$ Report No: RES00757 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF WAPP Ghana-Côte d’Ivoire Interconnection Project West Africa Regional Electricity Market Program (WA-REMP) AS PHASE 1 OF THE MULTI-PHASE PROGRAMMATIC APPROACH (MPA) APPROVED ON 24-Jan-2025 TO Republic of Côte d'Ivoire, Republic of Ghana February 24, 2025 Energy & Extractives Global Practice Western And Central Africa Region Regional Vice President: Ousmane Diagana Regional Director: Franz R. Drees-Gross Country Director: Franz R. Drees-Gross (Acting) Practice Manager: Kwawu Mensan Gaba Task Team Leader(s): Tamaro Kane, Frederic Verdol, Maame Tabuah Ankoh, Tu Chi Nguyen, Claire Marion Nicolas The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) ABBREVIATIONS AND ACRONYMS CI-ENERGIES Côte d’Ivoire Electricity Company - Côte d'Ivoire Énergies CPF Country Partnership Framework E&S Environmental and Social GM Grievance Mechanism GRIDCo Ghana Grid Company LTD. IDA International Development Association IPF Investment Project Financing kV Kilo Volt LERF Liquidity Enhancement Revolving Fund MPA Multiphase Programmatic Approach MW Megawatt PAPs Project-Affected Persons PDO Project development objective PIU Project Implementing Unit RAP Resettlement Action Plan RoW Right of Way RVP Regional Vice President SMO System Market Operator TA Technical Assistance TSO Transmission System Operator WAPP West African Power Pool WBG World Bank Group WA-REMP West Africa Regional Electricity Market Program The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name WAPP Ghana-Cote d'Ivoire Interconnection Project - P178923 Phase 1 WA-REMP MPA Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) Western and Central Africa Approval Date Current Closing Date 24-Jan-2025 31-Jan-2030 Environmental and Social Risk Classification (ESRC) High Organizations Borrower Responsible Agency CI-Energies, GRIDCo, West African Power Pool (WAPP) Republic of Côte d'Ivoire, Republic of Ghana Secretariat @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective The Project Development Objective is to increase electricity trade between Ghana and Cote d'Ivoire, and improve the WAPP network and market operation. Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD -- -- -- 0 i The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) IDA 311.22 0.00 311.22 0.00 Grants -- -- -- 0 Policy Waivers Does this restructuring trigger the need for any policy waiver(s)? No @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate MULTIPHASE PROGRAMMATIC APPROACH (MPA) Multiphase Programmatic Approach (MPA) Program Development Objective Original MPA Program Development Objective (Approved as part of Approval on 22-Dec-2024) The Program Development Objective (PrDO) is to increase regional electricity trade, scale up renewable energy integration, and expand access to electricity in the West African region. Current MPA Program Development Objective The Program Development Objective (PrDO) is to increase regional electricity trade, scale up renewable energy integration, and expand access to electricity in the West African region. Proposed MPA Program Development Objective Multiphase Programmatic Approach (MPA) Status (Public Disclosure) Status and Key Decisions (Public Disclosure) Negotiations have been completed and the MPA is scheduled for Board on January 22 2025. @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate ii The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ........................................................................................1 II. DESCRIPTION OF PROPOSED CHANGES ....................................................................................................................3 III. PROPOSED CHANGES ................................................................................................................................................6 IV. DETAILED CHANGE(S) ...............................................................................................................................................7 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The West African Power Pool (WAPP) Ghana-Côte d’Ivoire Interconnection Project- Phase 1 WA-REMP(P178923) was approved by the Board on January 24, 2025 as part of the first phase of the West Africa Regional Electricity Market Program Multiphase Programmatic Approach (WA-REMP MPA, P505173). The objective of the Project is to increase electricity trade between Ghana and Côte d’Ivoire, and improve the WAPP network and market operation. The project consists of three components: (a) Component 1: Second Ghana- Côte d’Ivoire Interconnection (US$221.5 million equivalent IDA): (i) Sub-component 1.a: Construction of the Ghana- Côte d’Ivoire Second Interconnection (US$189.5 million equivalent), including a 330-kilovolt high voltage transmission line spanning approximately 245 km and associated substations, SCADA and fiber equipment to connect the power systems of the two countries from a new substation (Dunkwa II) in Ghana to the Bingerville substation in Côte d’Ivoire. (ii) Sub-component 1.b: Technical assistance for project management, institutional capacity and commercial agreements (US$32 million equivalent IDA), including the recruitment of a common owner’s engineer, development and implementation of safeguards instruments, costs associated with the establishment of the project implementation units, and training and consulting services. (b) Component 2: Strengthen National Transmission capacity (US$37.5 million equivalent IDA), This component will finance the construction