REPORT NO.: RES41069 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ENERGY SECTOR IMPROVEMENT PROJECT APPROVED ON JUNE 24, 2019 TO SOCIETE TUNISIENNE DE L'ELECTRICITE ET DU GAZ (STEG) May 21, 2020 ENERGY & EXTRACTIVES MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Jesko S. Hentschel Regional Director: Paul Noumba Um Practice Manager/Manager: Erik Magnus Fernstrom Task Team Leader(s): Moez Cherif, Tu Chi Nguyen The World Bank Energy Sector Improvement Project (P168273) ABBREVIATIONS AND ACRONYMS CPC Carthage Power Company DLI Disbursement-linked Indicator DLR Disbursement-lined Result EEP Eligible Expenditure Program ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan ESIP Energy Sector Improvement Project GoT Government of Tunisia HV High voltage IPP Independent Power Producer IRI Intermediate Results Indicator LV Low voltage MV Medium voltage PDO Project Development Objective PIT Project Implementation Team PIM Project Implementation Manual PPSD Project Procurement Strategy for Development PV Photovoltaics RAP Resettlement Action Plan RE Renewable Energy RPP Revenue Protection Program RPF Resettlement Policy Framework STEG Tunisian Company of Electricity and Gas (Société Tunisienne de l’Electricité et du Gaz) WBG World Bank Group 2 The World Bank Energy Sector Improvement Project (P168273) BASIC DATA Product Information Project ID Financing Instrument P168273 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 24-Jun-2019 30-Jun-2024 Organizations Borrower Responsible Agency STEG STEG Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to: (i) strengthen Tunisia’s electricity transmission system; and (ii) improve STEG’s commercial performance. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-89890 24-Jun-2019 30-Jan-2020 30-Jun-2024 151.00 0 151.00 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 3 The World Bank Energy Sector Improvement Project (P168273) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Background (before Restructuring) 1. The Energy Sector Improvement Project (ESIP), a loan to the Société Tunisienne de l’Electricité et du Gaz (STEG) in the amount of US$151 million, was approved on June 24, 2019 and signed on January 30, 2020. The loan is guaranteed by the Government of Tunisia and the guarantee agreement was ratified by the Parliament on May 7, 2020. The ratification law was published in the official Gazette. The Project will be effective upon receiving the legal confirmation from STEG. 2. The Project Development Objective (PDO) is to (i) strengthen Tunisia’s electricity transmission system; and (ii) improve STEG’s commercial performance. The Project has two components:  Component 1: Strengthening the electricity transmission network (US$131 million). This component will provide support for the expansion and reinforcement of Tunisia’s power transmission system through: (i) Construction of approximately 384 km of high-voltage (HV) transmission lines, including (a) approximately 284 km of HV lines connecting Skhira with Kondar and with Thyna, and Kondar with the Bouficha-Sousse transmission line; and (b) approximately 100 km of HV lines connecting the 200MW solar photovoltaic (PV) power plant in Borj Bourguiba with Tataouine (the PV power plant is expected to be commissioned in 2022 under a concession regime, outside of the Project); (ii) Construction, extension and/or reinforcement of the following substations: (a) new 400/225kV substation in Kondar; and (b) existing substations at Thyna (225kV/150kV) and Tataouine (225kV).  Component 2: Commercial performance improvement (US$20 million). This component will provide financing for payments under the Eligible Expenditures Program (EEP) to strengthen STEG’s commercial performance through (i) monitoring consumption of HV and medium voltage (MV) electricity consumers in real-time through smart meters; (ii) securing revenues from low voltage (LV) electricity consumers with large consumptions; (iii) improving the collection rate of private consumers; (iv) improving meter reading through the provision of hand-held devices to STEG staff; and (v) launching citizen engagement campaigns and public consultations to raise awareness on customers’ rights and responsibilities, solicit customer feedback, and improve the orientation of services to beneficiary needs. These actions are monitored through five Disbursement Linked Indicators (DLIs) with annual targets for the calendar years of 2019-2023. B. Implementation Status and Results (before Restructuring) 3. The team confirms that requirements of the World Bank Policy on Investment Project Financing have been met. Namely: (i) the PDO remains achievable; (ii) the performance of the Borrower remains satisfactory; (iii) the World Bank and the Borrower agree on actions that will be undertaken to complete the Project by the closing date; and (iv) the Project is not subject to suspension of disbursements. 4. At this early stage of project implementation, the project’s progress towards PDO achievement and implementation progress is satisfactory for the following reasons: (i) project management has been set up; (ii) despite some expected delay in the launch of the procurement process for Component 1 due to the pandemic, it is expected that there is sufficient time to catch up; and (iii) three of four 2019 DLI targets in Component 2 have been achieved and one 2020 target was achieved ahead of time. Despite STEG’s current liquidity shortages, we anticipate that in the long term, revenues will be recovered and the PDO will remain achievable. 