Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR4788 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A IDA CREDIT (IDA 4620) IN THE AMOUNT OF SDR 134.4 MILLION (US$200 MILLION EQUIVALENT) AND ADDITIONAL IDA CREDIT (IDA 5128) IN THE AMOUNT OF SDR 64.5 MILLION (US$100 MILLION EQUIVALENT) AND A SERIES OF IDA PARTIAL RISK GUARANTEES IN THE TOTAL AMOUNT OF US$ 600 MILLION TO THE FEDERAL REPUBLIC OF NIGERIA IN SUPPORT OF THE NIGERIA ELECTRICITY AND GAS IMPROVEMENT PROJECT (NEGIP) June 11, 2020 Energy & Extractives Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective {Feb 19, 2019}) Currency Unit = Nigerian Naira US1= NGN 363.64 US$ 1 = SDR 0.72 FISCAL YEAR July 1 - June 30 Regional Vice President: Hafez Ghanem Country Director: Shubham Chaudhuri Regional Director: Riccardo Puliti Practice Managers: Ashish Khanna, Sebnem Erol Madan Task Team Leader: Muhammad Wakil ICR Main Contributor: Richard Berney ABBREVIATIONS AND ACRONYMS AFP Additional Financing Project NBET Nigerian Bulk Electricity Trading Company CPF Nigerian Country Partnership Framework DISCOs Distribution companies FGN Federal Government of Nigeria GENCOs Generation companies NDPHC Niger Delta Power Holding Company NEDP National Energy Development Project NEGIP Nigerian Electricity and Gas Improvement Project NERC Nigerian Electricity Regulatory Commission NETAP Nigeria Electricity Transmission Project NIPP National Integrated Power Projects PDOs Project Development Objectives PHCN Power Holding Company of Nigeria PMU Project Management Unit PPA Power Purchasing Agreement PRG Partial Risk Guarantee PSGP Power Sector Guarantees Project PSRP Power Sector Recovery Program TCN Transmission Company of Nigeria TABLE OF CONTENTS DATA SHEET ..........................................................................................................................1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ..................................... 10 II. OUTCOME .................................................................................................................... 14 A. RELEVANCE OF PDOs ............................................................................................................ 14 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 15 C. EFFICIENCY ........................................................................................................................... 18 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 19 OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................... 19 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 21 A. KEY FACTORS DURING PREPARATION ................................................................................... 21 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 22 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 24 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 24 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 25 C. BANK PERFORMANCE ........................................................................................................... 26 Rating: Moderately Satisfactory ................................................................................................ 26 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 27 V. LESSONS AND RECOMMENDATIONS ............................................................................. 27 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 29 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 39 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 41 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 42 ANNEX 5. MAP .................................................................................................................... 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P106172 Nigeria Electricity and Gas Improvement Project (NEGIP) Country Financing Instrument Nigeria Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Federal Ministry of Finance TCN - Project Management Unit Project Development Objective (PDO) Original PDO The development objectives of the Project are to: (i) improve the availability and reliability of gas supply to increase power generation in existing public sector power plants; and (ii) improve the power network#s capacity and efficiency to transmit and distribute quality electricity to the consumers. Page 1 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 200,000,000 170,712,235 167,014,453 IDA-46200 100,000,000 94,404,586 84,411,554 IDA-51280 Total 300,000,000 265,116,821 251,426,007 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 300,000,000 265,116,822 251,426,007 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 16-Jun-2009 21-Jul-2010 15-Sep-2014 31-Dec-2014 31-Dec-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 19-Dec-2017 231.98 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories 31-Dec-2018 258.11 Change in Results Framework Reallocation between Disbursement Categories KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Satisfactory Modest Page 2 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 15-Dec-2009 Satisfactory Satisfactory 0 02 27-Jun-2010 Satisfactory Satisfactory 0 03 27-Mar-2011 Satisfactory Satisfactory 3.19 04 01-Dec-2011 Satisfactory Moderately Satisfactory 6.22 05 26-Jun-2012 Satisfactory Moderately Satisfactory 7.34 06 16-Jan-2013 Satisfactory Moderately Satisfactory 20.66 07 06-Jul-2013 Satisfactory Moderately Satisfactory 36.85 08 04-Jan-2014 Moderately Satisfactory Satisfactory 56.52 09 26-Jul-2014 Moderately Satisfactory Satisfactory 95.86 10 05-Jan-2015 Moderately Satisfactory Moderately Satisfactory 104.55 Moderately 11 23-Jun-2015 Moderately Unsatisfactory 108.96 Unsatisfactory Moderately 12 07-Jan-2016 Moderately Unsatisfactory 119.79 Unsatisfactory Moderately 13 30-Jun-2016 Moderately Unsatisfactory 155.82 Unsatisfactory Moderately 14 04-Jan-2017 Moderately Unsatisfactory 166.59 Unsatisfactory 15 20-Jul-2017 Moderately Satisfactory Moderately Satisfactory 216.63 16 08-Feb-2018 Moderately Satisfactory Moderately Satisfactory 233.71 17 19-Oct-2018 Moderately Satisfactory Moderately Satisfactory 255.49 Moderately 18 31-Dec-2018 Moderately Unsatisfactory 258.11 Unsatisfactory Page 3 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 100 Public Administration - Energy and Extractives 10 Energy Transmission and Distribution 90 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 33 Jobs 33 Job Creation 33 Urban and Rural Development 66 Urban Development 33 Urban Infrastructure and Service Delivery 33 Rural Development 33 Rural Infrastructure and service delivery 33 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Hafez M. H. Ghanem Country Director: Onno Ruhl Shubham Chaudhuri Director: Inger Andersen Riccardo Puliti Practice Manager: Subramaniam Vishwanathan Iyer Ashish Khanna Prasad V. S. N. Tallapragada, Task Team Leader(s): Muhammad Abba Wakil Farida Mazhar ICR Contributing Author: Muhammad Abba Wakil Page 4 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Poor infrastructure, particularly in the power sector, was considered one of the key constraints to growth in Nigeria. At the time of appraisal in 2009, Nigeria had about 3,000 MW of available grid-supplied generation, against an estimated demand of 10,000 MW. This unmet demand forced a large proportion of the population and almost all private enterprises to resort to self-generation at a high cost to themselves and to the economy. With only about 40 percent of the population having access to electricity, ensuring adequate and reliable grid-based power was a key objective of the Federal Government of Nigeria (FGN) to extend the benefits of development to a wider population. Expanding electricity availability was also key for its plans to promote higher rates of economic growth, improve productivity in all economic sectors, grow employment, and reduce poverty. In accordance with these objectives, the FGN introduced sector reforms and undertook a public sector-led power investment drive as key priorities. 2. Weaknesses in the electricity transmission and distribution sectors were also limiting the growth of electricity consumption. Both the transmission and distribution infrastructure had low reliability and efficiency resulting in high losses at almost all substations. A national load demand study found that because of age, inadequate maintenance and system overload, the level of energy losses in transmission and distribution substations was, on average, about 40 percent. Without substantial investment in upgrading these substations, these losses would continue to grow as electricity generation increased from new power plants. In addition to technical losses, the distribution sub-sector suffered from high commercial losses as a result of poor billing and collection efficiency, below-cost tariffs, and widespread power theft. 3. In an effort to address sector challenges, the FGN enacted the Electric Power Sector Reform (EPSR) Act in 2005. This legislation established the Nigerian Electricity Regulatory Commission (NERC) to provide independent technical and commercial regulation for the sector. It also prescribed the disaggregation of the vertically-integrated monopoly utility into six separate generation companies (GENCOs), eleven independent distribution companies (DISCOs), and the Transmission Company of Nigeria (TCN). They were, however, still all under the umbrella of the Power Holding Company of Nigeria (PHCN). The reform process was dormant until 2011, when it received new momentum. During the following two years most of the PHCN-successor companies were sold to the private sector. Three thermal GENCOs were sold outright while the FGN retained various minority shares in the others. The three hydropower plants were concessioned to private operators while 60 percent of the shares of DISCOs were sold to private investors. Transmission was maintained as the FGN monopoly. The Nigerian Bulk Electricity Trading Company (NBET), a single electricity buyer, was created as a transitional entity to provide payments certainty between the privatized GENCOs and DISCOs until the creditworthiness of new market participants could be established. 4. Weaknesses of the gas sector had a negative effect on its ability to serve the power sector. This was a result of several factors: (i) lack of an FGN strategy to develop the full value chain of gas supply; (ii) under-investment by the public sector and over-reliance on the private sector; and (iii) insufficient incentives to attract private sector investments. Along with a rise in militancy in the oil-producing Niger Delta region, this operating environment Page 5 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) pushed International Oil Companies (IOCs) to focus on offshore oil and gas fields. Hence in 2010 the IOCs began a divestment program to dispose of a large proportion of their onshore oil and gas fields which were mostly sold to newly formed local oil companies. The new onshore field owners and investors struggled to find long term commercially viable off-take for gas, particularly from the power sector which was historically the largest customer base of the gas sector. 5. Bottlenecks in gas supply to power plants had been identified as a major constraint to power generation. Over 70 percent of the country’s generation capacity depended on natural gas, and the Bank’s analysis showed that existing thermal power plants were operating at only half capacity primarily due to gas supply shortages. Yet almost 60 percent of the natural gas that was produced jointly with oil production (i.e. “associated” gas) was being flared, and only about 300 mmscf per day was provided for domestic consumption against a then estimated demand of 600 mmscf per day. Due to insufficient incentives, the oil and gas companies present in Nigeria were not interested in undertaking investments in natural gas exploration, production, processing and transport (pipeline) facilities necessary to bring the gas to the domestic market. The key barriers to gas supply included: (i) uneconomic gas pricing; (ii) unclear institutional roles; (iii) inefficient or non-existent contractual arrangements; (iv) inadequate gas infrastructure; and (v) lack of risk mitigation mechanisms in relation to payment for long term gas off-take (particularly with respect to the public-owned GENCOs). 