compared to 6,289 kW for the original Project. It must be noted, however, that all 6,205 kW would now be PV power compared to only 3,400 kW of PV for solar home systems planned in the original Project in which the remaining capacity (2,889 kW) was to be generated with a variety of other renewable energy technologies (RETs). 7. The other technologies envisioned in the original Project were small micro-wind generators (“wind home systems�), solar battery charging systems, micro-hydropower plants, biomass gasifiers and RETs hybridized with diesel systems. While increasing access to electricity, the original idea was also to obtain operational experience with different renewable technologies that may well match existing renewable resources in the different communities. However, the more complex design involving multiple technologies has proven unwieldy in implementation. 5 See Annex 6: Localities. 8 8. The restructured Project would focus on the use of PV technology only in the form of “centralized solar farms,� feeding distribution lines to supply electricity to households, rural institutions and micro-enterprises. Of the 6,205 kW total capacity, 950 kW would be allocated to the productive and institutional sectors (community services, churches and health posts), leaving about 5,255 kW for household uses or about 1.2 kWp per household. The advantages of this major change in project design are the following: (a) the lead time required for design and installation of PV projects is much shorter than for the other RETs mentioned; (b) PV systems are simpler to operate and maintain and now these would be under the responsibility of CFE; and (c) the use of a single technology vastly simplifies organization and implementation procedures. 9. The pace of implementation of the streamlined Project is thus expected to be significantly improved. Moreover, the provision of much larger capacity per household is expected to dramatically improve the target households’ enjoyment of electricity connection to a level approaching the experience of grid connection. Whereas the 100 Wp per household in the original Project would only provide a basic electricity service, mainly for lighting, the new and much larger capacity would enable the use of several lighting points and multiple conventional appliances such as small refrigerators, TVs, electric fans, and food blenders which are highly desired by all households. The target population’s quality of life and standard of living would significantly improve with regard to the expectations in the original Project. 10. The original PDO in the PAD explicitly mentioned that the Project would be carried out in “predominantly indigenous rural areas of Mexico.�6 However, the legal documents misstated the relevant indigenous element of the Project. Accordingly, the PDO included in the amended legal documents through this restructuring is being made identical to the PDO in the PAD, as follows: “To increase access to efficient and sustainable integrated energy services in predominantly indigenous rural areas of the Borrower/Recipient�. Changes in Implementation Arrangements under Part 2: Rural Energy Subprojects 11. SENER as the Project Implementing Agency proposed a revised operational scheme that involves CFE as the operator for executing the Rural Energy Subprojects under Part 2 of the Project. This builds on CFE’s experience and capacity for undertaking rural electrification projects in Mexico. The responsibilities of CFE as operator are established under a Collaboration Agreement7 with SENER (see Annex 2). Under this new scheme, the Federal Implementation Team (FIT) as well as the State Implementation Teams (SITs) envisioned in the original Project would disappear. CFE would be in charge of the site selection, obtaining the land8 and topographic survey, environmental permits, agreements with the community, basic design and engineering, procurement of 6 “Predominantly indigenous rural areas of Mexico� means that the majority of the Project beneficiaries are indigenous peoples, as per OP/BP 4.10 (see paragraphs 19-21 and Annex 5). 7 Reviewed by the Bank team and to be signed by the parties together with the amendments to the Grant and Financing Agreement. 8 Land would be donated by the communities, following the applicable criteria to be included in the Operational Manual (for further details, see Annex 5, paragraph 16). 9 goods and services for sub-projects construction, construction supervision, and operation and maintenance of the facility (for further details see Annex 2 paragraphs 9-22). The Service Management Contracts and OBAs would be eliminated as CFE would be responsible for procurement activities (see paragraphs 30-32 and Annex 4). Summary of Changes in Project Activities 12. Several activities originally proposed by the Project have already been completed or are under way with Government and CFE funding, in particular activities related to technical assistance and impact assessment. Parts 1, 2, 4 and 5 of the original Project would be kept; Part 3 would be eliminated (Parts 4 and 5 would become Parts 3 and 4 of the Restructured Project, respectively). Table 1 below summarizes the current status of activities per Part, as well as those proposed through the restructuring. Table 1: Status of activities per Part Proposed Scope and Explanation for Part Original Scope Status Changes (a) Strengthening of the Recipient’s policy, Completed. The activity was completed by the Federal legal and regulatory framework for the Government through SENER with the energy sector, including: (i) the definition of publication of the Law on the Use of the tariff and subsidy mechanisms for Renewable Energy and Energy Transition projects not connected to the National Funding (LAERFTE) and its Regulations. Interconnection System; and (ii) the definition of ownership for projects co- financed with public resources at the national and subnational levels or with a combination of public and private resources. (b) Development of financial, policy and Completed. This activity was completed by the Federal regulatory incentives to foster the Government through SENER with the development of RET-based off-grid publication of the LAERFTE, which Part 1. Policy, electricity services. mandates the publication of the National Regulation and Strategy for Energy Transition and Strategy establishes the Fund for Energy Transition and Sustainable Use of Energy. (c) Development of regulatory measures, In progress This activity is being covered by CFE with standards and manuals to ensure minimum with GoM GoM resources. CFE will conduct bidding quality levels in technical installations and resources. processes for equipment and installation, service delivery practices. taking into consideration national and international standards9. (d) Development of methodological guidelines In progress CFE, with the aid of the Secretariat of and tools for public consultation activities with GoM Social Development (SEDESOL) as and for environmental protection. resources. needed10, is conducting consultations with the communities. No Subproject will be implemented without the consent of the community through consultations. In the case of environmental protection, CFE will 9 This activity has been developed as part of the preparation of the Environmental Management Plan (or Manual de Buenas Prácticas Ambientales para la Construcción de Obras de Electrificación con la aplicación de Granjas Solares) that has already been approved and the Operational Manual and bidding documents currently under review. 10 For further details, please see Annex 2. 10 process the environmental permits established by the Secretariat of Environment and Natural Resources (SEMARNAT)11. (e) Design of a conflict-resolution mechanism Completed. CFE, assisted by SEDESOL12, as needed, to ensure transparency and reduce risks. has completed the design of a mechanism to support the process of consultation and negotiation with communities. Part 2. Rural Conduction of Energy Subprojects in the Pending SENER has appointed CFE as operator for Energy Recipient’s rural communities. restructuring. executing this Project Part. Co-financed by Subprojects GoM and Project resources13. Provision of technical assistance and capacity Dropped. These activities will no longer be building activities to: necessary, considering that CFE will be Technical (a) Selected rural communities, to ensure the responsible for the installation (through Assistance for successful implementation of Energy Project-funded contracts) and maintenance Rural Energy Subprojects; of the solar systems. (Previously (b) Promote RET-based off-grid electrification Part 3) projects; and (c) Promote private-sector participation. (a) The development of social or community Pending. These activities will be developed and projects through the provision of rural financed by the GoM, consistent with the energy services, including energy for new approach. Some activities (provision community centers or local government of energy for community centers) would be offices; financed by Project resources15. Part 3. (b) The development of productive and Promotion and economic activities through the provision of Technical energy services; Assistance to (c) Better access to micro-financing and better Increase management of remittances; Productive (d) Better understanding of financial schemes Uses of and preparation of business plans; Electricity 14 (e) The development of socially productive activities; and (f) Promotion of economic and productive activities, including profitable energy- intensive activities. Part 4. Project Provision of technical assistance to the Project In progress. Co-financed by GoM and Project Management16 Management Unit. resources17. Financing 13. Project costs have been modified to reflect changes proposed under this restructuring (see Tables 2 and 3 below): 11 See footnote 9. 12 See footnote 10. 13 For details on the expected completion date for this activity, please see the Action Plan included in Annex 4. 14 Previously Part 4. 15 This activity would be completed once all Rural Energy Subprojects have been finalized and are under operation. 16 Previously Part 5. 17 This activity will end once the Project is implemented. 