4 The World Bank Energy Sector Improvement Project (P168273)  Project management: Aligned with the first legal covenant, STEG has assigned a Project Implementation Team (PIT) with necessary profiles, and key members are already working on the Project. In addition, the Project Implementation Manual (PIM) was finalized and approved by the Bank on September 16, 2019.  Component 1: The expansion of the transmission network aims to integrate the upcoming large renewable energy sites in the South and deliver electricity to the demand centers in the Central and Northern regions. Under the ambitious Government target of 30 percent renewables by 2030, the Government launched calls for 1000 MW utility-scale solar (500 MW solar PV and 500 MW wind) and received competitive prices (around US$0.24-0.33/kWh). The updated procurement plan, reflecting the change in activities (see Description of proposed changes below) has been approved by the World Bank and tender documents for the lines and substations are in advanced draft form. Procurement was supposed to be launched in March 2020 but delayed due to the COVID-19 pandemic and is expected to be launched by June 2020.  Component 2: Of the five DLIs, four have targets for 2019, of which three have been achieved. (i) DLI1 HV/MV customers provided with a smart meter: No customers received smart meters so far. Preliminary technical validation of the meters took place, but the final validation at the manufacturer’s site in Greece was postponed due to the travel ban driven by the COVID-19 crisis. STEG is exploring the possibility to carry out the validation in Tunisia to accelerate the process, but the target for 2020 – 70 percent of HV/MV customers provided with smart meters (there is no target for 2019) – is not expected to be met; (ii) DLI2 Large LV customers incorporated into Revenue Protection Program (achieved): 100 percent of LV customers consuming more than 2500 kWh/month have been integrated into the Revenue Protection Program (being treated similar to MV/HV customers, that is, getting their meters read and receiving their bills monthly, and being managed by a unit devoted to large customers), which is the target for 2019 and 2020; (iii) DLI3 Collection rate of bills of private customers (achieved): The bill collection rate as of December 2019 was 99 percent, exceeding the target for 2019 of 94 percent. This is partly thanks to STEG’s launching a series of communication campaign in 2019 on systematic disconnections for private customers with unpaid bills (see DLI 5); (iv) DLI4 LV meters read using hand-held devices: There was delay in the finalization of the specifications for the hand-held devices, which was eventually resolved, but the purchase is currently delayed due to the confinement order driven by the COVID-19 crisis. If the confinement is lifted soon, the purchase can by launched by early June 2020 with delivery by end 2020-early 2021. The target for 2019 (50 percent of LV meters read using hand-held devices) has therefore not been met and it is also unlikely that the 2020 target (90 percent of LV meters read using hand-held devices) will be met on time, but the 2021 target (100 percent of LV meters read using hand-held devices) is expected to be met on time; (v) DLI5 Communication/Outreach campaigns on customer rights and responsibilities (achieved): Multiple communication campaigns, consisting of TV/radio shows, journal articles, and pamphlets, were completed during 2019 to explain customers’ rights and responsibilities related to bill payment, exceeding the target for 2019 of one communication campaign. STEG submitted the verified report of the DLI achievement on April 3, 2020, with supplemental verified report of DLI 3 achievement on May 12, 2020. The allocation for the DLI targets already met totals US$5.1m. 5 The World Bank Energy Sector Improvement Project (P168273) 5. The Project is an environmental and social category B where potential negative impact is limited and adequate mitigation measures have been put in place. The Environmental and Social Management Framework (ESMF), Resettlement Policy Framework (RPF) and Scoping Study for the construction of the lines and substations under Component 1 were disclosed on STEG’s website on April 19, 2019 and on World Bank’s external website on April 22, 2019. The consulting firm, which is preparing the environmental and social impact assessment (ESIA) and the resettlement action plan (RAP), has been hired and started work in February 2020. It has a four months schedule, which will probably be affected by the COVID-19 pandemic. Given the Government mandated mobility restriction, field visits and public consultations will likely be affected. The team will advise STEG to work closely with the consultant to time and organize the visits and consultations (for example, in small-group sessions, employing TV, newspaper, radio, dedicated phone/SMS line, and mail) to adapt to the national restrictions. 