6. The continued shortfall in gas deliveries was having a profound effect on electricity generation. Gas availability and quality were identified as critical constraints to power sector’s performance. It was understood that without long term gas supply agreements (GSAs), gas was likely to continue to be supplied on a "best endeavor" basis without firm obligations from the gas producers with regard to the quantity and quality of gas delivered. This would lead to a continuation of intermittent gas supplies with limited control of gas quality resulting in unreliable power generation. This would lead to a reduced operational life of the power plants and further reinforce the negative spiral of poor performance and service provision. At the time of appraisal, the FGN was in the process of constructing ten new public-sector owned gas-fired power plants under its National Integrated Power Projects (NIPP) program implemented by the state-owned Niger Delta Power Holding Company (NDPHC). Without a substantial increase in natural gas supply, these new plants would also be limited to generating electricity at well below capacity. 7. In 2008, FGN requested Bank support to strengthen the performance of the energy sector. The Bank was active in the Nigerian energy sector through the Transmission Development Project (P072018) (approved in 2001 and closed 2008) and the National Energy Development Project (P090104) (approved in 2005 and closed 2012). The FGN request included (i) developing good practice investment packages for upgrading network efficiency; (ii) technical assistance to help in policy and sector analysis, including among other things, a detailed diagnostic of all rehabilitation requirements in the older power generation plants, and identifying barriers to market development in the Independent Power Producer (IPP) sector; and (iii) development of a carbon finance program in connection with its gas and power sector development efforts. The project was consistent with the Country Partnership Strategy (FY05-09 CPS) for the Federal Republic of Nigeria (2005 - 2009)1 and Country Partnership Strategy (FY10- 13 CPS) for the Federal Republic of Nigeria (2010-2013)2, which were under preparation at the time of appraisal of the first project and the additional financing respectively. Both CPSs called for supporting infrastructure development, especially power, gas and transport infrastructure, and were expected to contribute to the higher- 1 Report No. 32412-NG; June 2, 2005. 2 Report No. 46816-NG; July 2, 2009. Page 6 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) level objective of domestic gas market development, through enhancing the credibility of government reform in the gas and power sector. Theory of Change (Results Chain) 8. The project’s main goal was to increase the availability of grid-based electric power to consumers in a situation where estimated demand far exceeded supply. Within this context, the project development objectives (PDOs) were twofold: (i) to improve the availability and reliability of gas supply to increase power generation in existing public sector power plants; and (ii) to improve the power network’s capacity and efficiency to transmit and distribute quality electricity to the consumer. 9. During the project’s preparation, the FGN had expressed commitment to sector reform across the value chain, from gas to distribution and this was reflected in the project design. Hence, the theory of change included an implicit expectation that the Bank would have a seat at the table to influence the sector reform agenda due to the leverage provided by the project. Relevant reform areas were to include strategic decisions on gas supply and gas network development, power system planning, policy and regulation. 10. The project was supported by two distinct instruments to achieve PDOs: i) a series of World Bank PRGs focused on encouraging gas producers to invest in gas exploration, production, processing, transportation and supply to GENCOs (new or existing) by mitigating the gas off-taker payment risk (“PRG series”); and ii) an investment project financing credit focused on rehabilitating and upgrading the transformer substations of the transmission and distribution networks (“network investments”). 11. The expected output of the PRG series was to increase the gas supply availability from private sector producers to power plants through long term GSAs. The expected output of the network investments was to reduce losses in the transmission and distribution systems and thereby make more electricity available to the final consumers. 12. The outcomes for both programs would be an increased and more reliable source of electric power for industry and residential consumers from existing public sector power plants. The PRG series would increase the volume of electricity going into the system, and the network investments would reduce the system’s losses so that more electricity would be available to the final user, as well as build institutional capacity to manage and sustain investments. 13. The longer-term outcome would also be an expansion in the use of otherwise flared domestic natural gas for electricity generation and continued improvements in the efficiency of power sector infrastructure, which would support growth in industrial production and better lives for household consumers. Both men and women would benefit equally. Page 7 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Figure 1. Results Chain Activities Outputs Outcome Impact Reliable and quality gas Gas Gathering Increased volume of supply from private purification and pipeline electricity generated sector producers to transmission facilities from natural gas existing power plants Electricity Transmission Improved efficiency of Investments Electricity Transmission the power sector infrastructure More electricity used in and Distribution the economy. networks are Reduced system losses Improved livelihoods, Electricity Distribution rehablitated and and more electicity economic growth Investments upgraded Increased institutional capacity to manage Technical Assistnce & Institutional strengthening of the Increased private Project Management sector value chain investments in the sector Project Development Objectives (PDOs) 14. The PDOs are to: (i) improve the availability and reliability of gas supply to increase power generation in existing public sector power plants; and (ii) improve the power network’s capacity and efficiency to transmit and distribute quality electricity to the consumer. The statement of the PDO in the Financing Agreement was identical to the one in the Project Appraisal Document (PAD) and was not revised during project implementation. Key Expected Outcomes and Outcome Indicators 15. Provided below is a summary of the outcome indicators. A detailed breakdown of the baseline values, targets and changes that occurred to indicators during project restructuring is provided in Table 1. Outcome 1: Improve the availability and reliability of gas supply to increase power generation in existing public sector power plants: 16. The Outcome Indicators were: • The increased availability of natural gas would lead to additional power generation in public sector plants; • Natural gas supplied to public sector power plants would increase; • The number of interruptions in natural gas supply to public sector power plants would decline. Page 8 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Outcome 2: Improvement in the power network’s capacity and efficiency to transmit and distribute quality electricity to the consumer: 17. The Outcome Indicators were: • Transmission capacity would improve; • Distribution in project areas would improve; • There would be a reduction in distribution system losses; • Number of shut-downs due to equipment failure (distribution); • Improvement in average revenue per kWh in the target clusters; • Number of new meters connected; • Direct project beneficiaries (number of female); • Stakeholder forum meeting every six months; • Communications program implemented and public opinion used to gauge project effectiveness. COMPONENTS 18. Component 1: Risk mitigation through a series of PRGs in support of Gas Supplies to increase power generation for the national grid. This included original 2009 Board approval for US$400 million (actual use was US$0); and a 2012 Additional Financing (AF) of US$200 million (actual use was for a US$111.8 million guarantee). These PRGs were designed to provide risk mitigation and credit enhancement against the risk of payment default by the public sector GENCOs (PHCN-owned, at the time) as off-takers of natural gas under long-term GSAs. Without such guarantees, the private enterprises with onshore oil and gas assets had been unwilling to make investments in exploration, production, processing and transportation facilities necessary to supply natural gas to the state- owned national gas transportation network or directly to individual public sector GENCOs. Such guarantees were a necessary ingredient in the FGN’s program to increase gas-based electricity generation. Multiple private sector gas supply arrangements (and the underpinning private sector investments in the gas supply chain) were assessed and considered for support from the World Bank guarantees at the time of Board approvals (in 2009 and then in 2012). However, by 2017 it became clear that most of these investments would not go ahead as planned and the largest ones were cancelled. 19. Component 2a: Enhancement of Transmission Infrastructure (total cost at appraisal of US$108 million; AF of US$60 million; actual costs of US$155.2 million): Financing was used for rehabilitation and strengthening of transmission transformer stations and power lines, including: (i) Rehabilitation and reinforcement of aging 330 kV and 132 kV transmission stations including Afam, Akangba, Kaduna, Birnin Kebbi, Ikeja West, Ayede, Aba, Biu, Akure, Jerico, Ijebu-Ode, Eket, Ikorodu, Osogbo, Dan Agundi, Port Harcourt and Alagbon; (ii) Rehabilitation/retooling of existing power transformer workshop; (iii) Rectification/corrections of switchyard deficiencies and malfunctioning in 330/132 kV transmission stations so as to improve communications to strengthen electrical systems’ performance, efficiency and reliability; (iv) Reinforcement of distribution networks to increase electricity supply in selected cities including Kano, Kaduna, Eko, Ikeja, Ibadan, Abuja, Benin, Port Harcourt, Yola, Jos and Enugu; Page 9 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) (v) Installation of 11 kV sectionalizers in Karu, Kubwa, Lagos University Teaching Hospital, Ogba, Agege and Idiaraba to increase customer satisfaction by reducing economic loss resulting from chronic power outages in these service areas; (vi) Acquisition and installation of metering and other relevant equipment required to analyze and measure the quality and quantity of gas supplied to the Project. 20. Component 2b: Enhancement of Distribution Infrastructure (total cost at appraisal of US$72 million; the AF of US$20 million; actual cost of US$76.3 million): Financing was used for rehabilitation and strengthening of distribution transformer stations and the installation of 80,000 prepaid meters for household consumers. 21. Component 3: Technical Advisory Services (total cost at appraisal of US$16 million; AF of US$18 million; actual cost - US$27.8 million): This component provided support for the ongoing power sector reforms. It included: • Building institutional capacity of power sector institutions; • Enhancing institutional capacity to implement and enforce environmental rules and regulations governing gas and oil operations; • Community outreach activities, including a communication program to foster and to sustain open and continuous dialogue among all relevant Project stakeholders; • Feasibility and re-engineering studies related to Project investments. 