11 Table 2: Costs per Part (original and revised) Item Project as per PAD Restructured Project Costs (US$ M) GOM IBRD GEF Priv. Total GOM IBRD GEF Priv. Total Part 1-Regulation 1.58 1.18 1.35 0.00 4.11 4.10 – – – 4.10 Part 2- Subprojects 49.22 6.89 5.77 6.54 68.42 80.69 14.96 14.40 – 110.05 TA rural energy18 4.32 2.81 5.14 0.20 12.47 – – – – – Part 3- TA productive uses19 1.25 1.75 1.25 1.75 6.00 6.00 – – – 6.00 Part 4- Project Mgmt. 20 3.64 2.38 1.50 – 7.52 1.04 – 0.60 – 1.64 Front-end Fee – – – – – – 0.04 – – 0.04 15.00 15.00 Total 60.01 15.01 15.01 8.49 98.52 91.83 30.00 – 121.83 Table 3: Revised costs of Part 221 Part 2 – Subprojects Restructured Project [+] GOM Subtotal Costs (US$ M) IBRD GEF Priv. Total SENER CFE Oth. Sta. Com. GOM 36 solar farms – – – – – 14.96 14.40 – – 29.36 50 solar farms – 20.97 20.97 20.97 – – – 62.90 62.90 Land – – – – 0.90 – – 0.90 0.90 Land preparation – 1.50 1.50 1.50 – – – 4.50 4.50 Grids and associated costs – 4.13 4.13 4.13 – – – 12.39 12.39 14.96 14.40 Total – 26.60 26.60 26.60 0.90 29.36 – 80.69 110.05 Notes: Oth.: Other agencies of the Federal Government Sta.: States Com.: Communities (including municipalities and localities) 14. Under the Restructured Project, CFE would be the operator of the Rural Energy Subprojects and responsible for the subsequent procurement activities. This would eliminate the need for private sector financing which originally would have taken place through Service Management Contracts and OBAs. The grant, loan and GoM’s resources would fund the Project, while the private sector would be involved through the public bids to be launched for the construction of the CSFs. Reallocation of Funds 15. Activities under Project Parts 1 and 3 would be financed with Government resources. The restructuring would reallocate nearly all IBRD and GEF funds to Part 2 – Investment in Rural Energy Subprojects (see Tables 4.1 and 4.2). 18 Dropped. See Table 1 for further details. 19 Previously Part 4. 20 Previously Part 5. 21 Procurement under the Project includes: (i) procurement of photovoltaic (PV) systems, including batteries, low- and medium-voltage distribution lines, and land preparation; and (ii) project management (Annex 4, paragraph 3). 12 Table 4.1: Category restructuring, Loan Allocation % of Financing Current Revised Proposed new Percentage of Percentage of Category of Current IBRD Revised IBRD Category of Expenditures Expenditures Expenditure (expressed in (expressed in Expenditure to be financed to be financed US$) US$) (inclusive of (inclusive of Taxes) Taxes) Goods and works under Goods, other Part 2 of the than those Project other (1) financed by the 8,000 14,962,500 100% 100% than those GEF Trust Fund financed by the Grant GEF Trust Fund Grant Consultant Consultant Services and Services and Training, other Training, other [Intentionally (2) than those than those 3,577,500 100% left blank] financed by the financed by the GEF Trust Fund GEF Trust Fund Grant Grant Expenditures Expenditures under Service under Service Management Management 100% of OBA Contracts other Contracts other [Intentionally payments for (3) 7,776,000 than those than those left blank] Electrification financed by the financed by the Sub-projects GEF Trust Fund GEF Trust Fund Grant Grant Operating Costs Operating under Part 4 of Costs, other the Project, than those [Intentionally (4) other than those 2,375,000 100% financed by the left blank] financed by the GEF Trust Fund GEF Trust Fund Grant Grant Unallocated [Intentionally (5) Unallocated 1,226,000 – left blank] Amount Amount payable payable pursuant to pursuant to Section 2.03 of Section 2.03 of this Agreement this Agreement (6) Front-end Fee Front-end Fee 37,500 37,500 in accordance in accordance with Section with Section 2.07 (b) of the 2.07 (b) of the General General Conditions Conditions TOTAL 15,000,000 15,000,000 13 Table 4.2: Category restructuring, Grant Allocation % of Financing Current Revised Original Proposed Percentage of Percentage of Current GEF Revised GEF Category of Category of Expenditures Expenditures (expressed in (expressed in Expenditure Expenditure to be financed to be financed US$) US$) (inclusive of (inclusive of Taxes) Taxes) Consultant Consultants’ services and services and Training, other Training, other (1) 7,074,000 500,000 100% 100% than those than those financed by the financed by the Loan Loan Expenditures Expenditures under Service under Service 100% of OBA Management Management [Intentionally payments for (2) Contracts, other Contracts other 5,076,000 left blank] Electrification than those than those Sub-projects financed by the financed by the Loan. Loan Operating Costs Operating for Part 4 of the Costs, other Project other (3) than those 1,500,000 100,000 100% 100% than those financed by the financed by the Loan Loan Unallocated [Intentionally (4) Unallocated 1,350,000 – left blank] Goods and works under Part 2 of the (5) Project other – 14,400,000 – 100% than those financed by the Loan TOTAL 15,000,000 15,000,000 Notes: Figures for goods and construction services have been estimated at 85% for goods and 15% for construction services (based on CFE’s recent experience with the Guaycora pilot solar farm). There are no operating costs funded by IBRD. Operating costs funded by GEF are US $100,00022 allocated to SENER. US $199,363.47 have been disbursed (for Category 1). Extension of closing date 16. The Project’s original closing date of June 30, 2013 is being extended to June 30, 2014 to allow sufficient time for the implementation of project activities. Based on the status of preparation of bidding packages for the Rural Energy Subprojects, solar farms to be financed under this Project should be installed by the new proposed closing date. This would be the first extension of the Project’s closing date. 22 This amount is US$199,363.47 for Category 1 Consultant Services and Training. 14 Results/Indicators 17. The revised Performance Indicators are shown in Table 5 below (see Annex 1). Table 5: Original and Revised Performance Indicators23 Final Target Original Original Target Proposed in Restructuring 1. Number of households (HH) 34,000 (1) 4,432 electrified with solar PV24 2. Costs per new connection 960 1,097(2) (US$/HH) 3. kW new renewable energy 6,289(3) 6,205 capacity 4. Emissions reductions 254(4) 241 (thousand tons CO2e)/year 5. Incremental increase in MWh/year of electricity consumed for productive uses in 5,650 5,768(5) targeted communities (MWh/year) 6. Number of new social/productive activities and 1,000 2,179(6) micro-businesses developed 7. Total RET energy 175 2,077(7) consumption per household. in MWh/year Notes: (1) Out of 47,195 households to be electrified with RETs, 34,000 would have been electrified with PV of 0.1 kWp each. The restructured Project would provide 4,432 households with PV capacity of about 1 kWp each, plus about 950 kWp to the institutional and productive sectors. (2) Due to the much larger capacity per household. A 25% price decline is assumed by the end of the implementation period. (3) As per 2007 PAD Table 15.1, page 171. An incorrect total (typo) of 5,280 kW for RET installations is shown. The correct total, assuming 30% of hybrid capacity is RET, is 6,289 kWp. (4) Based on figure of 5 million tons of CO2 abated over 20 years, shown in 2007 PAD Table 2, page 176. (5) Assumes total of 3,293 kWp of PV for non-lighting use by households and productive uses by services sector. The original estimate of 5,650 MWh/yr is shown in the table on page 51 of the 2007 PAD. (6) This total counts as productive small, non-lighting uses possible in homes that now have nearly ten times PV capacity installed. (7) Output of 1.18 kWp PV capacity allocated per household on average at 20% capacity factor. 23 The table only includes applicable indicators; for further details, please see Annex 1. 24 The original Project considered a variety of RETs; the Restructured Project only considers one RET: Solar PV. 15 D. APPRAISAL SUMMARY Safeguard Policies 18. The Project is rated as Category B under the Bank’s Safeguard Policies, triggering the following: Environmental Assessments (OP 4.01), Natural Habitats (OP 4.04), Cultural Property (OP 4.11), Indigenous Peoples (OP 4.10), and Forests (4.36). Considering that the technology/activities to be developed in this proposed restructuring correspond(s) to those intended in the original scope, no change of category or the triggering of new safeguard policies is needed. 19. Social: According to the statistics provided by CFE, 58 of the 86 localities have census data, indicating the number of indigenous inhabitants living in each of these localities. In these 58 localities the indigenous peoples account for 78.72 percent of the population, and 15 additional localities show that an indigenous language is spoken, but these latter localities lack population data. This means that, of the 86 localities, 73 are predominantly populated by indigenous people who represent nearly 85 percent of the total number of localities. 20. An average percentage of 51 percent of indigenous inhabitants that lack population data was assumed for the 15 indigenous localities. Adding this average to the 58 localities would yield 73 percent of indigenous inhabitants for the 73 localities that are predominantly indigenous. By also adding the 16 localities listed as Spanish-speaking and assuming they have no indigenous inhabitants, the total percentage of indigenous peoples for the 86 localities is nearly 63 percent (see Annexes 5 and 6). 21. Thus the Project should be considered as an Indigenous Peoples’ Project, as per OP/BP 4.10, because the majority of the Project beneficiaries are indigenous peoples. 22. CFE would prepare socioeconomic assessments and conduct consultations for each locality with support from SEDESOL as needed (see Annex 2, paragraphs 5 to 6, for a detailed description of SEDESOL’s role). The socioeconomic assessments would also look at cultural aspects related to Project interventions, such as: (i) the identification and inclusion of traditional authorities (who may be different from officially recognized administrative authorities); (ii) gender and intergenerational perspectives, which may be different from those of the primary counterparts; (iii) the capacity and culturally appropriate mechanisms to pay for Project maintenance; and (iv) the potential use of local labor for maintenance and other related works. The social assessments would also describe the criteria under which agreements would be reached with each locality for Project acceptance and implementation. 