6. The Project is in compliance with its safeguard and fiduciary requirements. The Project is in compliance with social and environmental safeguards. In addition to the legal covenant related to project management above, the other legal covenants, regarding social and environmental safeguards, are not yet due since no construction work has been initiated. With respect to financial management (FM) and procurement, the ratings are satisfactory. There is no overdue audit. C. Rationale for Restructuring 7. The Government of Tunisia (GoT) is confronting the COVID-19 pandemic and urgently needs to augment its level of response and preparedness for recovery to the health and economic urgencies. On March 2, 2020, the GoT confirmed its first case of COVID-19. By May 12, 2020, the number of confirmed cases had risen to 1,032 and 45 deaths have been reported. A COVID-19 emergency preparedness and response plan was developed by the Ministry of Health on February 22, 2020. The GoT, in collaboration with the World Health Organization and other Development Partners (DPs), has been working on costing the plan and aligning support among DPs and donors. In the interim, the GoT adopted a preemptive approach to contain the spread of the virus. It suspended all international flights and closed its borders. It also placed visitors from overseas under quarantine to limit virus exposure. The country banned gatherings and markets, closed cafes and restaurants, suspended all public events, and closed schools. In addition, on March 18, it imposed a 12-hour daily curfew from 6 p.m. to 6 a.m. The World Bank has been restructuring projects to accelerate disbursement to help the Government. The Tunisia Irrigated Agriculture Intensification Project (P160245), for example, has reallocated US$14.5 million for inclusion of a COVID-19 emergency response component. However, more needs to be done to respond to the COVID-19 crisis in Tunisia, particularly in the context of the electricity sector through this Project. 8. The reason for the proposed restructuring is an exceptional change in the country’s circumstances due to the COVID- 19 pandemic which significantly affected the electricity sector and in particular the financial performance of the STEG. The approach undertaken in this restructuring will ensure electricity supply continuity by helping STEG address short-term liquidity shortfall as a result of the COVID-19 pandemic; remains within project objectives (in particular to support STEG’s commercial performance (objective (ii))); and does not entail a major overhaul of the project’s overall design and scope. The ongoing pandemic has depressed oil demand and, together with the delays by OPEC and Russia to reach an agreement to cut supply, has driven down oil prices. This could help reduce STEG’s fuel import bill and generation costs if the low oil price is sustained over the next 6 to 9 months. However, in the short term, the pandemic has slowed down economic activities and therefore demand for electricity and gas, particularly from commercial and industrial customers. In addition, the GoT announced a temporary suspension of bill payment obligation for households for two months (March and April). Finally, the confinement order has affected the ability of meter readers and bill presenters to safely visit customer sites, and the ability of customers, who are not able to pay STEG’s bills online, to visit STEG’s agencies to pay the bills. These factors contribute to a significant drop in revenue while STEG is obligated to pay their staff, suppliers, and contractors to maintain uninterrupted supply. It is estimated that STEG’s liquidity shortfall is 6 The World Bank Energy Sector Improvement Project (P168273) around 1,283 MDT (approximately US$430 million) from April to June 2020 – see Box 1 – and around 1,958 MDT (approximately US$650 million) for the year 2020. Immediate disbursement for the DLI targets STEG has already achieved would provide part of the short-term liquidity to sustain necessary operational expenses and ensure service. Box 1: STEG’s cashflow projection for April – June 2020 STEG’s latest data in early April show demand from households remain the same but demand from commercial and industrial customers drop by 40 percent. Combined with the suspension of bill payment obligation for the March and April bills, STEG’s revenue is expected to drop by 62 percent from 520 MDT to 196 MDT for April and May. Even if the suspension of bill payment obligation ends, the suppressed demand would still result in a lower revenue for June (estimated at 295 MDT). Revenues, therefore, are estimated at 687 MDT compared with 1,560 in normal times. STEG’s expenditures are estimated at 1,970 MDT. This results in an estimated cashflow deficit of 1,283 MDT over April-June. Immediate disbursement from the proposed Project, combined with the expected loan by the EBRD of 100 million Euro (300 MDT), will help with part of this shortfall. STEG is in discussion with the main gas supplier and some of the banks for discounts and payment delays to relieve part of its liquidity challenge. April May June Total Revenues 196 196 295 687 Expenditures Gas purchase 300 300 343.7 943.7 Electricity purchase 47.6 40.2 87.8 Operations 15 56 47.1 118.1 Investments 27.4 25.6 25.8 78.8 Salaries 33 32 31.7 96.7 Taxes 87 81.2 83.8 252 Debt payments 70.6 48 274.5 393.1 Total shortfall 337 394.4 551.8 1283.2 9. The proposed Level 2 Restructuring does not entail any change to the Project PDO or overall Project scope. It mainly entails the reallocation of funds between the two components and across the DLIs in Component 2 to allow for immediate disbursement to address