22. Project Management Unit (PMU) operating costs (total cost at appraisal of US$2.0 million; AF of US$2.0 million for a total of US$4.0 million; actual cost of US$8.6 million). B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs, Indicators and Outcome Targets 23. The PDOs remained the same throughout the Project’s implementation period. However, several changes to the Results Framework were introduced through the 2012 Additional Financing and 2017 restructuring as illustrated in Table 1. Revised Components 24. The Board approved an Additional Financing in May 2012 adding: A. For Component 1: US$200 million equivalent to expand the series of World Bank guarantees for gas supply, which at the time was expected to fully utilize its initial funding (US$400 million) for several projects (including the Shell-sponsored and Chevron-sponsored gas supply arrangements expected to require US$315 million in World Bank guarantees); B. For Component 2: US$180 million for expanding the investment component of the project for improvements in transmission and distribution infrastructure; and C. For Component 3: US$16 million for Technical Assistance. Page 10 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Other Changes 25. The original series of PRGs for supply of gas to PHCN approved by the Board in 2009 was expected to include two large contracts, one with Shell Petroleum Development Company, a joint venture between Shell and the Nigerian National Petroleum Company (NNPC); and one with Chevron Nigeria Ltd., a joint venture between Chevron and NNPC. In addition, five other smaller gas supply arrangements (with Exxon Mobil, AGIP, Pan Oceanic, Total and Addax) were anticipated. At the time of Board approval in 2009, the Shell and Chevron contracts represented approximately 70 percent of Nigeria’s domestic gas capacity and were expected to require World Bank guarantees worth US$315 million in face value (using an IDA allocation of US$78.8 million of the US$100 million approved). The remainder of US$85 million in guarantee face value (IDA allocation of US$21.3 million) was expected to be required by the other five smaller gas suppliers. 26. The 2012 Additional Financing provided funding for an additional series of PRGs (an extension of the original series). These funds were used for a GSA between Accugas Limited (Accugas) and Calabar Generation Company Limited (Calabar GENCO), one of FGN’s NIPP power generation projects, which accounted at the time for 11 percent of total NIPP capacity installed. This PRG supported the issuance of a US$111.8 million standby- letter of credit (SBLC) by JPMorgan Chase Bank, N.A. (JPM) in favor of Accugas as security for the payment obligations of NDPHC (owner and guarantor of the Calabar GENCO) to Accugas under their GSA. Any amount drawn by Accugas under the SBLC converts into a 12-month loan from JPM to NDPHC the repayment of which is guaranteed by IDA under the PRG. The PRG of US$111.8 million in face value (IDA allocation of US$28 million of the US$50 million approved as part of the 2012 Additional Financing) was approved by the Board on July 25, 2016 and became effective on September 15, 2017. Three other GSAs for NIPP generation companies (Alaoji, Olorunsogo, Sapele) were initially proposed, but were not implemented. On April 27, 2017, the US$400 million World Bank guarantee (IDA G2020) was cancelled along with the unused portion of the US$200 million additional financing (IDA G2140). Page 11 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Table 1 – PDO, PDO indicators, intermediate result indicators with revision dates and result Project Outcome Indicators Base- Original Revised Revised Actual Comments line End in 2012 in 2017 Result in Target Dec 2018 I. Component 1: World Bank Guarantees for gas supply PDO: Improve the availability and reliability of gas to increase power generation in public sector power plants. Additional Gas supply available to 0 700 820 131 131 Targets were achieved following public sector power plants (PSPPs – revision which recognized that both PHCN-owned and NIPPs) the underlying gas supply supported by NEGIP (mmscfd) transactions did not proceed as planned (and some were cancelled) - only one PRG was signed, not the seven-ten originally anticipated. Additional power generation from 0 500 898 560 260 Original target missed for increased gas supply to PSPPs under reason above. the NEGIP Revised 2017 target missed because Calabar (with 561MW installed capacity), whilst it is available and could be dispatched based on merit order, it is not dispatched due to the unresolved issues at the DISCOs Reliability: Number of Interruptions 10 8 0 Target exceeded. No in gas supplied the PSPPs per interruptions in 2019, after month. (under PRG) Accugas/Calabar dispute settled. II. Component 2: Project Investment Lending PDO: Improve the power networks capacity and efficiency to transmit and distribute quality electricity to the consumer. A. Transmission Investments Added Transmission Capacity (MW) 0 360 720 1630 Target exceeded. Increased Supply Capacity in 0 18 18 Target achieved. selected Transmission Substations: At least two 330/132 kV and ten 132/33 kV substations rehabilitated Improve input voltage to the 33/11 29kV A 10% Drop- Not possible to measure on a kV interface (V) increas ped continual basis. e Transmission losses 11% 8% Drop- Attribution Problem ped B. Distribution Investments Additional distribution capacity 625 520 Target missed due to failure to (MW) complete contracts before transfer of assets to privatized DISCOs. Number of distribution 0 5160 5173 Target achieved. transformers installed (added in 2012) Percentage of distribution 60% 10% Dropped Data not available from shutdowns due to equipment privatized DISCOs failures Page 12 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Percentage of households Average 10% Drop- Outcome unrelated to project connected to electricity in project was increas ped inputs, other indicators were clusters 60% e chosen. Households with 220-volt end-user Average 10% Drop- Data not available from voltage in project clusters 180 better ped privatized DISCOs Volts Connections with prepaid meter 0 80,000 40,000 Second procurement tranche (a new objective and target 2012) dropped because not enough time before closing to implement. Distribution System technical losses 15% 11% Drop- Dropped in favor of T&C losses, ped since DISCOs did not have only Technical losses Technical and commercial losses 32% 24% Dropped Data not available from privatized DISCOs Revenue collection ratio in project 85% 90% Dropped Data not available from clusters privatized DISCOs C. Other Outcome indicators Direct Project Beneficiaries (added 400,000 3,460,000 Target exceeded. However, at 2012 restructuring) there is an Attribution Problem. Percentage of whom are female 50% 50% Target achieved (added at 2012 restructuring) Stakeholder forum meeting every 0 2 Partially Target missed. Not held every 6 six months. months Communication program No Yes Yes Target achieved implemented and public opinion used Intermediate Result Indicators Institutional arrangements for gas sector reform are put in place. Contracts supported by PRG signed 0 7 4-5 1 1 Target achieved. Gas Master Plan launched Not in Yes Droppe Achieved. place d Capacity to assess and address power plant rehabilitation requirements are strengthened. Number of Power Plant 0 3 Droppe Government chose to pursue rehabilitation plans completed d privatization and so this became unnecessary Improved capacity to manage 0 6 6 Target achieved Environment, Health and Safety Environmental staff trained (number): Designated Officials responsible for No Yes Yes Target achieved EHS in place. Ministry needs assessed No Yes Yes Target achieved Capacity building program To be In place Target achieved for launched. Facilities under PRGs establis Accugas/Calabar project, the have in place and in use including hed as only PRG operation supported facilities an integrity study, a safety needed under the project and emergency response plan. Recommendations from the 0 100% 100% Target achieved Integrity Study are implemented. New wells / lines constructed for To be Yes Target achieved. No new wells project complying with Nigerian establis were constructed, gas line environmental laws. hed as construction was in compliance needed with Nigerian Law Page 13 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDO and Rating Rating: High 27. The PDO, was highly relevant for the electric power sector at project start in 2009 and continues to be highly relevant for the power sector and Nigerian economy today. The objective of improving the availability and reliability of gas supply to increase power generation in existing public sector power plants was, and still is a high priority for the FGN. In the 2012 Nigeria Investment Climate Assessment, 83 percent of Nigerian business owners consider the lack of a reliable electricity supply as the biggest obstacle to doing business. This situation has not changed significantly. More than half of Nigeria’s gas is flared, and because grid supplied electricity is either unavailable or unreliable, diesel generation continues to supply more than half the country’s electricity demand. The Bank’s recent closed Power Sector Guarantees Project (P120207; PSGP) attempted to tackle this issue by supporting payment guarantees to IPPs. 28. The objective of improving the power network’s capacity and efficiency to transmit and distribute quality electricity remains an urgent priority as reflected in the PSRP approved by the FGN in March 2017. The need to reduce the levels of transmission and distribution losses is still a critical factor in a system where losses were in the order of 40 percent and have not decreased significantly since then. Improving the capacity of the Nigerian power network to transmit quality electricity continues to be a focus of the NETAP approved in February 2018. It is also expected that the proposed Nigeria Distribution Sector Recovery Program (P172891; DISREP) will provide funding to DISCOs through the FGN ownership of 40 percent. This is expected to have a positive impact by reducing both commercial and technical losses. 29. Supporting the FGN’s critical programs to address the structural problems of access to power, and for creating job opportunities remained at the core of the Country Partnership Strategy for the Federal Republic of Nigeria for the period FY14-FY173. The FY14-17 CPS is structured around three strategic clusters, the first of which, the promotion of diversified growth and job creation, focuses, inter alia, on: “increasing installed power generation and transmission capacity and improving the efficiency and governance of electricity delivery”. The CPS also includes projects “to assist the Government in covering the payment risk of the Nigeria Bulk Electricity Trading Co. as it enters into PPAs with independent power producers (IPPs)”. 3 Report No. 82501-NG; March 13, 2014. Page 14 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Objective 1: To improve the availability and reliability of natural gas supply to increase power generation in existing public sector power plants. Rating: Negligible Outputs: 30. Shell and Chevron sponsored gas supply investments with gas offtake by PHCN: The original NEGIP approval contemplated the series of World Bank guarantees being used primarily for the Shell and Chevron sponsored gas supply arrangements (for a total World Bank guarantee face value of US$315 million from the US$400 million approved). At the time of project appraisal, both private sector investments were under negotiation by FGN (PHCN) with each of Shell and Chevron. Negotiations were difficult and progress was very slow, as were other FGN negotiations with investors in large, complex projects in the energy sector at the time. Similar to the privatization process, the lack of a coordinated strategy for the sector and a shortfall in its institutional capacity to prepare and implement bankable investments slowed down the decision making by FGN and resulted in protracted negotiations. At the time of the 2012 Additional Financing, after over two years of preparation and negotiations, the Shell and Chevron GSAs with PHCN were thought to be close to being finalized. 