23. SENER and CFE, with support from SEDESOL as needed, would ensure that the consultation process is adequately conducted, taking into account the cultural characteristics of the indigenous localities, and that it is adapted as necessary to language and literacy and to use culturally appropriate mechanisms. This process would also ensure that the authorities are provided with adequate participation in Subproject consultation and design, negotiations and the signing of Subproject agreements. The consultation process would gather feedback from each locality and determine whether 16 there is broad community support for the Subproject. The Subprojects would only be developed in those localities that support and accept them. 24. Environment: No community to be financed by the Project is located in a protected area. Nevertheless, the site selection, construction and equipment installations must comply with Mexico’s national and local environmental laws and with Bank Safeguard Policies. For this purpose, SENER/CFE, with Bank assistance, have developed an Environmental Management Plan (the “Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms�, Manual de Buenas Prácticas Ambientales para la Construcción de Obras de Electrificación con la aplicación de Granjas Solares), which would be an integral part of construction contracts and thus serve as a guide for SENER/CFE and Bank supervision activities. The Plan was disclosed in Mexico on March 28, 2012 and on the Infoshop on March 29, 2012. Implementation Arrangements 25. SENER is a planning and policy-making agency with limited Project execution capacities. Thus, it has proposed CFE as the operator for Part 2, Rural Energy Subprojects. This change is expected to result in a more efficient implementation. 26. As the operator, CFE would be responsible for: the selection of sites to be electrified; the social and environmental assessments in accordance with the Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms; putting into place proper mitigation measures; the design of the energy solution; the procurement process; the consultation process; and ownership, maintenance and operation of equipment (see Annex 2 for Subproject cycle). This new scheme would replace the State Project Implementation Committees (SPICs) originally proposed in the Project as responsible for planning, programming and implementing the Project at the state level. 27. An affordable fee based on the existing tariff structure would be determined which, besides covering generation costs, would help create a culture of payment among the locality’s residents. Financial Management 28. The Financial Management (FM) risk for the Project is deemed Moderate. The FM arrangements under this restructuring are completely different from those agreed under the original Project, which was designed to be implemented by four states. The proposed new FM arrangements are rather simple, because SENER will be the overall Project Implementing Agency, and as part of this role it has appointed the Federal Electricity Commission as operator for the implementation of Part 2 of the Project. SENER will also be responsible for liaising with the Bank for overall requirements (including preparing financial and disbursement reports for the entire Project). SENER would use part of the funds allocated on the Fund for the Energy Transition and the Sustainable Use of Energy (Fondo para la Transición Energética y el Aprovechamiento Sustentable de la Energía, for the purposes of this document the FTE), as a mechanism to disburse resources (including GEF resources). See Annex 3 for further details. 17 29. The FM action plan consists of the following: (i) updating the Project’s Operational Manual, in accordance with the FM arrangements agreed under the Project; and (ii) the creation and staffing by SENER of the Project Coordination Unit (Unidad Responsable Ejecutora de Proyectos, UREP), which would include an FM Specialist25. Procurement 30. CFE would be responsible for procurement activities for the Project, under the overall coordination of SENER as the Project’s Implementing Agency. The only procurement activities that would be carried out directly by SENER are some technical assistance services of small value that would be provided by individual consultants and be financed under the GEF Grant. CFE’s broad experience in Bank-financed projects, its capacity and organization are considered adequate for carrying out the Project as stipulated in the restructuring proposal. 31. Based on prior experience and the updated assessment of CFE, the procurement risk is considered Moderate. Procurement arrangements and mitigation measures are detailed in Annex 4. 32. A table in Annex 4 summarizes the key milestones of the procurement plan and of the first bidding process agreed with the Government to be financed by the Project, including the preparatory activities, such as site selection, social assessment, engagement with localities, permits and land donation. 25 This unit would also be responsible for the FM functions of two projects currently being implemented by SENER: TF56781 (P077717) Large-Scale Renewable Energy Development Project, and the Efficient Lighting and Appliances Project (P106424). Terms of reference for the specialist were already approved by the Bank. 18 ANNEX 1: Results Framework and Monitoring26 MEXICO INTEGRATED ENERGY SERVICES PROJECT Project Development Objective (PDO): Increase access to efficient and sustainable integrated energy services in predominantly indigenous rural areas of Mexico (as per page 5 of the PAD). To increase access to efficient and sustainable energy services in the Borrower’s rural areas in selected states (as per page 6, Schedule 1 of the original Loan Agreement). See paragraphs 2, 10 for further explanation of the original PDO. Revised Project Development Objective: Increase access to efficient and sustainable integrated energy services in predominantly indigenous rural areas of Mexico D=Dropped Responsibility Cumulative Target Values** Core PDO Level Results C=Continue Unit of Frequen- Data Source/ N= New Baseline for Data Indicators* Measure YR 1 YR 2 YR 3 YR4 YR5 cy Methodology R=Revised Collection Number of Households D electrified Indicator One: Number of households (HH) R 0 2,216 4,432 Annual electrified with RET (solar PV) Indicator Two: Costs per new connection R US$ 2400 1,097 YR 2 (US$/HH) Indicator Three: kW new Field surveys R kW 0 3,102 6,205 Annual renewable energy capacity progress and SENER/CFE Indicator Four: completion Emissions reductions R tCO2e 0 120 241 YR 2 reports (thousand tons CO2e)/year Indicator Five: Incremental increase in MWh/year of electricity R MWh 0 2,888 5,768 Annual consumed for productive uses in targeted communities (MWh/year) 26 For Further information on the original results framework, please see pages 51-52 of the PAD. 19 Income generation to Project beneficiaries due to increased D productive/economic uses of electricity Indicator Six: Number of Field surveys new social/productive progress and R 0 871 1,308 YR 2 SENER/CFE activities and micro- completion businesses developed reports Number of private companies operating as D service companies Amount of private equity invested in rural projects D (% total investment) Number of extension D agents trained Indicator Seven: Total Field surveys RET energy consumption progress and N MWh 0 1,0340 2,077 Annual SENER/CFE per household. in completion MWh/year reports INTERMEDIATE RESULTS SENER/CFE operational R None Completed Annual Design of bidding Annual documents C None Completed Annual SENER/CFE project report Issuance of technical C None Completed Annual guidelines Design procedure for technology and service D provider pre-qualification / certification Baseline Impact C None Completed Annual Evaluation Assessment Annual SENER/CFE Medium-term Impact project report C None Completed Annual Evaluation Assessment Successful ownership transfer of SHS to D Households 20 ANNEX 2: Implementation Arrangements A. Institutional Arrangements 1. SENER is the Project Implementation Agency in charge of the Project’s overall coordination, monitoring and reporting. SENER has designated the Federal Electricity Commission (CFE) as the operator of Part 2 (Rural Energy Subprojects). SENER’s and CFE’s roles are specified in a Collaboration Agreement (the CFE–SENER Agreement). Some of the key responsibilities are summarized below. Secretariat of Energy (Secretaría de Energía, SENER)  Verify the appropriate implementation of the actions arising from the Project as indicated in the Operational Manual.  Prepare the Annual Procurement Plan, in accordance with the Project’s objectives and in close coordination with CFE.  Ensure that CFE has the necessary resources on time for an appropriate implementation of the actions arising from the Project.  Provide guidance and prepare documentation for the procurement of goods and the contracting of services required for the Project, based on the terms and conditions indicated in the Annual Procurement Plan prepared by CFE, in accordance with the Bank’s Procurement Guidelines.  Conduct controls that enable the proper administration of the Project, as well as the oversight and monitoring of its financial progress.  Prepare Project Financial Reports, in accordance with the requirements of the Bank and of Government authorities.  Comply with the agreements made during the meetings of the Secretariat of Finance’s (Secretaría de Hacienda y Crédito Público, SHCP External Credit Committee.  Provide advice during the audit process by SENER’s Audit Department “ Órgano Interno de Control� (OIC) and provide support on the Project’s costs monitoring that the OIC conduct, in accordance with the procedures and criteria of the SFP.  Follow the guidelines and provisions of the Project’s Operational Manual. Federal Electricity Commission (Comisión Federal de Electricidad, CFE) 2. About CFE: CFE is a decentralized public agency, with legal status and assets, of the Government of Mexico (GoM). It is the only company in Mexico authorized to generate, transmit, distribute and market electricity nationwide. CFE is also the federal government agency in charge of planning the national electricity system and annually publishing plans for the expansion of generation and transmission capacity in order to meet national demand in the next 10 years. As stipulated in Article 9, subsection VII of the Law of Public Electricity Services, CFE is authorized to sign contracts with state and municipal governments for the conduction of efforts related to the provision of public electricity services (see CFE’s general organizational chart below). 