the negative economic impacts of the COVID-19 pandemic on Tunisia’s electricity sector. In addition, it makes changes to activities in Component 1 to adjust to the new structure of the planned solar PV project, which frees up funding for the DLIs of Component 2. The reallocation of cost under this restructuring does not affect the original economic and financial analyses and the efficiency of the expenditures. These analyses have already accounted for all the costs needed to achieve the Project benefits, within or outside the Project boundary. II. DESCRIPTION OF PROPOSED CHANGES 10. The scope of the proposed restructuring was discussed with the Government, and an official request (in a letter dated April 13, 2020) was submitted to the Bank. Specifically, this restructuring will entail the following changes: 11. Change in Project’s activities within Component 1: a) Addition of a new 400kV substation at Skhira to connect the new Skhira-Kondar and Skhira-Thyna lines with the existing corridor from the South to Sfax. This substation was originally under the scope of the private investor of the Skhira thermal power plant, but has been transferred to STEG’s responsibility. This addition is expected to have a net zero impact on over-all project cost as it utilises savings from other lines and 7 The World Bank Energy Sector Improvement Project (P168273) substations, whose specifications have been adjusted without compromising the technical quality and requirements. The Skhira substation is expected initially to transmit electricity coming from new renewable power plants in the South, and later on from the future thermal power plant at Skhira (expected 2023-2024). It is therefore aligned with the overall objective of the Project to reinforce the transmission backbone to draw power from renewable sites in the South to the demand centers in the Center and North; b) Removal of the 100 km HV transmission line connecting the solar PV power plant in Borj Bourguiba with Tataouine and the associated extension of the Tataouine substation since they will be funded by the private investor of the power plant – this will reduce the cost of the component by US$15.5 million. The revised procurement plan, which has been approved by the Bank, can be found in Annex 1. 12. Change in Project Result Framework: There is no change to the PDO or PDO level indicators. One Intermediate Results Indicator (IRI) of Component 1 has been adjusted to reflect the changes in the Project’s activities: the target for transmission lines constructed under the Project will be reduced from 384km to 284km, taking out the 100km Borj Bourguiba-Tataouine line. Some IRIs of Component 2 have been adjusted to align with the changes to the DLIs. 13. Change in Components, Cost and Reallocation between Disbursement Categories: The savings of US$15.5 million from Component 1 will be reallocated to Component 2, making the total disbursement under Component 2 US$35.5 million. This additional funding to Component 2 will be disbursed similar to the original funds under Component 2, that is, under the EEP to finance recurrent expenditures incurred by STEG, notably for the purchase of electricity from the Carthage Power Company (CPC). CPC is the only Independent Power Producer (IPP) in Tunisia’s power market, owning and operating a 471 MW gas-fired power generation facility in Radès, which accounts for 19 percent of power supply in the country. The ability of STEG to honor payments for electricity purchased from IPPs is key to enable a reliable service to electricity customers. The new allocation of US$35.5 million to Component 2 is a small fraction of STEG’s expected recurrent expenditures for the categories that form part of the EEP. 14. Change in DLIs: To respond to the immediate needs due to the exceptional changing circumstances, as mentioned above under the rationale for restructuring, the funding will be reallocated towards the DLIs that have achieved their 2019 and 2020 targets. In addition, to account for the suspension of the bill payment obligation mentioned above, the 2020 target for DLI3 or disbursement-linked result (DLR) 3.2 (bill collection rate to private customers) has been revised from 97% to 94%. Details are presented in Table 1 on the next page. 15. Change in Disbursement Estimates reflects the change in the allocation of funds across the years of the DLIs. With the reallocation, US$25 million is expected to be disbursed in FY20 for DLI achievement thus far as soon as the Project is effective. 16. Change in ESMF and RPF: These documents will be updated to include the Skhira substation and remove the Borj Bourguiba-Tataouine line and the Tataouine substation, consulted, and disclosed on STEG’s website and World Bank’s external website. The scope of work of the consulting firm selected for the ESIA and RAP will include the Skhira substation. 