of a 75km Awodua-Dunkwa II 330 kV transmission line which will be connected to the existing 330kV Aboadze-Kumasi transmission line. The Awodua-Dunkwa Line will be terminated at the new 330kV Dunkwa II Substation which has been designed and integrated into the Ghana System such that the project ensures that power is transmitted further into Ghana and the WAPP Network. These investments are instrumental to ensure that the national transmission system has enough capacity to enable the power flow along the new Côte d’Ivoire-Ghana interconnection and support the integration of variable RE capacity. (c) Component 3: Market Readiness Support to the WAPP/Information and Coordination Center (ICC) and establishment of the Liquidity Enhancement Revolving Fund (LERF) (US$55 million equivalent IDA): (iii) Sub-component 3.a: Power systems integration, upgrades and synchronization (US$32.54 million equivalent IDA) to finance residual investments needed to complete the synchronization of the WAPP power system with investments on hardware and equipment needed to enable real time monitoring of the grid and support best operational practices and tools to make the ICC fully operational as system market operator. (iv) Sub-component 3.b: ICC start-up support (US$12.8 million equivalent) to support personnel recruitment, equipment and capacity building for the system market operator and to facilitate coordination with the national transmission system operators. (v) Sub-component 3.c: Market frameworks testing and implementation and support to the establishment of the LERF (US$7.16 million equivalent) with assistance to WAPP agencies and members on development Page 1 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) and implementation of key market instruments such as the grid code, transmission tariff methodology, inter-operator agreements, and to develop key risk mitigation instruments. (vi) Sub-component 3.d: Feasibility studies for strategic infrastructure identified under the Regional Master Plan and update of the Regional Master Plan (US$2.5 million equivalent IDA) to finance the update of the ECOWAS regional master plan and the preparation of feasibility studies for critical regional infrastructure identified under the regional master plan. 2. The WAPP GH-CIV Project is not yet effective, and the financing agreements have not yet been signed. Project effectiveness is currently expected by June 2025. A project preparation advance of US$6 million was approved for the project and is under implementation by the WAPP. B. Rationale for Restructuring 3. On November 13, 2024 and November 25, 2024, respectively, the Government of Ghana and the Government of Côte d’Ivoire submitted correspondence requesting that IDA support the financing of land compensation and resettlement costs (US$7 million requested by Cote d’Ivoire and US$10 million requested by Ghana) for the WAPP GH- CIV Project as part of the implementation of Resettlement Action Plans (RAPs) for environmental and social (E&S) compliance with World Bank operational policies. 4. The Governments of Ghana and Côte d’Ivoire face significant fiscal constraints and would not be able to finance the implementation of the RAPs without significant delays. The use of IDA financing is essential to ensure that the Governments can adequately and timely compensate, and support individuals and communities affected by the Project, thereby facilitating the successful execution of the Project. The Government of Côte d’Ivoire’s fiscal constraints are described in the FY23-27 Country Partnership Framework (CPF1) noting that, “the preparation and implementation of resettlement and compensation instruments are not always satisfactory due to several difficulties, in particular the mobilization of dedicated funds by the Government, delaying Project implementation with significant disbursement lags.” The challenges of allocating compensation funds from the central budget would risk slowing down implementation. It should also be noted that in recent years, these fiscal pressures have already made it difficult to fully finance the resettlement costs for similar projects. There is therefore a risk that the execution of Project activities could be significantly delayed due to difficulty in mobilizing on time the needed resources for RAP implementation. The Government of Ghana is facing elevated public debt and financing needs that are difficult to meet given limited access to international capital markets. Restoring fiscal and debt sustainability, reducing the energy sector deficit and curbing inflation are key policy priorities which the World Bank is supporting through the development policy financing2 approved in January 2024 which aims to restore fiscal sustainability, support financial sector stability and private sector development, improve energy sector financial discipline and strengthen social and climate resilience. 5. Per the Procedure for the Preparation of Investment Project Financing (IPF), Regional Vice President (RVP) approval is required for the use of IDA financing for “land expenditures (including compensation for land acquisition related to implementation of a resettlement instrument) or cash compensation and other assistance paid in cash for involuntary resettlement”. While the Project was approved by the Board on January 24, 2025, approval of the RVP of the use of IDA financing for land compensation and resettlement costs under the Ghana and Côte d’Ivoire financings was obtained on 1 World Bank.2022. Côte d’Ivoire - Country Partnership Framework for the Period FY23-FY27. Report No. 178156. Washington, D.C. : World Bank Group. 