21 3. CFE’s key responsibilities under the CFE–SENER Agreement are:  Ensure that activities for Project execution are carried out in accordance with the terms of the Operational Manual.  Lead and conduct technical supervision of works, and maintain a specific and updated record of the works covered by this collaboration Agreement, and the disbursements incurred during the execution of the Project.  Use the resources provided solely and exclusively to finance the works and services covered in this Agreement and under the Project’s framework.  Maintain, under its \responsibility and custody, all documentation related with the execution of the works covered in this document; as well as provide all the facilities, to public servers that are entitled to request so, for consulting and auditing.  Provide updated information about electrification levels in rural areas, at both national and state levels.  Ensure that the procurement of goods and the contracting of services required for the Project are carried out in accordance with Bank’s Guidelines.  Provide SENER with the required information to comply with the agreements established during the meetings of SHCP’s External Credit Committee.  Allow SENER to oversee and monitor the Project’s financial progress.  Provide SENER with the required information to comply with the Project’s financial reports.  Provide SENER with information about the results with experiences on installation programs of renewable power generation sources in rural communities.  Provide SENER with technical information related to used technologies, costs, suppliers, installation standards, maintenance standardized mechanisms for different technologies, systems’ performance testing protocols, typical designs of renewable energy generation systems, among others, or additional required information for the integration of biannual Project’s progress reports.  If necessary, provide logistical support, as possible, to facilitate visits to the municipalities and communities.  Participate in the organization of promotional events to disseminate the positive experiences results on rural electrification through renewable energy technologies.  Refund to FTE’s heritage, those resources obtained from it and that were not used, as well as any financial benefits that have not been applied in the purposes of this Agreement.  Pay suppliers for the services required for the Project.  Establish and maintain a financial report system and submit the Financial Statements to SENER of the costs incurred under the Project, in order to be audited each fiscal year by the tax audit authorities.  Maintain on its own or take the necessary measures to store documentation on expenditures incurred and charged to the Grant or the Loan, for at least two years from the date on which the Bank receives the Audit Report corresponding to the fiscal year in which the final disbursement is made. 22  Provide to SENER, in accordance with the provisions of the Operational Manual, the necessary documentation to process the grant and loan disbursement’s to NAFIN, whereby SENER will provide support in the preparation of documents and formats required for the disbursements processes, including only the eligible funding expenses, made by CFE, in compliance with the Project’s objectives.  Provide SENER with a copy of the Project expenditures incurred by CFE, so that SENER can maintain accounting and financial control over each expenditure; likewise SENER will verify the adequate registration of these expenses. Figure 1: CFE’s General Organizational Chart General Directorate Operations Financed Investment Modernization Administration Financial Internal Planning Directorate Projects Directorate Directorate Directorate Directorate Control Unit Sub-Directorate Generation Financed Modernization General Financial Sub-Directorate Investment Projects and New Areas of Counsel Operation Contracting Opportunity Sub-Directorate Sub-Directorate Sub-Directorate Energy Finance Sub-Directorate Projects Sub-Directorate Development Sub-Directorate Physical Financial Control Security Sub-Directorate Construction Sub-Directorate Projects Sub-Directorate Transmission Sub-Directorate National Center for Energy Control Sub-Directorate Distribution Sub-Directorate 4. The Distribution Sub-Directorate, assigned to the Operations Directorate, would be in charge of the Project’s Part 2 operation, specifically through the following areas:  Distribution Sub-Directorate: The head of this area is in charge of signing the Collaboration Agreement between SENER and CFE.  Electrification Unit: This would be the Project Coordination Unit in CFE and would serve as the liaison with SENER. It would provide to SENER technical information related with used technologies, costs, suppliers, installation standards for different technologies, among others, and the results of experiences with the installation of power generation systems from renewable energy sources in rural communities. It is in charge of supervising, coordinating and reconciling information from all federal and divisional levels of CFE. It would send updates 23 to SENER on Project execution and financial reports required by the World Bank, the Secretariat of Public Administration and the Fund’s Technical Committee. With regard to financial issues, it would be in charge of coordinating, together with the Control, Supervision and Management Unit, the monthly preparation, integration and submission of accounting, administrative or financial information on the Project’s status, so that complete information is available on the flows of loan and grant resources.  Control, Supervision and Management Unit: This unit would be responsible to reconcile the accounting information reported by the Divisional Administrative Bureaus. It would also be in charge of the monthly preparation, integration and submission of accounting, administrative or financial information on the Project’s status, so that complete information is available on the flows of loan and grant resources.  Supply Unit: This unit would be in charge of supervising the processes of procurement and installation of equipment conducted by Divisional Administrative Bureaus, and of coordinating all the procurement processes required by the Project, in accordance with Annual Procurement Plans and in accordance with applicable national and World Bank regulations.  Divisional Management Distribution: These divisions are responsible for the preparation of projects, bidding processes, contracts elaboration, supervision of projects’ execution until their conclusion and the corresponding administrative closure, always following the guidelines issued by the Distribution Sub- Directorate. Also these divisions would be responsible for directing and performing the technical supervision of works, and to maintain a specific and updated record of works and its disbursements. The divisions would also be in charge of making payments to suppliers and would have to maintain the vouchers for expenses incurred. 24 Figure 2: CFE as Operator of Part 2 General Directorate Operations Directorate Distribution Sub-Directorate Control, Distribution Commercial Divisional Electrification Supervision and Coordination Coordination Supply Unit Management Unit Management Unit Unit Distribution Unit Secretariat of Social Development (SEDESOL) 5. The Secretariat of Social Development is the federal government agency in charge of formulating, conducting and evaluating the overall social development policy for effectively combating poverty. This agency coordinates the Federal Government’s 100x100 Strategy, whose key objective is to improve the disadvantaged conditions of the 125 municipalities with the country’s lowest Human Development Index. The 2012 targets of this strategy include: “introducing the use of renewable energy in all localities with fewer than 500 residents.� Under the framework of this Project, SEDESOL’s role would be to support local governments and localities liaise with this Project through their Federal Delegations. An essential part of their participation would be to organize residents of these localities so that they can form community committees or electrification committees during the process of installing the solar farms, and to appoint the broker in charge of collecting the fee for electricity service once the work is completed. 6. SEDESOL would make available the following as needed: i. Adequate information for consultations with the locality, prior to electrification; this would allow for a better social diagnostic of the community that will be electrified. ii. Channels of information to the community, different from those used by CFE, regarding the electrification process, its benefits, and the relationship with CFE. iii. Training on the productive use of electricity the communities could develop. Nacional Financiera, S.N.C. (NAFIN) 7. This institution has been appointed by the Secretariat of Finance and Public Credit to serve as the Project’s financial agent. 25 State and Municipal Governments 8. State and municipal governments would sign specific agreements with CFE27, in which their commitments during the electrification process would be specified. Their contribution to the Project would be based on the state’s and/or municipality’s capacities. Their participation would provide one third of Project financing and they would provide support for the processing of environmental and land use permits, labor for cable installation or other complementary efforts for work, transportation, or other in-kind contributions. B. Rural Electrification Subproject Cycle 1. Analysis of the Level of Rural Electrification 9. CFE’s Electrification Unit, in coordination with the 16 Divisional Management Units, would conduct a study of localities awaiting electrification, and evaluate the level of electrification by state and the number of residents without access to electricity. 2. Initial Activities 10. A community or state committee would be established. It would consist of a president, a treasurer, and one or two committee members, all of whom are community residents. In the case of the indigenous localities, the traditional authorities would perform part of these roles. The community committees are established during the period preceding the installation of the solar farm, and they serve as liaisons with CFE to provide information such as a list of users in the localities, home addresses, home property lines, etc. 2.1 Site Selection 11. CFE’s different distribution divisions would identify those localities that meet the following eligibility criteria:  Preferably located more than 40 km from the distribution grid.  