31. Neither the Shell nor the Chevron gas infrastructure investments were concluded – both fell apart (for reasons unrelated to the demand for gas-to-power that remains relevant to date) and as such the World Bank guarantees were no longer required. In 2012, Shell decided to focus on offshore developments and began selling its onshore holding to domestic producers. The domestic producers, facing similar hurdles in negotiations with FGN for bankable off-take arrangements and FGN support, showed limited interest in pursuing investments in gas supply to the domestic market and instead focused on monetizing the oil production (and continued to flare the associated gas). The Chevron project fell apart in December 2013, when the FGN completed the PHCN privatization transaction without transferring PHCN’s obligations on the GSA to NBET. Reviving the PRG with the newly established NBET and GENCOs would have necessitated another long and uncertain negotiating process with both. Given their experience with the intricacies of negotiating a deal with one integrated counterpart, Chevron decided that it would be too time consuming to negotiate a deal with all the newly privatized companies, and so it dropped the gas supply discussion. Subsequently, the US$400 million World Bank guarantee program was cancelled and the US$100 million IDA contribution transferred to the subsequent NETAP Project. 32. Accugas gas supply investment with gas off-take by Calabar GENCO: At about the same time as the Shell and Chevron projects collapsed, Accugas was nearing completion of its new 100 km pipeline to the Calabar plant and was looking for ways to protect its investment. Since Calabar GENCO is a state-owned enterprise (SOE, owned by NDPHC), the core commercial contractual structure agreed on involved a long-term GSA with the private gas supplier, Accugas, and a corporate guarantee from NDPHC (as owner of Calabar GENCO) backstopping Calabar GENCO’s payment obligations to Accugas under the GSA. This arrangement enabled Accugas to begin supplying gas for Calabar GENCO to generate power. At the time, FGN was also pursuing the privatization of the NIPP GENCOs (including Calabar GENCO) which would have required additional contractual arrangements. If Calabar GENCO were successfully privatized at some stage, Calabar GENCO would become a typical privately-owned independent power producer (IPP) and thus would have a long term PPA with NBET and FGN support. In this context, a binding Support Agreement was put in place between Accugas, Calabar GENCO, NDPHC and NBET, whereby in the event of the privatization of Calabar Page 15 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) GENCO, NBET would assume the rights and obligations of NDPHC, including to backstop Calabar GENCO’s obligations under the GSA. 33. At present, the Calabar plant has adequate gas supply but is not delivering electricity to the grid at full capacity. At the time of the ICR mission, the Calabar plant was only being dispatched at about half capacity (that requires a gas volume of 81 mmscf/day versus the take-or-pay obligation under the GSA of 131 mmscf/day). NDPHC is currently using income from its seven other operating power plants to meet the take-or-pay obligations of Calabar GENCO under the GSA with Accugas, leaving these other facilities with insufficient resources for adequate maintenance. Financially, as owner and guarantor of Calabar GENCO, NDPHC is in a situation that is unlikely to be tenable in the medium term. 34. Although the contractual recourse is clear, in practice the following has occurred: electricity demand from DISCOs has been below contractually agreed take-or-pay obligations under various PPAs and GSAs. The absence of an enforced merit-order dispatch process has resulted in TCN’s inability to prioritize dispatch of the NDPHC-owned Calabar plant at a level that would at least meet Calabar GENCO’s take-or-pay obligations under the Accugas-Calabar GSA. For as long as revenue remittance by DISCOs remains inadequate, NDPHC will continue facing challenges in meeting take-or-pay obligations in full. Outcome: 35. The sole IDA guarantee issued under the approved series provided the credit enhancement (risk mitigation) to mobilize the payment security that Calabar GENCO was obligated to provide to Accugas under the GSA as a condition of Accugas making the investments in new pipelines needed to provide Calabar GENCO with long-term gas supplies. Accordingly, the IDA guarantee has helped this PDO to be achieved in terms of improving the availability and reliability of natural gas for the Calabar plant, insofar as these gas supplies are now sufficient to enable the Calabar plant to be available to generate power at full capacity. However, the FGN (via TCN) decision to limit its offtake from Calabar plant has caused the actual amount of power dispatched to the grid from the Calabar plant to be less than half of Calabar’s actual generation capacity. Calabar GENCO and its holding company, NDPHC, cannot resolve this problem by themselves. Resolution of this problem will require the resolution of the sector’s broader financial and institutional challenges. All the other gas supply arrangements that were originally expected to close during the 2009- 2018 period with IDA guarantee support have been cancelled for reasons related to the overall sector challenges and their effect on the risk appetite of the private investors. All were outside the control of the World Bank and the guarantee instrument. For as long as the sector challenges continue, it is unlikely that any more long-term gas supply arrangements for power generation would come into effect. The efficacy rating of this objective is therefore Negligible. It is worth noting that if the objective had not included the expectation of an “increase in power generation”, this would have better reflected the boundary of influence of GSAs, and would hence have allowed for a higher rating. Objective 2: To improve the power network’s capacity and efficiency to transmit and distribute quality electricity to the consumer. Rating: Substantial Outputs: 36. On the transmission component, nine contracts for procurement and installation of transformers and related equipment costing US$81.1 million and one contract (US$5.5 million) for civil works for reconstruction of the sinking Alagbon substation were completed. Five transformer contracts, with a contract sum of US$75.1 million, were still to Page 16 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) be completed. Two that are about 70 percent completed (contract sum of US$18.7 million), are being completed by TCN staff. Three others, that are about 80 percent completed (contract sum of US$56.3 million) were re-awarded and expect to be completed by end 2019 using funds from NETAP. There were also 11 equipment and supplies contracts (US$2.6 million) for the PMU. 37. On the distribution component, 31 contracts for upgrading transformers and related equipment were implemented. They provided 135 MW of 13/11 KV transformer capacity and 437 MW of 11/0.425 KW transformers capacity. About 40,000 prepaid meters were also purchased and installed but procurement for a second lot of 40,000 prepaid meters had to be cancelled due to project closing time constraints. The commissioning of one substation was delayed due to coordination issues between TCN and the DISCOs. The responsibility for commissioning this substation was transferred to the respective DISCO in late 2018. Outcomes: 38. The Bank financed transmission projects of approximately US$160 million in transformer capacity, which represented only a small portion of TCN’s total investment in its transmission system over the project’s ten years of operation. Over that time, the Bank project contributed an increase of 150 MW of high voltage (330/132 kV) substation capacity, and 820 MW medium voltage (132/33kV) substation capacity. As the table below shows, TCN’s losses have declined consistently over the period. However, energy wheeled has not increased significantly, indicating that grid power usage has remained relatively stable. Table 2: Declining transmission losses Transmission Losses in % Peak Load MW Energy Wheeled TWh Load Factor % 2010 3804 25.8 75.1 2012 11.32 4517 29.8 74.7 2014 9.66 4390 30.1 78.3 2016 8.34 5075 28.5 64.8 2018 8.22 5191 39. The pre-paid metering system has been highly popular with consumers. In addition to allowing the customer to control the quantity of electricity used and paid for, the introduction of two-part prepayment meters have improved the quality of the electricity received. This occurs because the part of the meter that is attached to the transformer greatly reduces voltage fluctuations as an integral part of the measurement of the kilowatts used. This improvement in the quality of electricity that consumer receives is important because large fluctuations in voltage can damaged their equipment. 40. By increasing the power handling capacity of a large number of Nigeria’s high, medium and low voltage substations, and introducing pre-paid consumer meters, the project met its objectives of improving the efficiency and quality of the transmission and distribution operations of Nigeria’s electricity sector. The efficacy rating of this objective is Substantial. Page 17 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Justification of Overall Efficacy Rating for combining the two independent project objectives Rating: Modest 41. The project’s overall efficacy rating is a combination of the ratings of the two independent project objectives. While the efficacy of the Gas Guarantee project component is judged to be Negligible, the efficacy of the investment component is judged to be Substantial. The overall efficacy was rated as Modest. C. EFFICIENCY Assessment of Efficiency and Rating Rating: Modest 42. The gas guarantee program experienced a number of false starts. The first two contracts (Shell and Chevron) were in the late stages of preparation when they were dropped. A great deal of legal work had been put into bringing all the parties together on the program’s basic framework and then on detailed contractual arrangements. The basic gas sales contracts had been agreed and signed by all parties. Only subsidiary agreements needed to be completed. In both cases, the program fell apart when the underlying institutional structures changed (see section II.D). The Accugas-Calabar project was the only one sufficiently advanced after the restructuring to be able to benefit from a PRG under the Additional Financing and it was approved in 2016. The efficiency of this component is judged Modest. 43. The project’s investment components have performed quite well, with 87 percent of the project’s funds utilized. However, due in part to challenges with contractor capacity and contract management, subproject timelines were extended numerous times, leading to project extension. Also, a portion of the subprojects have not yet been completed due to deficits in the performance of some local contractors. All of these subprojects are being completed by TCN and have been re-allocated to contractors with proven records of good implementation. They are expected to be completed before the end of the year, when NETAP becomes effective. Problems with attribution and a lack of data have prevented the production of an economic analysis (see Annex 4) which would have possibly improved this rating. The efficiency of this component is judged Modest. 