2 Côte d’Ivoire Investment for Growth DPF3/PBG/D4D project (P180234). Page 2 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) January 31st, 2025. As such, a restructuring is being processed to enable the inclusion of a financing category for this exceptional use in the financing agreements prior to their signature. II. DESCRIPTION OF PROPOSED CHANGES 6. The proposed change consists of the inclusion of a new financing category for land compensation and resettlement expenses in the financing category tables for the Côte d’Ivoire and Ghana financing agreements. Approval was provided by the RVP for the use of US$10 million IDA equivalent in the US$150 million IDA financing for Ghana and for the use of US$7 million IDA equivalent in the US$1093 million IDA equivalent financing for Côte d’Ivoire to finance compensation for land acquisition, loss of assets and revenue, and livelihood restoration related to the implementation of the RAPs in the respective countries. The tables 1 and 3 below outline the changes in the financing categories in schedule 2 of to the negotiated agreements presented to the Board. Ghana Table 1. Financing Category – Annex 2 of the Ghana Financing Agreement Previous Allocation Revised Allocation Category Amount of the Percentage of Amount of the Percentage of Financing Expenditures to Financing Allocated Expenditures to be Allocated USD) be Financed USD) Financed (1) Goods, works, non- 150,000,000 100% 140,000,000 100% consulting services, consulting services, Training and Operating Costs for the Ghana Respective Part of the Project (Parts 1 and 2) (2) Eligible Expenditures for 0 100% 0 100% the CERP (3) Complementary Financing 0 Not applicable 0 Not applicable for the Cat DDO (4) Land expenditures and - 100% 10,000,000 100% RAP compensation Total Amount 150,000,000 150,000,000 7. The reallocation of financing in the categories for the Ghana financing would shift US$10 million equivalent from Category 1 (Goods, works, non-consulting services, consulting services, training and operating costs for the Ghana respective part of the Project) to a new “Category 4” for resettlement costs under two RAPs – one for sub-component 1a and one for component 2. For sub-component 1a, the RAP covers a 125 km transmission line with a 40-meter Right of Way (RoW). The Project requires approximately 1,275 acres of land for the Ghana section. Per the RAP surveys conducted based on the established cut-off date September 24, 2024, a total of 1,205 assets are affected, including 1,095 farms and 110 structures. The total number of Project-Affected Persons (PAPs) censured is 713, comprising 500 males and 213 females. Additionally, 345 farms whose owners were unavailable were assessed and tagged as “Unknown”. For Component 2, the census was conducted based on the agreed cut-off date of August 9, 2024, following the current routing and a 40-meter-wide RoW. The construction of a 75 km power transmission line from Dunkwa to 3 Credit B in the Financing Category table. Page 3 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) Awodua would affect 741.316 acres, traversing 24 communities within the Upper Denkyira East district in the Central Region and the Prestea Huni-Valley Municipality. A total of 660 PAPs were identified, and 857 farm parcels will be affected. Perennial crops such as cocoa, rubber, and oil palm, as well as annual crops such as rice, maize, cassava, cocoyam, and plantain, will be impacted. Per the survey, a total of 116 structures will be affected under the Project, including 59 permanent structures and 57 temporary structures. The two RAPs are subject to the Bank’s review, clearance, and public disclosure per ESF requirements. 8. The cost estimates for the two RAPs based on the inventory of impacted assets and socio-economic survey of PAPs include: (a) compensation for the affected assets (land, houses, structures, crops/trees); (b) implementation of a livelihood restoration program or activities; (c) assistance for vulnerable persons; and (d) construction damages (damages to assets outside the approved RoW). The overall budget estimation is provided in the table below. Table 2. Ghana RAP Compensation Budget Items USD Compensation for crops and trees 4,922,364.72 Compensation for land 3,063,262.66 Compensation for structures 605,593.64 Support to vulnerable groups 94,198.92 Livelihood restoration 429,561.05 Construction damages 387,049.39 Contingency 497,969.62 Total 10,000,000.00 9. In Ghana, the Ghana Grid Company Limited (GRIDCo) is responsible for the implementation of Component 1 and 2. GRIDCo has the adequate capacity to supervise and manage Project implementation (including environment and social risks management) and has invested in the network construction and expansion in Ghana, and in the existing transmission interconnection between Ghana and Côte d’Ivoire. GRIDCo will facilitate compensation payment through transfers to PAPs’ bank accounts or other secure payment methods accessible to them. Advance notice will be provided regarding the date, time, and related payment procedures. GRIDCo has a robust financial system and qualified and experienced personnel to ensure the implementation of compensation payments in accordance with current regulations. The use of funds will be audited during the implementation and after completion. Côte d’Ivoire Table 3. Financing Category – Annex 2 of the Côte d’Ivoire Financing Agreement Previous Allocation Revised Allocation Category Amount of Amount of