Populations with over 100 residents.  The population is not very dispersed.  Most residents lack access to any type of electricity.  Accessible roads for transporting equipment and providing maintenance. 2.2 Socioeconomic Studies 12. CFE, with support from SEDESOL as needed, would conduct a socioeconomic study of each locality, with the following objectives: 27 So far, CFE has signed agreements with the following States: Chihuahua, Coahuila, Durango, Nayarit and Oaxaca. 26  Obtain general socioeconomic information on the locality based on the population census of the National Institute of Statistics and Geography (Instituto Nacional de Estadística y Geografía, INEGI) and with the support of the regional office of the Secretariat of Social Development.  Conduct a diagnostic of how the Project’s development and execution will change the lifestyle of residents of electrified communities, taking special care to prevent situations that could incite a social movement such as: affecting lands or boundaries with graves, leaving out a home due to the grid’s profile, changes in community-life activities, disagreement due to lack of information, etc.  Determine the intangible benefits to the community.  The socioeconomic assessments will also deal with gender and intergenerational perspectives, which may be different from the primary counterparts; the capacity and culturally appropriate mechanisms to pay for Project maintenance; and the potential use of local labor for maintenance and other related works. 13. Based on this information, CFE, together with the local authorities and the traditional leaders in the case of the indigenous localities, would hold consultation processes with residents of the localities to be electrified in order to raise their awareness of the benefits of having this service and to inform them about the systems’ specifications as well as to gather their feedback and provide capacity for managing the equipment. For example, in a locality whose predominant economic activity is fishing, a description is provided about the benefits of electricity to refrigerate their products and the avoided costs of other sources of refrigeration that are currently in use. Thus, CFE would continue the process in each locality only if the community consents to the works and agrees on payment mechanisms. The socioeconomic information makes it possible to estimate the payment capacity of each locality’s households. An affordable fee based on the existing tariff structure would be determined which, besides covering generation costs, would help create a culture of payment among the locality’s residents. 2.3 Management with the Locality 14. Consultation meetings would be held with CFE personnel and state, municipal and local authorities and indigenous leaders with the objective of promoting Project execution among the various stakeholders involved and for the purpose of obtaining a letter of acceptance by the community authorities. In this process, the activities and responsibilities of each of the parties would be defined, and the building where the centralized solar farms (Granjas Solares Isla, CSF) will be located would be selected. 2.4 Permit Processing and Authorization 15. In accordance with the General Law on Ecological Balance and Environmental Protection, and especially the Regulation of the General Law on Ecological Balance and Environmental Protection on Matters of Environmental Impact Assessments, compliance is required with the following: 27  Environmental Impact Assessment (Manifestación de Impacto Ambiental, MIA) due to change in soil use in protected areas, and/or local environmental permits with the state environmental authority as required by State Environmental Law.  If the Project is carried out on forest land, the Justifying Technical Soil Use Study (Estudio de Suelo Técnico Justificativo) must be performed.  If the Project involves construction on a waterway or water source, the necessary permits must be received from the National Water Commission (Comisión Nacional de Agua, CNA). 16. Depending on what is agreed with state and municipal governments, CFE or the Government itself carries out the necessary procedures to obtain these permits. Project execution cannot begin without the corresponding permits. These considerations are consistent with provisions in the updated Environmental Management Plan (Manual de Buenas Prácticas Ambientales para la Construcción de Obras de Electrificación con la aplicación de Granjas Solares) that was developed with World Bank assistance in November 2011 and disclosed locally and at the Infoshop in March 2012. 2.5 Other Prior Activities 17. In addition to the above, CFE, as part of Project design, would conduct the following activities:  Preparation of a blueprint showing distances among users from the CSF;  Conduction of a topographic survey;  Preparation of distribution grid projects;  Signing of a cooperation agreement between CFE and the state government. 3. Solar Farm’s Engineering 18. CFE would conduct an analysis of the solar farm’s necessary capacity to be installed, so that it will cover the expected consumption in the community. 4. Integration of Bidding Requirements Technical specifications of the systems to be installed: 19. In accordance with the needs and conditions of each locality, the solar power plants would have the following basic specifications:  Photovoltaic modules with monocrystalline cells or polycrystalline cells with 25 mm hail-resistant, encapsulated, texturized, non-reflecting solar glass, with power ranging from 211 to 264 Wp, guaranteed to have a useful life of 25 to 30 years.  These modules will be supported by aluminum or galvanized zinc bases.  Generating capacity varies, depending on the locality’s energy demand (see Annex 6 for further details). 28  48-volt lead-acid battery bank with 2V/DC batteries and 1,837 amperes/hour every 24 hours, with a maximum discharge of 50 percent and 2 days’ autonomous operation with a maximum of 2 parallel strings.  Useful battery life: five-year guarantee.  Inverters with nominal power of 5 kW of CA; for the purpose of increasing the useful life of the battery bank, a scheme with two types of inverters:  Solar cell inverter;  Two-directional islanding-type inverter.  Overvoltage, overcurrent or ground fault protection.  The cable used on the exterior of the solar power plant should have features that are suitable for working with direct and alternating current, with the proper type of lining and in strict compliance with official Mexican standards.  The low-voltage (or medium voltage if needed) three-phase distribution grid should preferably be underground. 20. The installed capacity by community takes into consideration a margin of about 15% of the electricity demand for use in productive activities resulting from the locality’s natural aptitudes. Because the localities are located very far from CFE’s supervision points, there are plans to install a monitoring and alarm system in order to conduct equipment supervision and detect maintenance needs as they appear. For each of the elements of the solar farms and in accordance with their useful life, there should preferably be guarantees that can be made valid throughout the country in order to eliminate shipping costs. Moreover, maintenance and training programs by providers are considered. 5. Bidding Process 21. The bidding process would be under the responsibility of CFE, following World Bank procurement rules. 6. Connection and Contracting 22. Once the solar farm is declared completed and contracts are drawn up with beneficiary users, a broker (comisionista) who is a resident of the locality would be appointed to be in charge of collecting the fee for electricity service. 29 ANNEX 3: Financial Management 1. A Financial Management (FM) Assessment was conducted for the restructuring of the Integrated Energy Services Project (LN7501 and TF91733–the Project), in accordance with OP/BP 10.02 and Guidelines for Assessment of FM Arrangements in World Bank-Financed Projects. FM arrangements under the IBRD loan and the GEF grant would be identical. 2. Summary. The FM risk for the Project is deemed Moderate. The FM arrangements under this restructuring are completely different with regard to those agreed under the original Project, which was designed to be implemented by four states. The proposed new FM arrangements are rather simple, because the Secretariat of Energy (Secretaría de Energía, SENER) would be the overall Project implementation agency, and as part of this role has designated the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) as the operator for the implementation of Part 2 of the Project. SENER would be also responsible for liaising with the Bank for overall requirements (e.g., preparing financial and disbursement reports for the entire Project). 3. The FM action plan consists of the following: (i) updating of the Project’s Operational Manual, in accordance with the FM arrangements agreed under the Project; and (ii) creation and staffing by SENER of the Project Coordination Unit (Unidad Responsable Ejecutora de Proyectos, UREP), which would include an FM Specialist.28 Completion of this plan will be included in the applicable legal agreements as a covenant. Description and Assessment of Project FM Arrangements 4. Budgeting arrangements. SENER is responsible of procuring the resources for the operation of the Project. Under this responsibility, SENER intends to use part of the funds allocated on the Fund for the Energy Transition and the Sustainable Use of Energy (Fondo para la Transición Energética y el Aprovechamiento Sustentable de la Energía, for the purposes of this document the FTE), which is chaired by SENER and was created under the Renewable Energy Law in 2009 for the purpose of managing resources for sustainable energy projects. The FTE receives annually resources from the Federal Treasury (Tesorería de la Federación, TESOFE) and the allocation of these resources on specific projects is decided by its Technical Operational Committee, which is created specifically to manage the FTE and whose responsibilities include evaluating and approving the projects to be financed. Hence, those resources approved for this Project will be transferred (under SENER’s instructions) to SENER for the implementation of Part 4 and to CFE for the implementation of Part 2. The use of the FTE will allow the disbursement of GEF resources. The FTE has already approved funding for the Project. See Figure 3 for further details on the flow of funds. 