8 The World Bank Energy Sector Improvement Project (P168273) Table 1: Summary of Disbursement Linked Indicators Disbursement Linked Amount of Loan Allocated Restructuring: Amount of Loan Disbursement Linked Result Indicator Description (expressed in USD) Allocated (expressed in USD) DLI#1: High and medium DLR#1.1: 70% of high and DLR#1.1: 1,400,000 No change voltage customers medium voltage clients have For each additional percentage provided with a smart been provided with a smart point of high and medium voltage meter meter, as further described clients provided with a smart in the PIM, from a baseline of meter, 20,000 may be made 0 available for withdrawal, up to 1,400,000 DLR#1.2: Cumulative 100% of DLR#1.2: 600,000 No change high and medium voltage From a baseline of 70%, for each clients have been provided additional percentage point of with a smart meter, as high and medium voltage clients further described in the PIM provided with a smart meter, 20,000 may be made available for withdrawal, up to 600,000 DLI#2: Large low voltage DLR#2.1: 50% of large low DLR#2.1: 1,500,000 DLR#2.1: 5,000,000 customers incorporated voltage customers (with For each additional percentage For each additional percentage into the revenue consumption over 2,500 point of large low voltage clients point of large low voltage clients protection program kWh/month) incorporated (with consumption over 2,500 (with consumption over 2,500 into the revenue protection kWh/month) incorporated into kWh/month) incorporated into program, from a baseline of the revenue protection program, the revenue protection 0 30,000 may be made available for program, 100,000 may be made withdrawal, up to 1,500,000 available for withdrawal, up to 5,000,000 DLR#2.2: Cumulative 100% of DLR#2.2: 1,500,000 DLR#2.2: 5,000,000 large low voltage customers From a baseline of 50%, for each From a baseline of 50%, for each (with consumption over additional percentage point of additional percentage point of 2,500 kWh/month) large low voltage clients (with large low voltage clients (with incorporated into the consumption over 2,500 consumption over 2,500 revenue protection program kWh/month) incorporated into kWh/month) incorporated into the revenue protection program, the revenue protection 30,000 may be made available for program, 100,000 may be made withdrawal, up to 1,500,000 available for withdrawal, up to 5,000,000 DLR#2.3: 25% of large low DLR#2.3: 500,000 No change voltage customers (with For each additional percentage consumption less than or point of large low voltage clients equal to 2,500 but over 1,750 (with consumption less than or kWh/month) incorporated equal to 2,500 but over 1,750 into the revenue protection kWh/month) incorporated into program, from a baseline of the revenue protection program, 0 20,000 may be made available for withdrawal, up to 500,000. 9 The World Bank Energy Sector Improvement Project (P168273) Disbursement Linked Amount of Loan Allocated Restructuring: Amount of Loan Disbursement Linked Result Indicator Description (expressed in USD) Allocated (expressed in USD) DLR#2.4: Cumulative 50% of DLR#2.4: 500,000 No change large voltage customers From a baseline of 25%, for each (with consumption less than additional percentage point of or equal to 2,500 but over large low voltage clients (with 1,750 kWh/month) consumption less than or equal incorporated into the to 2,500 but over 1,750 revenue protection program kWh/month) incorporated into the revenue protection program, 20,000 may be made available for withdrawal, up to 500,000 DLR#2.5: Cumulative 100% of DLR#2.5: 1,000,000 No change large voltage customers From a baseline of 50%, for each (with consumption less than additional percentage point of or equal to 2,500 but over large low voltage clients (with 1,750 kWh/month) consumption less than or equal incorporated into the to 2,500 but over 1,750 revenue protection program kWh/month) incorporated into the revenue protection program, 20,000 may be made available for withdrawal, up to 1,000,000 DLI#3: Collection rate of DLR#3.1: 94% collection rate DLR#3.1: 2,000,000 DLR#3.1: 10,000,000 bills of private customers of bills of private customers For each additional percentage For each additional percentage measured over a 4- measured over a 4-month point of collection rate of bills of point of collection rate of bills of month period period, from a baseline of private consumers measured private consumers measured 92% in a given FY over a 4-month period, 1,000,000 over a 4-month period, may be made available for 1,428,571 may be made withdrawal, up to 2,000,000 available for withdrawal, up to 10,000,000 DLR#3.2: 94% collection rate DLR#3.2: 3,000,000 DLR#3.2: 1,000,000 of bills to private customers From a baseline of 94%, for each For maintaining a collection rate entities measured over a 4- additional percentage point of of at least 94% month period in a collection rate of bills of private subsequent FY consumers measured over a 4- Note: The target is revised month period, 1,000,000 may be from 97% to 94% made available for withdrawal, up to 3,000,000 DLR#3.3: 99% collection rate DLR#3.3: 3,000,000 DLR#3.3: 1,000,000 of bills to private customers From a baseline of 97%, for each From a baseline of 94%, for each measured over a 4-month additional percentage point of additional percentage point of period in a subsequent FY collection rate of bills of private collection rate of bills of private consumers measured over a 4- consumers measured over a 4- month period, 1,500,000 may be month period, 200,000 may be made available for withdrawal, made available for withdrawal, up to 3,000,000 up to 1,000,000 10 The World Bank Energy Sector Improvement Project (P168273) Disbursement Linked Amount of Loan Allocated Restructuring: Amount of Loan Disbursement Linked Result Indicator Description (expressed in USD) Allocated (expressed in USD) DLR#3.4: 99% collection rate