44. Technical assistance activities disbursed in total, US$25.8 million (as of September 30, 2018). The funds were well utilized. The majority (41 percent) was used for engineering services associated with the transmission and distribution investment program, 17 percent for training, 14 percent for environment and social support; 14 percent to support preparation of upcoming projects, primarily the operation in support of the PSRP and also for the Nigeria Electrification Project (P161885; NEP) led by the Rural Electrification Agency (REA); 8 percent was spent for PMU related use; and 5 percent was used to support environmental units in the Ministries of Power and Environment. Another US$5.8 million, about half of which was for engineering supervision and half for long term legal support for NBET, was 95 percent completed. 45. A study was expected to be done to identify and select rehabilitation and management options to be adopted to promote efficiency for the Project Implementing Entity’s power generation subsidiary companies. The total restructuring of the electricity sector and the continued financial limitation of generating companies in the face of inaction on electricity pricing greatly limited the potential usefulness of this study, so it was dropped. Upgrading a subsidies model for the Multi-Year Tariff Order; this study was dropped following a MYTO Major Review where subsidies were eliminated. Design of gas infrastructure and transmission and distribution systems Page 18 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) needed to handle expected increases in power supply; this was dropped due to a lack of interest from the National Gas Company which is in charge of the gas network. Enhancing institutional capacity to implement and enforce environmental rules and regulations governing gas and oil operations; this study was dropped first because the project was refocused entirely on the power sector, and secondly because the Bank did not have the leverage to undertake activities in the country’s oil and gas sector. The efficiency of this component is judged as Substantial. 46. The project’s overall efficiency rating is a combination of the ratings of the three independent project components. While the efficiency of the TA is substantial, the efficiency of the other two components is modest, so the project’s overall efficiency rating is Modest. D. JUSTIFICATION OF OVERALL OUTCOME RATING Outcome Rating: Moderately Unsatisfactory 47. This ICR provides separate project ratings for each of the two distinct, independent project outputs. The PDO of the PRG component, which was to improve the availability and reliability of the gas supply (in order to) increase power generation from existing plants, was highly relevant for the Nigeria power sector. Its Efficacy, however, was Negligible. Under the one GSA that was closed with support from a PRG, the gas buyer is experiencing untenable financial difficulties associated with Calabar being dispatched only at half capacity and the broader sector issues described elsewhere in this ICR. Its Efficiency is rated as Modest because two of the three PRG deals failed to close and were dropped after two years of Bank efforts. Overall, as an independent project, the outcome for this PRG component would be rated as Unsatisfactory. 48. The PDO of the network investment component was to improve the power network’s capacity and efficiency to transmit and distribute quality electricity to consumers. Since it accomplished almost all of the transformer upgrades its Efficacy was rated as Substantial. Efficiency is also rated as Modest, since there were several subcomponents that had not be completed before project closing and had to be subsumed by the subsequent NETAP project, which became effective in June 2019. As an independent project its outcome would be rated as Moderately Satisfactory. 49. Using the Bank’s quantitative methodology for a combined rating (1 to 6 for highly unsatisfactory to highly satisfactory), the outcome of the first PDO is 2 (Unsatisfactory) and the rating for the second PDO is 4 (Moderately Satisfactory). For the project as a whole, the overall outcome rating is 3, which is Moderately Unsatisfactory. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 50. As with most power projects, the benefits from an increase in the availability of electricity to the general public are undifferentiated between men and women. All benefit equally. Institutional Strengthening 51. The project made an effort to strengthen all the public energy institutions through its support for training courses and seminars. Beneficiaries of this training included TCN, Ministry of Power and NERC. These Page 19 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) institutions also benefited from numerous consultancies wherein a significant amount of knowledge transfer is expected to have occurred, thereby strengthening institutional capacity. The PMU’s overall effectiveness declined significantly in 2017 after most of its senior staff either retired or were transferred to other departments and were replaced by staff who had never worked on a Bank project. Poverty Reduction and Shared Prosperity 52. The direct beneficiaries of the project’s improved electricity service are the current and future electricity consumers in the grid-connected households and businesses. Men and women are expected to benefit equally. The impact of this project is not directly assessible partly due to the difficulty in attribution between Bank funding and other funding. Impact of the Guarantee in Mobilizing Private Sector Financing 53. As part of the 2012 Additional Financing, the World Bank guarantee issued for Accugas-Calabar enabled the conclusion of a US$ 240 million private sector investment by Accugas in gas supply infrastructure (including a 100 km gas pipeline) that supported a long-term gas supply to Calabar GENCO (an SOE). The creditworthiness of Calabar GENCO was considered risky by the private sector. The World Bank guarantee mobilized a commercial bank-issued SBLC as security for the payment obligations of Calabar GENCO and its owner, NDPHC, under the take-or-pay GSA with Accugas. The impact of the World Bank guarantee was to mobilize private capital that resulted in delivery of gas for electricity generation. Whilst it enabled Calabar GENCO to obtain adequate volume of gas and thus be available to produce electricity, it did not and could not address FGN/TCN decisions related to the actual dispatch of Calabar GENCO. Role and Value of the Guarantee in Addressing Critical Risks and Improving the Overall Sustainability of the Transaction 54. The PRG for Accugas made possible improvements in the availability and reliability of natural gas supply to the public sector Calabar GENCO but such improvements in gas supply have not further increased the power generation delivered by Calabar GENCO to the grid. On the gas supply side, the PRG provided the necessary credit enhancement to partly mitigate the non-payment risk by Calabar GENCO under the terms of the long-term GSA agreed with Accugas. The PRG enabled Accugas’ capital investments and long-term commitment to supply natural gas (firm volumes, quality and price) to Calabar GENCO. On the electricity supply side, the PRG for Accugas was not designed to address or interfere with FGN decisions (through NBET and TCN) to dispatch Calabar GENCO or other grid-connected GENCOs, or with FGN policy decisions related to the implementation of the power sector reform strategy (in particular the privatization of the DISCOs and their subsequent operational performance). The improvement in availability and reliability of natural gas supply to Calabar GENCO enabled this then newly commissioned NIPP capacity to move from stranded status (due to lack of gas supply) to available status and ready for dispatch by FGN (TCN). Subsequent sector developments however, primarily the DISCOs operational performance collapse and the FGN failure to implement electricity tariff reforms, created a new bottleneck on the distribution and retail side (in terms of ability to deliver and sell electricity to end-users) that in turn constrained the ability of (i) FGN (TCN) to dispatch the grid-connected GENCOs, including Calabar GENCO, at the levels originally estimated and (ii) NDPHC (SOE, owner and guarantor of the Calabar GENCO) to meet its GSA contractual obligations to Accugas. 55. In the context of the Nigerian energy sector, the PRG was not designed to address the two most critical risks associated with the financial viability of the GENCOs, both of which materialized. The first risk was that the GENCOs’ output might be constrained: if they are unable to sell all of the power that they can Page 20 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) produce, they will not need all of the gas they are committed to buy. What happened was that Calabar was able to sell less than half (260 MW) of its design capacity (560 MW), while the GSA take-or-pay obligation meant that about 40% of the gas that it contracted for on a take-or-pay basis could not be used to generate electricity. The second risk was that the GENCOs would not be paid adequately for the power they produce. In that case the income they received from the DISCOs would be insufficient to enable them to pay for the gas they use. What transpired was that the DISCOs were allowed to subtract their operating costs from their gross income before paying for the electricity they received from the GENCOs. Consequently, the pass- through payments that the DISCOs provided to Calabar for the electricity received was only a third of the invoice and hence much less than what it needed to maintain its operations and pay for the gas that it consumed. To avoid a drawdown on the SBLC backed by the PRG, NDPHC (the entity that owns Calabar GENCO) found it necessary to use some of the revenue from its other power plants (which were also receiving a third of expected revenues) to make up for the losses of Calabar and meet the take-or-pay obligations, thereby further depriving its other power plants of the revenue they needed to operate. Key Issues or Events that May Arise in the Future that Could Lead to a Potential Call on the Guarantee 56. Until the DISCO-related challenges are resolved, the risk of NDPHC defaulting under its GSA obligations to Accugas remains relatively high and so is the risk of a potential draw on the World Bank guaranteed SBLC and, if such a draw is not reimbursed within 12 months, a potential call on the World Bank guarantee. A dispute in 2018, when Calabar GENCO was unwilling or unable to accept any gas, was settled with Accugas agreeing to a limited-time reduction in the take-or-pay gas quantity. All parties (Calabar GENCO, NDPHC and Accugas) are looking for an intermediary solution that would prevent a call on the World Bank guarantee and buy time until the situation of the DISCOs is resolved in a sustainable manner. Discussions in mid-2020 involve the possibility of creating an automatic payment mechanism at the Federal Ministry of Finance, Budget and National Planning, which could sustainably shield Accugas from the continued DISCO revenue shortfalls. Other Unintended Outcomes and Impacts 57. The innovative designs for pre-paid consumption meters, which involved splitting the metering between the transformer and the house has greatly reduced the problem of energy theft and has since been replicated by other DISCOs. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 58. In hindsight, the appraisal of the original project in 2009 appears over-optimistic in its risk assessment of (i) the FGN commitment and ability to implement the power sector reforms agreed at the time, (ii) the readiness of the GSAs to be concluded between FGN and private gas suppliers, and as a result (iii) the readiness of the implementation of the suite of World Bank guarantees. However, it is necessary to acknowledge that the preparation occurred prior to the restart of a significant sector reform program which had outcomes that could not be fully anticipated at appraisal. The subsequent appraisal for the 2012 Additional Financing was more grounded as it focused on the NIPP GENCOs, the country’s newest and generating affordable costs. This enabled the GSA between Accugas and Calabar GENCO to be successfully concluded with the support of a World Bank Page 21 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) guarantee. The Results Framework included few quantitative indicators to better monitor the project’s implementation progress and judge the success in achieving its desired outcomes. B. KEY FACTORS DURING IMPLEMENTATION Changes in Sector Context 59. Prior to the privatization of the PHCN GENCOs and DISCOs, inadequate electricity tariffs and poor governance had compromised the financial health of the Nigerian power sector. The sector companies continued to depend on FGN budget transfers to stay afloat, and this funding had never been sufficient to make up for inadequate tariffs and high technical, commercial and collection losses. The lack of reliable gas supplies, which was the result of the FGN’s lack of strategy to develop and invest in the gas sector, and the electricity sector’s inability to pay in full for the gas it consumed, only exacerbated the problem of inadequate electricity generation. When the current phase of power sector reform was launched in 2010, the FGN had created an expectation that privatization would be a panacea for the sector’s problems and would open the floodgates of private investment. This expectation was contingent on the creation of an enabling environment that included consistency in government policy and regulatory certainty. Due to perceptions of risk, the privatization of PHCN successor companies was primarily able to attract only local investors who had limited experience in running utilities and limited ability to inject the required capital to meet the performance improvement targets in the privatization agreements (especially in the case of the DISCOs). It was expected that local banks would provide the necessary funding, which would be supported by the sector cashflows based on cost reflective tariffs. However, in the face of largely external economic pressures, the FGN chose to set aside NERC’s tariff review process and thereby created a situation where the sector (especially the GENCOs and gas suppliers) was deprived of expected cashflows, which consequently prevented the injection of funding for performance improvements across the value chain. 60. In 2015, the FGN attempted to increase electricity tariffs to cost-reflective levels. This caused a major public backlash, and with an election coming up, NERC decided to partially reverse the tariff increase thereby eroding perceptions of its independence and increasing the regulatory uncertainty in the market. Since then, the problem has been further exacerbated by the FGN’s decision in 2016 to suspend tariff reviews after t he 50 percent devaluation of the Naira against the USD. Between January 2015 and December 2016, the DISCOs’ payables to the rest of the market were estimated at NGN 476 billion (US$1.56 billion), of which the tariff shortfall component (the amount resulting from low tariffs rather than DISCO performance) represented a significant majority at NGN 420 billion (US$1.38 billion). Tariff shortfalls have continued to accumulate at a rate of approximately US$1 billion per year in 2017 and 2018. 61. Low tariffs and collections by DISCOs, coupled with the lack of enforcement of electricity market contracts, has led to non-payment along the supply chain including the gas suppliers. In 2017 and 2018, NBET has received only about 30 percent of its billings to DISCOs (versus approximately 70 percent prior to the 2016 naira devaluation) and has consequently only been able to pay for about 80 percent of the money owed to the GENCOs by borrowing from the Central Bank of Nigeria’s (CBN) Payment Assurance Facility (PAF). In addition, it has been observed since mid-2017 that DISCOs have been disconnecting feeders to locations where the collection losses are highest, which has reduced their total demand. This has led to their rejecting up to 2 GW of the system load, thus curtailing GENCO output to around 3,500 MW/hour. This is despite a declared available generation capacity of over 5,500MW (on average) and a nameplate installed capacity of over 12,000MW as at December 2018. Page 22 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) 62. The consequence of FGN choices in the post-privatization era is that electricity market contracts have not been enforceable and so there is an absence of market discipline. DISCOs’ remittance to NBET has been discretionary and continuously declining in proportion to the wholesale cost of electricity. Having created this cashflow gap by the suspension of tariff reviews, FGN eventually made efforts to fund the gap by borrowing from the CBN in 2017. The CBN facility has been available for NBET to draw down to make payments to GENCOs and their gas suppliers. To provide a more sustainable solution, the FGN approved a Power Sector Recovery Program (PSRP) in March 2017. The PSRP contains a set of policy and regulatory actions designed to establish financial viability in the sector. The World Bank is also preparing a performance-based operation to support the implementation of the PSRP (Power Sector Recovery Operation, P164001). Factors subject to the Government Control 63. The inability of the FGN to propose a contractual structure that would have been sustainable ultimately caused the private sector gas supply arrangements predicated under the original project (i.e. Shell, Chevron) to not proceed. This had direct and immediate impact on the series of World Bank guarantees. After the 2012 Additional Financing, a suitable contractual structure was achieved for one of the NIPP GENCOs (Calabar) and a sizeable guarantee was issued and achieved effectiveness. 64. Power Sector Unbundling: The National Electric Power Policy (2001) and the resulting Electric Power Sector Reform Act (2005) provided the basis for unbundling the vertically integrated National Electric Power Authority. With a view to stabilize Nigeria's electricity supply system, NDPHC was established in 2004 as a fast- track government funded initiative to build and operate gas-fired generating plants under the NIPP program, including Calabar, until they could also be sold. TCN remains a fully government-owned monopoly transmission service provider and system operator. In late 2013, the FGN completed the process of unbundling and privatization of the vertically integrated utility (PHCN) and five GENCOs and ten DISCOs were privatized. FGN retained 40 percent ownership in the DISCOs. This new disaggregated institutional structure made the PRG program much more difficult to implement because rather than selling gas to one integrated utility, new discussions would have had to be started with the newly established Government institutions and the newly privatized GENCOs. 65. Electricity Tariffs: In 2016, NERC suspended the implementation of the semi-annual ‘minor review’ of tariffs which provides for adjustments to reflect changes in gas prices, generation levels and economic parameters such as inflation and exchange rate. This was in response to a “perfect storm” of external events which included a fall in oil prices in 2015, increased militant attacks on gas pipelines (with consequent fall in gas and electricity production), and a 50 percent Naira devaluation against the USD. Political pressure to avoid tariff adjustments has remained strong since then and no minor review adjustments have been implemented as at end-2019. Since 2016, DISCOs have not been able to cover their operational costs and also pay in full for their electricity purchases and so they have only paid on average about a third of their energy invoices from NBET. For the period between January 2017 and December 2018, NBET has had access to a facility provided by the Central Bank, which ostensibly enables it to pay for 80% of GENCO invoices and up to 90% of gas invoices. However, the allocation of funds to NDPHC has meant that Calabar receives much less than it needs to make full payments for gas, thereby requiring NDPHC to cross-subsidize from revenue due to its other plants. Proper implementation of tariff minor reviews, together with an organized subsidy program, would have helped to address this situation. Page 23 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) 66. The PMU: Most of the experienced PMU staff were abruptly redeployed in 2017 after a change in TCN management. This reorganization was implemented without prior discussion with the Bank team. The new staff have required significant time to begin to learn the project’s procurement requirements, and so several contract awards were delayed. There are also weaknesses in the areas of record keeping, contract management, and environmental and social safeguards management. These weaknesses have resulted in long delays in the procurement process. In several instances, changes in contract scope has resulted in the need for time consuming and costly addenda to these contracts. Factors subject to World Bank Control 67. Ongoing contract management support for the PMU could have been stronger both in the early years of project implementation and then again after the major turnover of staff in 2017. A new training program probably should have been prepared for these new staff. Exogenous Factors 68. In 2015, the fall in oil prices led to Nigeria’s first recession in 25 years. The recession led in 2016 to a 50 percent Naira devaluation against the USD and double-digit inflation. The deterioration of the economic situation was combined with an uptick in militant activity leading to increased oil and gas pipeline vandalism. The increased vandalism meant that power generation was severely affected across the nations many thermal power plants. The overall situation meant that the FGN was unable to increase tariffs to reflect changing economic parameters. In the following years, economic recovery has been mild and so tariff increases have been avoided. Failure to correct the tariff has meant that DISCOs have been less able to borrow and invest in performance improvements. This has inhibited the overall progress in sector reform. The FGN has made efforts to address these issues with the PSRP and by providing funding to NBET through the Payment Assurance Facility (PAF). The PSRP attempts to restart the reform program using policy and regulatory mechanisms, while the PAF provides funding to cover the payment shortfall from DISCOs in the interim before tariffs are adjusted. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 69. The M&E design for the PRG component was fully adequate, however, the design for the investment component had weaknesses. It could have been improved by providing specific output/outcome targets. Many of the intermediate outcome indicators were revised or dropped due to challenges in using them for measuring performance and progress. Measurement of some of the indicators was beyond the capabilities of the institutions involved, such as “Households with end-user 220 voltage” and “Input voltage to the 33/11kV interface”. Others, such as “Additional transmission capacity” had attribution issues since it was not possible to separate the benefits of the project’s investments from the benefits due to other non-bank transmission upgrades. The system’s total transmission investment would be needed to proportion, at least theoretically, the benefits between project and non-project investments. Page 24 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) M&E Implementation 70. Several of the intermediate indicators were not effectively tracked, including the needs assessment and capacity building programs for the Ministry of Environment and Department of Petroleum Resources. Onsite follow-up environmental reviews were not adequately monitored, and the communications program that was to be used to gauge project effectiveness was not followed up. M&E Utilization 71. M&E was used to closely follow the investment programs technical progress and to report this progress to both TCN management and the Bank’s supervision teams. The PMU was unable to collect information indicators related to distribution system losses and revenue collection rates for the distribution clusters that had received Bank financing after the DISCOs were privatized. Justification of Overall Rating of Quality of M&E 72. The implementation and utilization of M&E was inconsistent and would have benefited from greater attention by the Bank and the Borrower throughout the project implementation process. The overall rating for M&E is Modest. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 73. Environment: OP4.12 was activated because the project initially was going to include new transmission lines. While there were no resettlement issues, and the project’s physical investment activities were limited to transformer substations in the transmission system and in distribution DISCOs, there were some issues related to land used for a green field substation where land was donated to the project by the local chief, who passed away before formal land documents had been provided to the Project. The issue was resolved by the State Government stepping in, making an appropriate payment to the claimants and formally selling the land to TCN. The point here is that borrowers need to ensure that they pay market value for land used for projects, rather than relying on donations, and that such transactions are legally documented before contractors arrive at the site. 74. PCBs (polychlorinated biphenyls): The significant environmental issue with transformers is that they are likely to contain PCBs, a highly toxic carcinogen, which need to be properly stored and disposed of. The Environmental and Social Management Framework (ESMF) for NEGIP recognized the likely presence of PCBs at some substations’ aging equipment and provided some general guidelines for its handling. The ESMPs for specific substations were more detailed: they described equipment and procedures for testing transformer oil, training and equipment needed for handling PCB-contaminated oil or equipment, and training needed for packaging and storage. Contractors were responsible for providing equipment and training to their employees. There was also a brief discussion of final disposal options, with a reference to Federal Ministry of Environment as focal point on this subject. However, there is a lack of documentation from the substations to indicate that PCB contamination was discovered and, if so, how it was handled. 75. Environmental Training: At the time PHCN was unbundled, the Environment, Resettlement and Social Unit (ERSU) had requested that the Bank-funded National Energy Development Project (NEDP) include training Page 25 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) and equipment needed to establish effective environmental and social capacity in TCN. Because little of that TA was actually delivered under NEDP, training needs were pushed into the NEGIP project. However, there was also a substantial shortfall in TA delivery under NEGIP. In addition, critical supplies were not secured. Several vehicles were purchased under the project for the Ministry of Environment, but none to the PMU specifically for the environmental unit, greatly limiting their ability to supervise environment issues. 76. Fiduciary Compliance: There have been no fiduciary issues raised during project implementation. Quarterly IFRs have been provided to the Bank on schedule. Audits have been completed on schedule and without qualifications. The few minor accounting issues observed were efficiently resolved. The project’s final audit is under preparation and awaits only the account for the unutilized funds to be returned to the Bank. Efficiency of procurement and contract management reduced after the 2017 reassignment of PMU staff. C. BANK PERFORMANCE Quality at Entry Rating: Moderately Satisfactory 77. Both the original project and the 2012 Additional Financing had some shortcomings at entry, due in large extent to their broad scope and (in hindsight) an optimistic risk assessment of the likely speed or probability of completion of GSAs between FGN and private investors (and thus the World Bank guarantees). This happened in a period when Nigeria’s energy sector was experiencing major challenges and was planning to implement significant reforms. Quality of Supervision Rating: Moderately Satisfactory 78. The Bank maintained a full supervision schedule, with supervision missions (at least) twice a year for the transmission component, as well as missions specifically focused on bringing a gas guarantee project to fruition. For the network investments, supervision missions continually emphasized the need for stronger action on project components that were behind schedule. In hindsight, it is clear that it would have been useful for the Bank to insist on the hiring a procurement consultant to provide day-to-day procurement support for the PMU following the 2017 reshuffling of PMU staff. The reshuffling led to a deterioration in procurement and contract management due the PMU’s new staff lacking experience with Bank procurement processes. It would have been useful if the Bank could have provided a training course for these new employees to familiarize them on Bank procurement procedures. Justification of Overall Rating of Bank Performance 79. Continued interaction with and support of the PMU has enabled the project’s investment component to achieve an 87 percent utilization of its available IDA funds, a significant achievement in the Nigerian context. On the World Bank guarantees component, the Bank staff spent two years putting together a legal framework for handling many complex institutional issues needed to make the program work for private suppliers of gas to the country’s integrated power monopoly. The documents were almost all signed and ready to go when the institutional changes (both on the potential buy’s and sell’s end) to which the Bank staff had no knowledge of or control over, brought the work to a halt. However, the transaction structure that the Bank put together in the second round, after the unbundling of the energy sector underestimated the consequences of the gap in Page 26 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) contracting between the power plant and the bulk trader. Overall, the Bank performance is rated as Moderately Satisfactory. D. RISK TO DEVELOPMENT OUTCOME 80. The risk is high. As long as the sector companies do not receive their revenue requirement across the value chain, the off-take of electricity by DISCOs will likely remain limited. Calabar GENCO will have difficulties both in selling its full capacity output, and in receiving the full value of its invoices from NBET. It is not clear how long its owner NDPHC will be able to sustain the financial losses and payments for its take-or-pay gas contract. To mitigate this risk, NDPHC must obtain specific cover from the Federal Ministry of Finance, Budget and National Planning to ensure that it meets its GSA payment obligations when its DISCO revenues are insufficient. There is little long-term risk for the investments in transmission substations because once they are fully certified they can be expected to remain in operation for at least 30 years. The same is true for the transformers in the distribution system. The effectiveness of the metering system will, in the long run, depend on the ability of the distribution companies to reduce electricity theft. The new two-part meters will go a long way in resolving this problem. V. LESSONS AND RECOMMENDATIONS 81. Deficiencies in the power sector reform implementation process have shifted the main bottleneck in the electricity sector from that of an insufficient supply of grid-based power to one of (i) poor revenue collection and payment discipline from DISCOs to NBET and (ii) lack of incentive for the privatized DISCOs to increase their electricity supply and sales to customers. At the time of appraisal, the approach taken by this project was to target and alleviate bottlenecks in the areas of investments in gas supply for increased electricity generation, as well as physical constraints in transmission and distribution. However, under the present conditions the DISCOs are unwilling or unable to utilize and sell the increased electricity supply. They have neither the incentives nor the resources to invest and expand the delivery of electricity to their customer base. Expanding the available upstream electricity supply by itself is not going to increase grid-based electricity consumption. This lesson is reflected in the Bank’s ongoing efforts to prepare operations supporting the PSRP and the distribution sub-sector which will respectively address institutional policy and regulatory issues while channeling funds to the distribution sub-sector for much needed investments in performance improvement. 82. The Accugas PRG may have focused too narrowly on the financial relationship between the gas supplier and the consuming GENCO rather than the broader relationship with the sector. In the case of Accugas and Calabar, this only shifted the risks from the gas supplier to the GENCO. A key lesson in the use of payment guarantees is that while the instrument provides comfort to the seller, it does not make the buyer more creditworthy. As the ultimate guarantor, the Ministry of Finance needs a better appreciation of the contingent liabilities involved in the transaction, including the potential need for subsidies to prevent a drawdown on the guaranteed SBLC. More effort should be put into helping the government understand the actions needed on its part to make the guaranteed projects viable, including addressing broader sector issues. The Bank may consider making these actions part of the conditions for signing or effectiveness of the guarantee. It may also be necessary to secure agreement on least-cost dispatch by the System Operator for power plants that are guarantee beneficiaries. Page 27 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) 83. The guarantee component lacked a well-defined boundary as reflected in its PDO which implicitly assumed that improved gas supply would necessarily lead to an increase in power generation. This was ill- advised due to the presence of many aspects of “power generation” that were beyond gas supply and hence outside the component’s sphere of influence. Future guarantee support for gas supply must analyze the entire supply and payment chain to ensure that the system is sustainable can generate sufficient revenue to sustain upstream obligations at the top of the chain. This would involve, as a minimum, a parallel PPA with the Bulk Trader or a distribution company so that the electricity generating company is assured a market for its output and contractual discipline along the value chain to reduce risk of nonpayment for gas. This lesson has been incorporated in subsequent guarantee projects whereby guarantees are provided for PPAs (which include gas payments) rather than to GSAs. Additionally, as long as electricity tariffs are too low to enable the entire system to meet its costs, the problem will persist. 84. In the area of construction of transmission and distribution facilities, contractor performance needs to be addressed: Several local contractors failed to complete the installation of imported equipment after the Bank had paid for the delivery of the equipment. One possible solution to this problem would be to change the payment process so that only 70 or 75 percent of the contract payment would be made on delivery of the equipment with the remaining 25 to 30 percent being paid only upon installation and delivery. The use of prequalification procedures is another way to weed out contractors with insufficient technical and financial capability handle the contract, but it involves a resource intensive and time-consuming process. The evidence to date suggests that the problem has been with the way the international contractors work with their local “joint venture” partners. Stronger incentives are needed for the international partner to choose a reliable local partner. Qualification standards for local partner should be included in the bidding documents, presumably forcing the international bidder to do its own due diligence when choosing a partner, and the foreign partner should be required to take responsibility for the completion of the contract, including installation. The pay-out rules should also be revised so that there is a stronger financial incentive to complete the contract. Procurement packages should be designed at sizes that are suitable for the contract management capacity in the PMU. 85. PCBs in Transformers: Management of PCB contamination and its processing and disposal was problematic in this project. The environmental framework in later projects in Nigeria, such as NETAP, have a specific protocol for managing PCBs. The implementation of this protocol needs to be monitored closely. 