28 This unit will be also responsible for the FM functions of two projects currently being implemented by SENER: TF56781 Large-Scale Renewable Energy Development Project, and the Efficient Lighting and Appliances Project (P106424). 30 Project’s Institutional Arrangements, including Staffing Arrangements 5. The overall Project coordination would be under the responsibility of SENER. In order to manage specific requirements of the Loan, SENER would create a Project Coordination Unit (Unidad Responsable Ejecutora de Proyectos, UREP), which would include an FM Specialist. 6. CFE29 is a decentralized government agency with legal and administrative autonomy. From a technical standpoint, the Project would be implemented by the Distribution Sub-Directorate (Subdirección de Distribución). The Project’s FM functions would be carried out by the Budget and Treasury Department (Departamento de Presupuestos y Tesorería), which is under the organizational structure of the Distribution Sub-Directorate. This unit is adequately staffed to perform the Project’s FM tasks. 7. The National Bank for Public Works and Services (Banco Nacional de Obras y Servicios Públicos, BANOBRAS) is the fiduciary agent of the FTE, which operates through the Technical Operational Committee. 8. Nacional Financiera, S.N.C. (NAFIN) would be the financial agent for this Project. 9. Accounting system. For this Project CFE would use the “My SAP� system, which is an integrated information technology (IT) system used for budget, accounting, payments and all other operational purposes. With regard to SENER, the Accounting System (Sistema de Contabilidad, SICOP) would be used for the accounting of the Project’s transactions. 10. General flow of funds and information. The disbursement methods for this Project would be the reimbursement of eligible expenditures and advance to the designated account. The description of the funds flow is presented in the following diagram30, where the solid lines represent the flow of money and the dotted lines represent the flow of information. 29 CFE has institutional experience in managing Bank-financed projects. It is currently implementing the following two TFs: TF056781–MX GEF Large-Scale Renewable Energy Development (La Venta 3), and TF057033–MX Hybrid Solar Thermal (Agua Prieta). 30 This diagram considers that resources for this Project have already been approved by the Technical Operational Committee. 31 Figure 3: General flow of funds and information TESOFE World Bank 1 1 0 SENER 9 7 8 1 1 0 FTE 2 2 CFE SENER NAFIN 4 6 3 5 Payments to Payments to providers of goods providers of goods under the loan and under the loan and grant as applicable grant as applicable Notes: (1) TESOFE, through SENER, transfers the designated resources to the FTE, according to the Federal Budget. (2) Those resources allocated on the FTE and approved by the Technical Operational Committee for the Project will be transferred to SENER and CFE. The resources are transferred to CFE for the implementation of Part 2 of the Project, and to SENER for the implementation of Part 4. (3) CFE will pay directly to suppliers of goods and services. The recognition of expenditures will be after payments to final beneficiaries have been made. (4) CFE will submit periodically to the UREP in SENER the financial information related to Project implementation. (5) SENER will pay directly to suppliers of services for the implementation of Part 4. The recognition of expenditures will be after payments to final beneficiaries have been made. (6) SENER will report to NAFIN on the consolidated expenditures incurred for the Project through the periodic submission of Statements of Expenditures (SOEs), and the periodic financial reports required by the World Bank. (7) NAFIN will review the information and submit it to the World Bank. (8) The World Bank will reimburse the funds in US dollars into a commercial bank account opened by NAFIN. (9) NAFIN will reimburse the funds to TESOFE. In the case of the loan the reimbursed funds will stay at TESOFE (i.e. with no further use for this Project). (10) Only in the case of the grant, the funds reimbursed to TESOFE will be returned to the FTE, through SENER, on a revolving basis. 32 11. Disbursement arrangements. According to the original and amended “Disbursement Letters� dated December 5, 2008, and June 18, 2012, the project disbursement arrangements31 are summarized below: Disbursement Loan: Reimbursement of eligible expenditures (pre-financed by the Government). method Grant: Advance to the segregated Designated Account in USD to be opened by NAFIN in NAFIN, and Reimbursement of eligible expenditures (pre-financed by the Government). Supporting SOEs.32 documentation Minimum Minimum Value of Applications for reimbursements is US$400,000. Value of Applications 12. Financial reporting. SENER in close coordination with CFE would prepare consolidated semi-annual unaudited Project Interim Financial Reports (IFRs) and the annual audited Project Financial Statements. These reports would be prepared on a cash basis, in local currency (i.e., Mexican pesos), using the standard formats agreed with the Secretariat of Public Administration (Secretaría de la Función Pública, SFP) for the Mexico portfolio. Following loan effectiveness, the following financial reports would be submitted to the World Bank: Report Due date Semi-annual unaudited Project IFRs Within 45 days after the end of each six-month calendar period Annual audit report on Project Financial Within six months after the end of each calendar year of loan Statements and eligibility of expenditures disbursements (or other period agreed with the Bank) 13. External audit. Annual audits of Project Financial Statements and eligibility of expenditures would be performed by an auditor selected by SFP and acceptable to the Bank in accordance with Bank policy, as reflected in the audit terms of reference and memorandum of understanding agreed between the Bank and SFP. 14. Regarding previous audit reports, the TF91733 was audited covering the period from effectiveness to December 2010, and the audit reports were considered acceptable to the Bank; however, the LN7501 has not been subject to audit as it has not disbursed any amount (except from the front end fee) up to the date of preparation of this report. 31 For details, see the Disbursement Handbook for World Bank Clients. 32 All SOE supporting documentation would be available for review by external auditors and Bank staff at all times during Project implementation, until at least the later of: (i) one year after the Bank has received the audited Financial Statements covering the period during which the last withdrawal from the Loan Account was made; and (ii) two years after the Closing Date. The Borrower and the Project Implementing Entity shall allow the Bank’s representatives to examine these records. 33 ANNEX 4: Procurement 1. Procurement for the proposed restructured Project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA credits� dated May 2004, revised October 1, 2006 and May 1, 2010; “Guidelines: Selection and Employment of Consultants by World Bank Borrowers� dated May 2004 revised October 1, 2006 and May 1, 2010; and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the loan, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual Project implementation needs and improvements in institutional capacity. 2. The methods to be used for the procurement of goods and services under the Loan are described below with the estimated amounts, and are summarized in Table 6 which suggests thresholds to be used in the Procurement Plan and the revised Operational Manual for the various procurement methods. Procurement Summary 3. Procurement under the Project includes: (i) procurement of photovoltaic (PV) systems, including batteries; (ii) Project management; and (iii) small activities related to land preparation and low and medium voltage distribution lines, as needed by the Centralized Solar Farms. Procurement of Works 4. No isolated civil works are expected under the Project, only minor works that are part of the installation of the equipments. Procurement of Goods and Non-Consulting Services 5. The power equipment and materials for selected Subprojects would be procured by CFE using standardized and harmonized bidding documents agreed with the IBRD and the Secretariat of Public Administration (Secretaría de la Función Pública, SFP), adapted for the specialized types of goods and services. Contracting of Consultants 6. Individuals. Individual consultants would be hired to provide technical advisory and Project support services and selected in accordance to Section V of the Consultant Guidelines. All sole source selection of consultants would be subject to prior review. Other specific procedures for the selection of these consultants would be described in the Operational Manual. 34 7. Prior Review Thresholds: The prior review of procurement actions would be defined in the annual Procurement Plan review and would not exceed the thresholds determined by the Bank for a moderate-risk project. Procurement Capacity Assessment 8. SENER would retain its capacity as general coordinator of the Project. CFE would be the principal agency responsible for procurement activities under Part 2. CFE is one of the largest government companies in the country and has a solid technical reputation and good procurement performance. The capacity assessment shows that CFE is well equipped to conduct its procurement responsibilities under the Project, but SENER would need a part-time procurement specialist to help with supervision and coordination activities. The overall risk rating for the Project is Moderate. The Bank would carry out procurement reviews at least once a year. Procurement Plan 9. The Procurement Plan (Plan de Adquisiciones y Contrataciones, PAC) covering Project implementation is under preparation by CFE and would be inputted in the Procurement Plan Execution System (Sistema de Ejecución de Planes de Adquisiciones, SEPA) by SENER and revised by NAFIN once the restructuring is formalized. The PAC would be updated at least once a year. The Procurement Plan would be based on the overall Project Implementation Plan prepared by SENER in close coordination with CFE. Table 6: Thresholds for procurement methods and prior review1 Contract Value Contracts Subject to Type of Expenditures Threshold Procurement Method Prior Review (US$) (US$ millions) 1. Goods and non- >350,000 ICB All consultant services >100,000 NCB TBD in each Procurement <100,000 Shopping Plan review 2. Consultant Firms >200,000 QCBS All <200,000 Other methods TBD in each Procurement Individual Cons. IC Plan review 1 To be reviewed and confirmed in the annual Procurement Plan review. 