DLR#3.4: 1,000,000 No change of bills to private customers measured over a 4-month period in a subsequent FY DLR#3.5: 99% collection rate DLR#3.5: 1,000,000 No change of bills to private customers measured over a 4-month period in a subsequent FY DLI#4: Low voltage DLR#4.1: 50% of low voltage DLR#4.1: 1,250,000 DLR#4.1: 1,000,000 meters read using hand- meters read using hand-held For each additional percentage For each additional percentage held devices devices, from a baseline of 0 point of low voltage meters read point of low voltage meters using hand-held devices, 25,000 read using hand-held devices, may be made available for 20,000 may be made available withdrawal, up to 1,250,000 for withdrawal, up to 1,000,000 DLR#4.2: Cummulative 90% DLR#4.2: 1,000,000 DLR#4.2: 800,000 of low voltage meters read From a baseline of 50%, each From a baseline of 50%, each using hand-held devices additional percentage point of additional percentage point of low voltage meters read using low voltage meters read using hand-held devices, 25,000 may hand-held devices, 20,000 may be made available for be made available for withdrawal, up to 1,000,000 withdrawal, up to 800,000 DLR#4.3: Cummulative 100% DLR#4.3: 250,000 DLR#4.3: 200,000 of low voltage meters read From a baseline of 90%, each From a baseline of 90%, each using hand-held devices additional percentage point of additional percentage point of low voltage meters read using low voltage meters read using hand-held devices, 25,000 may hand-held devices, 20,000 may be made available for be made available for withdrawal, up to 250,000 withdrawal, up to 200,000 DLI#5: DLR#5.1: one (1) DLR#5.1: 80,000 DLR#5.1: 5,000,000 Communication/outreach communication/outreach campaigns on customer campaign on customer rights rights and responsibilities and responsibilities in a given FY DLR#5.2: three (3) DLR#5.2: 210,000 DLR#5.2: 250,000 communication/outreach For each For each campaigns on customer communication/outreach communication/outreach rights and responsibilities in campaign, 70,000 may be made campaign, 83,333 may be made a subsequent FY available for withdrawal, up to available for withdrawal, up to 210,000 250,000 11 The World Bank Energy Sector Improvement Project (P168273) Disbursement Linked Amount of Loan Allocated Restructuring: Amount of Loan Disbursement Linked Result Indicator Description (expressed in USD) Allocated (expressed in USD) DLR#5.3: three (3) DLR#5.3: 210,000 DLR#5.3: 250,000 communication/outreach From a baseline of 4 For each campaigns on customer communication/outreach communication/outreach rights and responsibilities in campaigns, for each campaign, 83,333 may be made a subsequent FY communication/outreach available for withdrawal, up to campaign, 70,000 may be made 250,000 available for withdrawal, up to 210,000 III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ PBCs ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Procurement ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ APA Reliance ✔ Implementation Schedule ✔ Other Change(s) ✔ 12 The World Bank Energy Sector Improvement Project (P168273) Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Strengthening the electricity Strengthening the electricity 131.00 Revised 115.50 transmission network transmission network Commercial performance Commercial performance 20.00 Revised 35.50 improvement improvement TOTAL 151.00 151.00 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-89890-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: G, CW, NCS, CS Part 1 130,622,500.00 0.00 115,122,500.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Payments for EEPs Part 2 20,000,000.00 0.00 35,500,000.00 100.00 100.00 Total 150,622,500.00 0.00 150,622,500.00 13 The World Bank Energy Sector Improvement Project (P168273) OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2019 0.00 0.00 2020 44,410,000.00 25,000,000.00 2021 51,685,000.00 16,250,000.00 2022 39,055,000.00 40,000,000.00 2023 14,850,000.00 35,750,000.00 2024 1,000,000.00 34,000,000.00 2025 0.00 0.00 2026 0.00 0.00 . 14 The World Bank Energy Sector Improvement Project (P168273) . Results framework COUNTRY: Tunisia Energy Sector Improvement Project Project Development Objectives(s) The Project Development Objective (PDO) is to: (i) strengthen Tunisia’s electricity transmission system; and (ii) improve STEG’s commercial performance. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Strengthened Tunisia’s electricity transmission system Increased transmission capacity along the South-North corridor 721.00 3,090.00 (Megawatt) Improved commercial performance of STEG Increase in cash recovery index (Percentage) 83.00 92.00 PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target 1. Strengthening the electricity transmission network Transmission lines constructed under the projects (Kilometers) 0.00 284.00 Action: This indicator has been Revised Substations constructed and/or reinforced (Number) 0.00 3.00 15 The World Bank Energy Sector Improvement Project (P168273) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target 2. Improving STEG's commercial performance High and medium voltage customers provided with a smart PBC 1, 1 0.00 100.00 meter (Percentage) Action: This indicator has been Revised Large low voltage customers incorporated into the revenue PBC 2, 2 0.00 100.00 protection program (Percentage) Action: This indicator has