86. Attribution: The problem of attribution always arises in transmission projects when the Bank project funds only a small portion of the system’s improvements. Efforts should be made to obtain information on total investment in the transmission system every year over the project life, so that the Bank project contribution can be estimated as a percentage of its contribution to total investment. 87. Improving the performance of the PMU: Changes in TCN management led to unexpected changes in PMU staffing. Going forward, legal agreements and Project Implementation Manuals need to be more explicit in the procedures to be followed in making changes to PMU staffing. The focus should be on how to retain expertise and experience during a transition and hence avoid a situation whereby implementation capacity is compromised, albeit temporarily. . Page 28 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Improve the availability and reliability of gas supply to increase power generation in existing publ Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Additional power generation Megawatt 0.00 500.00 898.00 253.00 from increased gas supply covered under the PRG 16-Jun-2009 30-Jun-2014 22-May-2019 18-Dec-2018 framework Comments (achievements against targets): Target was revised to 898 in Additional Financing and to 560 in the restructuring done in July 2017. The Calabar Generation Plant has a capacity of 560 MW, but its production has been much lower due to limited demand. The figure for actual achieved is based on the average production for February and March 2019. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 29 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Interruptions in gas supply to Number 10.00 8.00 0.00 public sector power plants covered under the PRG 16-Jun-2009 30-Jun-2014 18-Dec-2018 scheme (number per month) Comments (achievements against targets): Calabar stopped accepting gas from Accugas for most of the period from May through November 2018, claiming that contaminants had damaged its equipment and it needed to make repairs. Accugas denied these claims. The issues related to the Take-or-Pay obligations were resolved and the gas supply was restarted in mid-January 2019. There have been no interruptions in gas supply since then. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Gas supply to public sector Text 0 Mmscfd/month 400 Mmscfd/month 131 Mmscfd/month 65.6 Mmscfd/month power plants covered under the PRG framework 16-Jun-2009 30-Jun-2014 23-May-2012 18-Dec-2018 Comments (achievements against targets): Only half of the targeted quantity of gas was used because the Calabar plant operated at only half capacity. Objective/Outcome: Improve the power network's capacity and efficiency to transmit and distribute quality electricity Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 30 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Direct project beneficiaries Number 0.00 400000.00 4845000.00 16-Jun-2009 31-May-2012 18-Dec-2018 Female beneficiaries Percentage 0.00 49.00 50.00 50.00 Comments (achievements against targets): This was introduced with Additional Financing. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution system losses Percentage 32.00 30.00 24.00 0.00 31-Dec-2011 30-Jun-2014 18-Dec-2018 Comments (achievements against targets): Distribution systems were privatized. The private companies were unable to provide this data. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 31 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) New connection with Number 0.00 80000.00 40000.00 40000.00 operating meters 16-Jun-2009 30-Jun-2014 31-Dec-2017 18-Dec-2018 Comments (achievements against targets): Target was set when this component was added in the Additional Financing. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Additional Distribution Kilovolt- 0.00 300.00 495.00 539.00 Capacity Amphere(KVA) 16-Jun-2009 30-Jun-2014 29-Dec-2017 18-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Additional Transmission Kilovolt- 0.00 300.00 600.00 2210.00 capacity Amphere(KVA) 16-Jun-2009 30-Jun-2014 29-Dec-2017 18-Dec-2018 Comments (achievements against targets): Page 32 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) A.2 Intermediate Results Indicators Component: PRGs for gas suppliers Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Contract supported by PRG Number 0.00 7.00 1.00 1.00 signed 16-Jun-2009 30-Jun-2014 31-Jul-2017 14-Jun-2018 Comments (achievements against targets): Component: Investment in complementary transmisison and distribution infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution transformers Number 0.00 35.00 5173.00 3567.00 installed 16-Jun-2009 30-Jun-2014 31-Jul-2017 18-Dec-2018 Comments (achievements against targets): Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Formally Revised Completion Page 33 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Target Substations Number 0.00 30.00 30.00 rehabilitated/reinforced 16-Jun-2009 18-Dec-2018 18-Dec-2018 330/132 kV Number 0.00 8.00 2.00 16-Jun-2009 14-Jun-2018 14-Jun-2018 132/33 kV Number 0.00 28.00 28.00 16-Jun-2009 18-Dec-2018 18-Dec-2018 Comments (achievements against targets): Component: Technical assistance Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Stakeholder forum meeting Number 0.00 10.00 10.00 every six months 19-Jun-2009 24-Jan-2018 24-Jan-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 34 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Number of staff trained Number 0.00 895.00 895.00 (cummulated): 16-Jun-2009 18-Dec-2018 18-Dec-2018 Staff PMU (EMS) Number 0.00 95.00 112.00 Staff FME Number 0.00 15.00 30.00 Staff NBET Number 0.00 10.00 16.00 Staff Gas Group (PHCN) Number 0.00 25.00 30.00 Staff DPR Number 0.00 10.00 0.00 Staff TCN/Market OP Number 0.00 58.00 469.00 Page 35 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) Staff NAPTIN (Power Sector Number 0.00 470.00 240.00 staff trained) Comments (achievements against targets): Page 36 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1 To Improve the availability and reliability of gas supply to increase power generation in existing public 1. The increased availability of gas would lead to additional power generation in public sector plants. Outcome Indicators 2. Natural gas supplied to public sector power plants would increase. 3. The number of interruptions in gas supply to public sector power plants would decline. 1. Several Partial Risk Guarantee (PRG) contracts for the delivery of gas would be signed. 2. Metering and other relevant equipment required to analyze and measure the quality and quantity of gas supplied is acquired and Intermediate Results Indicators installed. 3. Institutional Arrangements for gas sector reform would be in place, including Implementation of the Gas Master Plan 4. Programs would be designed for rehabilitation of several power plants. 1. power generation increased by on 260 MW. Key Outputs by Component 2. Natural gas was supplied to only one public sector power plant. (linked to the achievement of the Objective/Outcome 1) 3. There was no change in the number of interruptions of gas supply. Objective/Outcome 2 To Improvement in the power network’s capacity and efficiency to transmit and distribute quality electricity to the consumer: 1. Transmission capacity would improve 2. Distribution in project areas would improve 3. There would be a reduction in Distribution system losses; Outcome Indicators 4. The number of shut-downs due to equipment failure (distribution); 5. There would be an improvement in Average Revenue per kWh in the target clusters. Page 37 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) 6. The number of new households connected in target clusters; [Dropped during 2012 restructuring] 7. The number of new meters connected; 8. Direct project beneficiaries (number of female) 9. Stakeholder forum meeting every six months. 10. Communications program would be implemented, and public opinion used to gauge project effectiveness. 1. The number of transmission substations that were rehabilitated. Intermediate Results Indicators 2. The number of distribution substations that were rehabilitated. 1. Improvement in transmission capacity (dropped because the contribution of the project’s investments could not be ascertained) 2. Reduction in Distribution system losses (data unavailable); 3. Number of shut-downs in project supported target cluster distribution systems due to equipment failure (Data unavailable) 4. Improvement in Average Revenue per kWh in target clusters. (data Key Outputs by Component unavailable) (linked to the achievement of the Objective/Outcome 2) 5. The number of new households connected in target clusters; [Dropped during 2012 restructuring] 6. Number of new meters connected; 40,000 new meters 7. Direct project beneficiaries (number of female) 8. Stakeholder forum meeting every six months. 9. Communications program implemented, and public opinion used to gauge project effectiveness. Page 38 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Muhammad Abba Wakil ICR Task Team Leader Sunday Esene Osoba, Bayo Awosemusi, Rahmoune Essalhi Procurement Specialist(s) Eucharia Nonye Osakwe Financial Management Specialist Thomas E. Walton Social Specialist Jianping Zhao Supervision Task Team Leader Kyran O'Sullivan Supervision Task Team Leader Dante Ariel Mossi Reyes Team Member Juliana Chinyeaka Victor Team Member Adewunmi Cosmas Adekoya FM Specialist Amos Abu Environmental Specialist Chita Obinwa Team Member Sarah Farnuwa Tangalu Team Member Ogochukwu Joy Medani Team Member Michael Gboyega Ilesanmi Social Specialist Edda Mwakaselo Ivan Smith Social Specialist Elijah Abiodun Siakpere Social Specialist Page 39 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY08 30.317 280,557.35 FY09 81.705 576,112.93 FY10 0 0.00 Total 112.02 856,670.28 Supervision/ICR FY10 25.623 238,782.21 FY11 55.907 286,445.04 FY12 68.965 311,074.80 FY13 52.553 286,845.82 FY14 66.469 329,302.88 FY15 50.369 266,781.60 FY16 57.863 361,634.17 FY17 56.182 284,860.69 FY18 28.527 206,349.52 FY19 29.783 255,537.01 FY20 1.150 3,785.82 Total 493.39 2,831,399.56 Page 40 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) Partial Risk Guarantee 600 111.8 18.6 Transmission Investments 168 139.6 83 Distribution Investments 92 72.4 76 Technical Assistance 34 72.4 76 Incremental Operating Cost 4 7.3 182.5 Total 0.00 198.00 0.00 Page 41 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) ANNEX 4. EFFICIENCY ANALYSIS No data was available to undertake an efficiency analysis. For the Transmission investments it was not possible to disaggregate the system improvements associated to Project investments from those associated with investments from other sources. The analysis of the Distribution investments had the same difficulties, even if the privatized distribution companies would have been willing to provide the necessary data. The PRG component had only a contingency investment component, which is not the type of investment that can be utilized for a cost-benefit analysis. Page 42 of 43 The World Bank Nigeria Electricity and Gas Improvement Project (NEGIP) (P106172) ANNEX 5. MAP Page 43 of 43