10. The table below summarizes the key milestones of the procurement plan and of the first bidding process to be financed by the Project33: 33 Bids have already been conducted by CFE for two pilots. The first bid of the overall project will be conducted by CFE and funded by the FTE. The first bid financed by the Project will be the second bidding process under the overall program. 35 Table 7: Action Plan and Key Milestones for the first bid to be financed with IBRD/GEF resources (5 solar farms in Durango) Milestone Estimated limit date 1. Preparation and finalization of technical requirements July-August, 2012 (completed) documents for the Rural Energy Subprojects: a. Site selection July, 2012 b. Social assessment July, 2012 c. Engagement with locality July-August, 2012 d. Permits July-August, 2012 e. Land donation July-August, 2012 2. Engineering design July-August, 2012 (completed) 3. Preparation and finalization of first set of bidding August, 2012 (completed) documents 4. Submission of bidding documents to the Bank for review September-October, 2012 and No Objection 5. Bidding process: October, 2012-January, 2013 a. Launching of first bid October, 2012 b. Visit to localities November, 2012 c. Clarification meetings November, 2012 d. Submission of proposals November, 2012 e. Evaluation November, 2012 f. Submission to the Bank of evaluation report and December, 2012 recommendation for No Objection g. Negotiation and Sign-off January, 2013 h. Submission of signed contract to the Bank January, 2013 6. Bids award January, 2013 7. Construction and entry into operation of the November, 2012-March, 2013 corresponding Rural Energy Subprojects: a. Land preparation November, 2012 b. Construction January-March, 2013 c. Installation April, 2013 d. Supervision January-April, 2013 8. Supervision of the Subproject by the Bank March, 2013 9. Connection and contracting April, 2013 11. The subsequent tenders would include similar steps, according to the timeline indicated below. The Bank team will evaluate the compliance of the above mentioned milestones every 4 months. 36 Table 8: Bids Calendar Estimated limit Estimated bidding Estimated # of Solar date for Bid # State documents contract award Farms finalization of publishing date date works 2 3 Durango November, 2012 March, 2013 May, 2013 3 3 Durango February, 2013 April, 2013 June, 2013 Chihuahua (2) 4 3 April, 2013 June, 2013 August, 2013 & Coahuila (1) 5 4 Durango June, 2013 August, 2013 September, 2013 6 3 Oaxaca July, 2013 September, 2013 November, 2013 7 4 Durango September, 2013 November, 2013 January, 2014 8 5 Durango November, 2013 January, 2014 March, 2014 9 9 Oaxaca January, 2014 March, 2014 May, 2014 37 ANNEX 5: Safeguard Policies 1. This Project is classified as Category B under the World Bank’s Safeguard Policies, referring to a project that has minimum adverse or no environmental impacts. The Project only supports Subprojects that have potential environmental impacts under the parameters of Category B projects. The following Bank Safeguard Policies are observed in the Project: OP/BP/GP 4.01 Environmental Assessment 2. To ensure compliance with this safeguard, as well as with national environmental legislation, an Environmental Management Plan or Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms (Manual de Buenas Prácticas Ambientales para la Construcción de Obras de Electrificación con la aplicación de Granjas Solares) was developed and disclosed locally and at the Infoshop in March 2012. The Project Manual’s purpose is to manage, minimize and compensate the Project’s potential environmental impacts; its implementation by contractors and operators of solar farm projects is mandatory. 3. At the federal level, the Secretariat of Environment and Natural Resources (Secretariat of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, SEMARNAT), under which are other institutions including the National Water Commission, the National Forest Commission, the Protected Natural Areas Commission, and the Federal Environmental Protection Agency, among others, are jointly responsible for ensuring that any public or private development implying the use or exploitation of natural resources, water, air, soil, flora and fauna complies with Mexican legislation on environmental impact and pollution control. 4. Mexico has developed a body of laws, regulations and rules that cover all areas of environmental management. These include the General Law on Ecological Balance and Environmental Protection, the General Law on the Prevention and Integrated Management of Waste, the National Waters Law, the General Law on Wildlife, and the General Law on Forest Development, among others, as well as their regulations and the official rules stemming from them. Oversight and monitoring of federal regulations are ensured by the Federal Environmental Protection Agency (Procuraduria Federal de Protección al Ambiente, PROFEPA), which is the SEMARNAT agency in charge of overseeing compliance with environmental legislation, with offices specializing in this subject in all of the country’s states. In addition, with regard to the implementation of local laws and regulations, all states have agencies in charge of overseeing environmental management, similar to federal agencies. 5. CFE is a state-owned company which, due to its type of activities, is governed by the federal regulations that are stipulated by the General Law on Ecological Balance and Environmental Protection, as well as by its regulations and the Official Mexican Rules (Normas Oficiales Mexicanas) stemming from this law. Due to the large scale of CFE’s activities, it has an Environmental Protection Bureau that is in charge of carrying out 38 CFE’s environmental management together with SEMARNAT and thus has the proper technical staff and resources to carry out this function. Historically, this environmental management control activity in CFE has been that required by the authorities who regulate it, since CFE has the necessary human and budget resources for this work. OP/BP 4.04 Natural Habitats 6. In general, the Project’s impacts are expected to be null or nonexistent, because most of the systems to be constructed are small. In the case of the execution of any Subproject in a Protected Natural Area, authorization by SEMARNAT, through the National Commission for Protected Natural Areas (Comisión Nacional de �reas Naturales Protegidas, CONANP), is required on matters of environmental impact. These aspects have also been considered in the Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms. OP 4.11 Cultural Heritage 7. In some Subproject areas, there may be historical sites, archeological zones and sacred places. In these cases, the authorization of the National Institute of Anthropology and History (Instituto Nacional de Antropología e Historia, INAH) is essential, and the responsibilities of work contractors and of the interested party are clearly stated in said Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms. OP 4.36 Forests 8. Due to the strong possibility of the existence of forests in Subproject areas, these Subprojects could have an impact on the health and quality of the forests. The Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms considers specific mitigation measures to manage the related risks. 9. The Manual of Environmental Good Practices for the Construction of Electrification Works Using Solar Farms has been prepared by SENER, with World Bank support, under the Project’s Environmental Management Plan and covers aspects related to: characteristics of projects; reconnaissance of the work site or zone; management and protection of ground and surface water; management and protection of flora and fauna; temporary work camps and warehouses; management of surplus materials and excavations; environmental operational specifications for the construction of electrical substations; management of machinery and equipment; management of construction materials; proper management of solid waste and of waste requiring special handling; management of hazardous substances and waste; air and noise pollution; occupational health and safety; social benefits for workers; and monitoring program for the application of mitigation and compensation measures. 10. The application of this manual ensures compliance with Mexican environmental regulations and with World Bank safeguards in order to define responsibilities, mitigation measures and timely actions that ensure that participating institutions, construction 39 companies and consultants have the capacity to address any environmental impact associated with the Project. OP/BP 4.10 Indigenous Peoples 11. The Project triggers OP/BP 4.10 Indigenous Peoples Policy. As per the policy, because the majority of the beneficiaries are indigenous peoples, the Project should be considered an Indigenous Peoples’ Project and -as such- no separate Indigenous Peoples Plan needs to be prepared. 12. According to the statistics provided by CFE, 58 of the 86 localities have census data, indicating the number of indigenous inhabitants living in each of these localities. In these 58 localities the indigenous peoples account for 78.72 percent of the population, and 15 localities show that an indigenous language is spoken, but these latter localities lack population data. This means that, of the 86 localities, 73 are predominantly populated by indigenous people who represent nearly 85 percent of the total number of localities. 13. An average percentage of 51 percent of indigenous inhabitants that lack population data was assumed for the 15 indigenous localities. Adding this average to the 58 localities would yield 73 percent of indigenous inhabitants for the 73 localities that are predominantly indigenous. By also adding the 16 localities listed as Spanish-speaking and assuming they have no indigenous inhabitants, the total percentage of indigenous peoples for the 86 localities is nearly 63 percent (see Annexes 5 and 6). 