been Revised Bill collection of private customers (Percentage) PBC 3, 3 92.00 99.00 Action: This indicator has been Revised Low voltage meters read remotely or with handheld devices PBC 4, 4 0.00 100.00 (Percentage) Communication/outreach campaigns on customer rights and PBC 5, 5 0.00 7.00 responsibilities (Number) Ratio of female to male customers using electronic payment 0.65 0.85 (Number) Share of customers aware of STEG's performance improvement 14.10 30.00 effort (Percentage) Share of female customers aware of STEG's performance 12.50 30.00 improvement effort (Percentage) The results of the consumer feedback sessions and the customer No Yes satisfaction survey, and STEG responses, are published (Yes/No) Action: This indicator has been Revised IO Table SPACE 16 The World Bank Energy Sector Improvement Project (P168273) Performance-Based Conditions Matrix DLI IN00836282 ACTION PBC 1 High and medium voltage customers provided with a smart meter Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Percentage 2.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 2019 0.00 2020 1.40 2021 0.60 2022 0.00 2023 0.00 Action: This PBC has been Revised. See below. DLI IN00836304 ACTION PBC 1 High and medium voltage customers provided with a smart meter Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Percentage 2.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 17 The World Bank Energy Sector Improvement Project (P168273) 2019 0.00 2020 70.00 1.40 0.02 for each percentage point 2021 100.00 0.60 0.02 for each percentage point 2022 0.00 2023 0.00 DLI IN00836285 ACTION PBC 2 Large low voltage customers incorporated into the revenue protection program Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Percentage 5.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 50% LV customers consuming more 2019 1.50 than 2500 kWh/month 100% LV customers consuming more 2020 1.50 than 2500 kWh/month 25% LV customers consuming 1750- 2021 0.50 2500 kWh/month 50% LV customers consuming 1750- 2022 0.50 2500 kWh/month 100% LV customers consuming 1750- 2023 1.00 2500 kWh/month Action: This PBC has been Revised. See below. 18 The World Bank Energy Sector Improvement Project (P168273) DLI IN00836305 ACTION PBC 2 Large low voltage customers incorporated into the revenue protection program Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Text 12.00 0.00 Period Value Allocated Amount (USD) Formula 0% of large voltage customers consuming more Baseline than 1750 kWh/month 50% LV customers consuming more than 2500 2019 5.00 0.1 for each percentage point kWh/month 100% LV customers consuming more than 2500 2020 5.00 0.1 for each percentage point kWh/month 25% LV customers consuming 1750-2500 2021 0.50 0.02 for each percentage point kWh/month 50% LV customers consuming 1750-2500 2022 0.50 0.02 for each percentage point kWh/month 100% LV customers consuming 1750-2500 2023 1.00 0.02 for each percentage point kWh/month DLI IN00836287 ACTION PBC 3 Bill collection of private customers Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Percentage 10.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 92.00 2019 2.00 19 The World Bank Energy Sector Improvement Project (P168273) 2020 3.00 2021 3.00 2022 1.00 2023 1.00 Action: This PBC has been Revised. See below. DLI IN00836150 ACTION PBC 3 Bill collection of private customers Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Percentage 14.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 92.00 1.43 for each percentage point 2019 99.00 10.00 above 92% 2020 94.00 1.00 0.2 for each percentage point above 2021 99.00 1.00 94% 2022 99.00 1.00 2023 99.00 1.00 20 The World Bank Energy Sector Improvement Project (P168273) DLI IN00836289 ACTION PBC 4 Low voltage meters read remotely or with handheld devices Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Percentage 2.50 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 2019 1.25 2020 1.00 2021 0.25 2022 0.00 2023 0.00 Action: This PBC has been Revised. See below. DLI IN00836326 ACTION PBC 4 Low voltage meters read using handheld devices Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Percentage 2.00 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 2019 50.00 1.00 0.02 for each percentage point 21 The World Bank Energy Sector Improvement Project (P168273) 2020 90.00 0.80 0.02 for each percentage point 2021 100.00 0.20 0.02 for each percentage point 2022 0.00 2023 0.00 DLI IN00836291 ACTION PBC 5 Communication/outreach campaigns on customer rights and responsibilities Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Number 0.52 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 2019 0.10 2020 0.21 2021 0.21 2022 0.00 2023 0.00 Action: This PBC has been Revised. See below. 22 The World Bank Energy Sector Improvement Project (P168273) DLI IN00836327 ACTION PBC 5 Communication/outreach campaigns on customer rights and responsibilities Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Output Yes Number 5.50 0.00 Period Value Allocated Amount (USD) Formula Baseline 0.00 2019 1.00 5.00 2020 3.00 0.25 0.083 for each campaign 2021 3.00 0.25 0.083 for each campaign 2022 0.00 2023 0.00 Verification Protocol Table: Performance-Based Conditions DLI_TBL_VERIFICATION PBC 1 High and medium voltage customers provided with a smart meter Description Data source/ Agency STEG Verification Entity STEG' Inspection and Audit Office The Inspection and Audit Office verifies the result per the progress report of the Smart Grid Project provided by STEG. If Procedure necessary, the Office also confirms that the HV/MV customers' smart meters are connected to the consumer management system. 