14. CFE would prepare socioeconomic assessments for each locality and would conduct a consultation process with support from SEDESOL, as needed. The socioeconomic assessments would also look at cultural aspects related to Project intervention, such as: (i) the identification and inclusion of traditional authorities (who may be different from officially recognized administrative authorities); (ii) gender and intergenerational perspectives, which may be different from those of the primary counterparts; (iii) the capacity and culturally appropriate mechanisms to pay for Project maintenance; and (iv) the potential use of local labor for maintenance and other related works. The social assessments would also describe the criteria under which agreements would be reached with each locality for Project acceptance and implementation. 15. With support from SEDESOL as needed, the consultation process would be adequately conducted, taking into account the cultural characteristics of the indigenous localities, and would be adapted as necessary to language and literacy and to use culturally appropriate mechanisms. This process would also ensure that these authorities are provided with adequate participation in Subproject consultation and design, negotiations and the signing of Subproject agreements. The consultation process would gather feedback from each locality and would determine whether there is broad community support for the Project. The Projects would only be developed in those localities that support the Project. 40 OP/BP 4.12 Involuntary Resettlement 16. The Project is not expected to trigger this policy because the land that would be used for Project facilities would be voluntarily provided by the local authorities and the municipalities, and would not entail the relocation of people or the need to replace assets. To ensure that all voluntary donations of land meet the Bank’s criteria for voluntary donations, these criteria would be included in the Project’s Operational Manual. 41 ANNEX 6: Localities Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect CHIAPAS ALTAMIRANO ONILJA 124 32 38.25 3.38 3.38 45 7,286.87 TOJOLABAL 123 99.15% CHIAPAS CHILON NUEVO TEPEYAC 108 27 34.15 2.93 2.93 40 6,477.22 TZELTAL 107 99.03% CHIAPAS CHILON TOPOTEEL 134 34 42.80 3.60 3.60 50 8,096.53 TZELTAL 132 98.44% CHIAPAS CINTALAPA IGNACIO ZARAGOZA 173 44 50.55 4.73 4.73 60 9,715.83 ESPAÑOL 149 86.06% CHIAPAS LAS MARGARITAS BENITO JU�REZ 498 125 143.23 13.39 13.39 170 27,528.19 YAQUI 427 85.86% CHIAPAS LAS MARGARITAS DIEZ DE ABRIL 195 49 59.43 5.29 5.29 70 11,335.14 TOJOLABAL 59 30.11% CHIAPAS LAS MARGARITAS EL CARACOL 112 28 33.93 3.04 3.04 40 6,477.22 TOJOLABAL 0 0.00% CHIAPAS LAS MARGARITAS EL PORVENIR 370 92 105.20 9.90 9.90 125 20,241.31 TOJOLABAL N/D N/D GUADALUPE LOS CHIAPAS LAS MARGARITAS 385 97 114.30 10.35 10.35 135 21,860.62 TOJOLABAL 319 82.83% ALTOS NUEVA TIERRA Y CHIAPAS LAS MARGARITAS 246 62 71.73 6.64 6.64 85 13,764.09 TOJOLABAL 224 91.03% LIBERTAD CHIAPAS LAS MARGARITAS R�O COROZAL 538 134 156.20 14.40 14.40 185 29,957.14 TOJOLABAL 531 98.83% CHIAPAS LAS MARGARITAS ROSARIO BUENAVISTA 110 28 33.93 3.04 3.04 40 6,477.22 TOJOLABAL 84 76.19% SAN ANTONIO LA CHIAPAS LAS MARGARITAS 124 32 38.25 3.38 3.38 45 7,286.87 TOJOLABAL N/D N/D ESPERANZA CHIAPAS LAS MARGARITAS SAN CARLOS 221 56 68.08 5.96 5.96 80 12,954.44 TOJOLABAL N/D N/D 42 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect SAN FRANCISCO EL CHIAPAS LAS MARGARITAS 417 105 122.50 11.25 11.25 145 23,479.92 TOJOLABAL 15 3.53% NARANJO SANTA RITA CHIAPAS LAS MARGARITAS 794 198 227.48 21.26 21.26 270 43,721.24 TOJOLABAL 715 90.08% INVERNADERO MARAVILLA CHIAPAS 20 DE NOVIEMBRE 184 46 55.10 4.95 4.95 65 10,525.48 TOJOLABAL 33 17.71% TENEJAPA CHIAPAS OCOSINGO AMADOR HERN�NDEZ 574 144 164.18 15.41 15.41 195 31,576.45 TZELTAL 523 91.04% ARROYO SANTA CHIAPAS OCOSINGO 124 32 38.25 3.38 3.38 45 7,286.87 TZELTAL 123 99.15% MAR�A CHIAPAS OCOSINGO CANDELARIA 471 119 139.58 12.71 12.71 165 26,718.53 TZELTAL 466 98.89% DOCTOR MANUEL CHIAPAS OCOSINGO 184 46 55.10 4.95 4.95 65 10,525.48 TZELTAL 182 98.86% VELASCO SU�REZ CHIAPAS OCOSINGO NUEVA GALILEA 471 119 139.58 12.71 12.71 165 26,718.53 TZELTAL N/D N/D NUEVO EGIPTO CHIAPAS OCOSINGO 105 26 34.38 2.81 2.81 40 6,477.22 TZELTAL N/D N/D (PANTEL�) CHIAPAS OCOSINGO NUEVO PEDREGAL 209 53 63.75 5.63 5.63 75 12,144.79 TZELTAL 194 92.96% NUEVO SAN CHIAPAS OCOSINGO 284 71 84.70 7.65 7.65 100 16,193.05 TZELTAL N/D N/D GREGORIO CHIAPAS OCOSINGO OJO DE AGUA ZAPOTE 128 33 38.03 3.49 3.49 45 7,286.87 TZELTAL 127 99.18% CHIAPAS OCOSINGO PICHUCALCO 523 131 151.88 14.06 14.06 180 29,147.49 TZELTAL N/D N/D CHIAPAS OCOSINGO PLAN DE GUADALUPE 379 96 109.53 10.24 10.24 130 21,050.97 TZELTAL N/D N/D 43 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect CHIAPAS OCOSINGO ROSARIO LA PACAYA 274 69 80.15 7.43 7.43 95 15,383.40 TZELTAL 268 97.70% SAN ANTONIO CHIAPAS OCOSINGO CARIBAL (SAN JUAN 118 29 33.70 3.15 3.15 40 6,477.22 TZELTAL 117 99.11% TZELTAL) CHIAPAS OCOSINGO SAN JERÓNIMO 160 40 46.45 4.28 4.28 55 8,906.18 TZELTAL 9 5.92% CHIAPAS OCOSINGO SAN LUIS 132 34 42.80 3.60 3.60 50 8,096.53 TZELTAL 127 96.03% MASPAC ARRIBA 3RA. CHIAPAS OSTUACAN 113 28 33.93 3.04 3.04 40 6,477.22 ZOQUE 65 57.41% SECCIÓN CHIAPAS OXCHUC CHENCO 117 29 33.70 3.15 3.15 40 6,477.22 TZELTAL 116 99.10% CHIAPAS OXCHUC EL PORVENIR NEJWITS 133 34 42.80 3.60 3.60 50 8,096.53 TZELTAL 131 98.43% CHIAPAS SABANILLA CERRO DE NAVA 225 57 67.85 6.08 6.08 80 12,954.44 TZELTAL 222 98.60% SAN JUAN EL CHIAPAS SABANILLA 375 95 109.75 10.13 10.13 130 21,050.97 TZELTAL 371 98.88% MIRADOR CHIAPAS SALTO DE AGUA LA GRANJA 120 30 38.48 3.26 3.26 45 7,286.87 CHOL 59 49.12% SAN CRISTÓBAL LA CHIAPAS SIMOJOVEL 105 26 34.38 2.81 2.81 40 6,477.22 TZELTAL 104 99.00% GLORIA CHIAPAS TECPATAN LOS DIAMANTES 159 40 46.45 4.28 4.28 55 8,906.18 ZOQUE 16 9.93% CHIAPAS TECPATAN RANCHO ALEGRE 112 28 33.93 3.04 3.04 40 6,477.22 ZOQUE 65 57.94% CHIAPAS TILA ESPERANZA OCOTAL 140 36 42.35 3.83 3.83 50 8,096.53 TZELTAL 138 98.50% 44 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect EMBARCADERO CHIAPAS TUMBAL� 200 50 59.20 5.40 5.40 70 11,335.14 TZELTAL 197 98.66% JOYETA CHIAPAS TUMBAL� ESPERANZA JOYETA 156 40 46.45 4.28 4.28 55 8,906.18 TZELTAL 142 91.05% CHIAPAS TUMBAL� JOYETA FRACCIÓN 114 29 33.70 3.15 3.15 40 6,477.22 TZELTAL 113 99.08% CHIHUAHUA ALDAMA CHORRERAS 114 29 33.70 3.15 3.15 40 6,477.22 TARAHUMARA 0 0.00% CHIHUAHUA OCAMPO BASOGACHI 149 38 46.90 4.05 4.05 55 8,906.18 ESPAÑOL 4 2.82% SAN JOSÉ DE COAHUILA SIERRA MOJADA 230 58 67.63 6.19 6.19 80 12,954.44 ESPAÑOL 0 0.00% CARRANZA DURANGO CANELAS MESA DE GUADALUPE 138 35 42.58 3.71 3.71 50 8,096.53 ESPAÑOL 0 0.00% CANO�TAS (CANOAS DURANGO MEZQUITAL 119 30 38.48 3.26 3.26 45 7,286.87 TEPEHU�N 119 100.00% DOS) DURANGO MEZQUITAL CEJA DE CEBOLLETA 237 60 72.18 6.41 6.41 85 13,764.09 TEPEHU�N 237 100.00% CURACHITOS (BUENA DURANGO MEZQUITAL 185 46 55.10 4.95 4.95 65 10,525.48 TEPEHU�N 185 100.00% VISTA) DURANGO MEZQUITAL EL ZANCUDO UNO 105 26 34.38 2.81 2.81 40 6,477.22 TEPEHU�N 105 100.00% DURANGO MEZQUITAL SAN BUENAVENTURA 138 35 42.58 3.71 3.71 50 8,096.53 TEPEHU�N 128 93.13% DURANGO MEZQUITAL TEPALCATES 111 28 33.93 3.04 3.04 40 6,477.22 TEPEHU�N 96 85.85% DURANGO MEZQUITAL TOYANA 128 33 38.03 3.49 3.49 45 7,286.87 TEPEHU�N 128 100.00% OJOS AZULES (CAMPO DURANGO OCAMPO 169 43 50.78 4.61 4.61 60 9,715.83 HUICHOL 3 1.86% ALEGRE) 45 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect DURANGO OTAEZ LA CIENEGUITA 128 33 38.03 3.49 3.49 45 7,286.87 TEPEHU�N 0 0.00% DURANGO OTAEZ SAN JOSÉ DE LA CRUZ 135 35 42.58 3.71 3.71 50 8,096.53 TEPEHU�N 0 0.00% DIVISIÓN DEL NORTE DURANGO SAN BERNARDO 120 30 38.48 3.26 3.26 45 7,286.87 ESPAÑOL 13 10.53% (LOS LOBOS) DURANGO SAN DIMAS EL PALMITO 114 29 33.70 3.15 3.15 40 6,477.22 ESPAÑOL 0 0.00% SANTIAGO DURANGO EL GUAMÚCHIL 258 65 76.05 6.98 6.98 90 14,573.75 ESPAÑOL 0 0.00% PAPASQUIARO SANTIAGO DURANGO LA SIERRITA 126 32 38.25 3.38 3.38 45 7,286.87 ESPAÑOL 0 0.00% PAPASQUIARO SANTIAGO DURANGO MONTOROS 121 30 38.48 3.26 3.26 45 7,286.87 ESPAÑOL 0 0.00% PAPASQUIARO SANTIAGO DURANGO RINCÓN DE HUAJUPA 138 35 42.58 3.71 3.71 50 8,096.53 ESPAÑOL 0 0.00% PAPASQUIARO SANTIAGO DURANGO SAN JAVIER 114 29 33.70 3.15 3.15 40 6,477.22 ESPAÑOL 0 0.00% PAPASQUIARO SANTIAGO SANTA CRUZ DE DURANGO 119 30 38.48 3.26 3.26 45 7,286.87 ESPAÑOL 0 0.00% PAPASQUIARO MACOS SANTIAGO DURANGO SANTA EFIGENIA 195 49 59.43 5.29 5.29 70 11,335.14 ESPAÑOL 5 2.69% PAPASQUIARO SANTIAGO DURANGO SOYUPA 265 66 75.83 7.09 7.09 90 14,573.75 ESPAÑOL 0 0.00% PAPASQUIARO DURANGO TAMAZULA LA NUEVA ROSITA 285 71 84.70 7.65 7.65 100 16,193.05 ESPAÑOL 0 0.00% 46 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect DURANGO TEPEHUANES LA GRANIZA 107 27 34.15 2.93 2.93 40 6,477.22 ESPAÑOL 0 0.00% DURANGO TOPIA EL CARMEN 148 38 46.90 4.05 4.05 55 8,906.18 TEPEHU�N 0 0.00% GU�SIMA DEL NAYARIT DEL NAYAR 143 36 42.35 3.83 3.83 50 8,096.53 CORA 143 100.00% METATE TIERRAS BLANCAS NAYARIT DEL NAYAR 188 47 54.88 5.06 5.06 65 10,525.48 CORA 188 100.00% DEL PICACHO MAGDALENA OAXACA EL CIPRÉS 114 29 33.70 3.15 3.15 40 6,477.22 ZAPOTECO 0 0.00% TEQUISISTLAN SAN FRANCISCO OAXACA CACHIMBO 130 33 38.03 3.49 3.49 45 7,286.87 HUAVE 43 33.06% IXHUAT�N SAN JOSÉ OAXACA CERRO �LAMO 295 75 89.03 7.99 7.99 105 17,002.70 MAZATECO 295 100.00% TENANGO SAN JOSÉ OAXACA CERRO NEGRO 106 27 34.15 2.93 2.93 40 6,477.22 MAZATECO 106 100.00% TENANGO SAN JOSÉ OAXACA CERRO RABÓN 290 72 84.48 7.76 7.76 100 16,193.05 MAZATECO 290 100.00% TENANGO SAN JOSÉ GÉNOVA NUEVO OAXACA 156 40 46.45 4.28 4.28 55 8,906.18 MAZATECO 156 100.00% TENANGO PROGRESO SAN JOSÉ OAXACA RANCHO PEINECILLO 208 53 63.75 5.63 5.63 75 12,144.79 MAZATECO 208 100.00% TENANGO SAN JUAN LA NUEVA OAXACA 210 53 63.75 5.63 5.63 75 12,144.79 ZAPOTECO 210 100.00% MAZATLAN ESPERANZA 47 Estimated Cost (thousand MXN pesos) Productive Activities Demand (kW) Solar Farm Capacity (kW) Indigenous Population % Housing Demand (kW) Services Demand (kW) Indigenous Population Estimated Houses Residents State Municipality Locality Dialect SAN JUAN SAN BARTOLO OAXACA 166 42 51.00 4.50 4.50 60 9,715.83 CHATINO 105 63.29% OZOLOTEPEC LAPAGU�A SAN MIGUEL OAXACA EL PALMAR 208 53 63.75 5.63 5.63 75 12,144.79 ZOQUE 91 43.94% CHIMALAPA SANTA MAR�A OAXACA CANA�N 120 30 38.48 3.26 3.26 45 7,286.87 ZOQUE N/D N/D CHIMALAPA SANTA MAR�A SAN ANTONIO NUEVO OAXACA 111 28 33.93 3.04 3.04 40 6,477.22 ZOQUE 91 82.08% CHIMALAPA PARA�SO TOTAL 17,578 4,432 5,255 475 475 6,205 1,004,779 48