23 The World Bank Energy Sector Improvement Project (P168273) DLI_TBL_VERIFICATION PBC 1 High and medium voltage customers provided with a smart meter Description Data source/ Agency STEG Verification Entity STEG' Inspection and Audit Office The Inspection and Audit Office verifies the result per the progress report of the Smart Grid Project provided by STEG. If necessary, the Office also confirms that the HV/MV customers' smart meters are connected to the consumer management Procedure system. DLI_TBL_VERIFICATION PBC 2 Large low voltage customers incorporated into the revenue protection program Description Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office STEG's Inspection and Audit Office verifies the result based on the report from the Commercial Department which indicates Procedure the inclusion of the reclassified customers in the RPP who are metered and billed on a monthly basis. DLI_TBL_VERIFICATION PBC 2 Large low voltage customers incorporated into the revenue protection program Description Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office STEG's Inspection and Audit Office verifies the result based on the report from the Commercial Department which indicates Procedure the inclusion of the reclassified customers in the RPP who are metered and billed on a monthly basis. 24 The World Bank Energy Sector Improvement Project (P168273) DLI_TBL_VERIFICATION PBC 3 Bill collection of private customers Percent of bills of private customers get collected, measured as the ratio of amount of revenue collected over amount of Description revenue billed over any four-month period Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office The STEG's Inspection and Audit Office verifies the result per the report from the Commercial and Finance departments Procedure which shows the amount of revenue collected from private customers as a percentage of total amount billed. DLI_TBL_VERIFICATION PBC 3 Bill collection of private customers Percent of bills of private customers get collected, measured as the ratio of amount of revenue collected over amount of Description revenue billed over any four-month period Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office The STEG's Inspection and Audit Office verifies the result per the report from the Commercial and Finance departments Procedure which shows the amount of revenue collected from private customers as a percentage of total amount billed. DLI_TBL_VERIFICATION PBC 4 Low voltage meters read remotely or with handheld devices Description Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office The STEG's Inspection and Audit Office verifies the result per the report by the Commercial and IT departments which Procedure indicates which customers have their meters read electronically (hence consumption recorded directly in the IT system). 25 The World Bank Energy Sector Improvement Project (P168273) DLI_TBL_VERIFICATION PBC 4 Low voltage meters read using handheld devices Description Data source/ Agency STEG Verification Entity STEG's Inspection and Audit Office The STEG's Inspection and Audit Office verifies the result per the report by the Commercial and IT departments which Procedure indicates which customers have their meters read electronically (hence consumption recorded directly in the IT system). DLI_TBL_VERIFICATION PBC 5 Communication/outreach campaigns on customer rights and responsibilities Description Data source/ Agency STEG Communications Department Verification Entity STEG Inspection and Audit Unit Verification of the campaigns launched through records of the campaigns and the associated materials. Procedure DLI_TBL_VERIFICATION PBC 5 Communication/outreach campaigns on customer rights and responsibilities Description Data source/ Agency STEG Communications Department Verification Entity STEG Inspection and Audit Unit Verification of the campaigns launched through records of the campaigns and the associated materials. Procedure 26 The World Bank Energy Sector Improvement Project (P168273) Annex 1: Revised Procurement Plan Evaluation Bid Procure Estimated Draft Specific Report and Review Market Prequalif Submission Notification Signed Contract Description ment amount Bidding Procurement Recommend Type Approach ication /Opening/ of Award Contract Completion Category (US$) Documents Notice ation for Minutes Award - New 400kV double line (bundle 2 x 570mm²) Skhira- Kondar (197km) - Line in-Line out on Open- the existing 225 kV Works 68,850,000 Prior Internatio No 1-Jun-20 5-Jun-20 4-Aug-20 2-Nov-20 16-Nov-20 7-Dec-20 22-Nov-23 (bundle 2 x 570mm²), nal Bouficha-Sousse to Kondar (6.5 km) - New 225kV double line (570 mm²) Skhira- Thyna (85km) - New 400/225kV substation at Kondar Open- - New 400kV Works 30,480,000 Prior Internatio No 1-Jun-20 5-Jun-20 4-Aug-20 2-Nov-20 16-Nov-20 7-Dec-20 26-May-23 substation at Skhira nal - New 225/150kV substation at Thyna - Two auto- transformers 400/225 kV (500 MVA each) at Kondar Open- - An auto-transformer Works 13,500,000 Post Internatio No 29-May-20 2-Jun-20 3-Aug-20 2-Nov-20 16-Nov-20 7-Dec-20 31-May-22 225/150 kV (200 MVA) nal at Thyna - Four coils 400 kV (40 MVAR each) 27