Percentage of Amount of Amount of Percentage of Credit A4 Credit B Expenditures Credit A Credit B Expenditures allocated allocated to be allocated allocated to be Financed (EUR) Financed (EUR) (1) Goods, works, non- 3,100,000 100,200,000 100% 3,100,000 93,565,000 100% consulting services, consulting services, 4 Credit A – SML credit ; Credit B – regular credit Page 4 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) Training and Operating Costs for Part 1 of the Côte d’Ivoire Respective Part of the Project (Part 1) (2) Eligible 0 0 100% 0 0 100% Expenditures for the CERP (3) Complementary 0 0 Not 0 0 Not applicable Financing for the Cat applicable DDO (4) Land expenditures - - 100% 0 6,635,000 100% and RAP compensation Total Amount 3,100,000 100,200,000 3,100,000 100,200,000 10. The reallocation of financing in the categories for the Côte d’Ivoire financing would shift EUR5 6.635 million (US$ 7 million equivalent) from Category 1 (Goods, works, non-consulting services, consulting services, training and operating costs for the Côte d’Ivoire respective part of the Project) to a new “Category 4” for resettlement costs under the RAP. The draft RAP indicates that the Côte d'Ivoire section crosses three regions (Alépé, Grand-Bassam, Aboisso), and affects 709 PAPs, including one palm factory. Land use along the proposed transmission line corridor consists mainly of small- scale subsistence farming and large-scale plantations. During the rainy season (planting), the area is intensively cultivated, with cocoa as the main crop grown in the region. The area impacted by the power line corridor consists mainly of agricultural land. The socio-economic assessment of PAPs and affected assets revealed no significant specific impacts along the designated route that would warrant a deviation of the planned line. Furthermore, the Project does not affect any sacred sites or locations of special significance. The RAP will be reviewed, cleared and disclosed per the World Bank’s requirements. 11. The RAP implementation budget has been estimated based on the identified land acquisition impacts of the Project. The itemized costs include: (a) compensation for the affected assets (land, houses, structures, crops/trees); (b) implementation of a livelihood restoration program or activities; (c) assistance for vulnerable persons; and (d) damages to trees/crops due to the installation of power lines (construction and stringing of the transmission line). The overall budget estimation is provided in the table below. Table 4. Côte d’Ivoire RAP Compensation Budget Items FCFA USD6 (1USD~=605 FCFA) Compensation for affected crops, trees 340,000,000 561,983 Compensation for land, structures 795,000,000 1,314,050 (including houses) Support to vulnerable groups 10,000,000 16,529 Livelihood restoration activities 1,666,500,000 2,754,545 Compensation for damages to 1,000,000,000 1,652,893 trees/crops due to installation of 5 Côte d’Ivoire financing is in EUR. 6 Note that the study was completed with dollar values, and these are kept here for accuracy, but the financing is provided in EUR. Page 5 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) power lines (construction and stringing of the transmission line) Contingency (10%) (to cover the discrepancies arising from annual 423,500,000 700,000 variations in compensation unit rates) Total 4,235,000,000 7,000,000 12. The Project’s implementation will be managed by CI-ENERGIES, a state-owned company with the required technical expertise on behalf of the Government of Côte d'Ivoire. CI-ENERGIES has extensive experience in network construction and expansion within the country, as well as managing existing cross-border interconnections. Funding for the RAP implementation will be channeled through the designated account of the Project. The PIU in CI-ENERGIES will facilitate compensation payment through transfers to PAPs’ bank accounts or other secure payment methods accessible to them. Advance notice will be provided regarding the date, time, and related payment procedures. The PIU has qualified specialists with experience in compensation payments for PAPs, including under World Bank financed operations such as the Northern Electricity and Digital Access project (NEDA, P176776) and the now completed Electricity Transmission and Access project (P157055). The payment system and the accountability structures are sufficiently robust and will ensure there are satisfactory records of all compensations payments, including proper monitoring, evaluation, and audit of the implementation of the RAP. 13. Ghana and Cote d’Ivoire. Under the Project, both internal and external monitoring and evaluation will be applied, regardless of their financing sources. Internal monitoring responsibilities are explicitly assigned to the PIUs. The PIUs will also engage external competent resettlement specialists to monitor the implementation of the resettlement plans, propose necessary corrective measures, and prepare periodic monitoring and final evaluation reports. The completion report, which detail all accountabilities, processes, challenges, lessons learned, and any discrepancies, will be submitted to the World Bank for approval. Civil works cannot commence until the RAP completion report has been approved by the Bank. The World Bank will monitor the RAP implementation through implementation support missions, field visits, and regular exchanges with the PIU. The World Bank will closely monitor the release of funds, the operationalization and implementation of the Project-level Grievance Mechanism (GM), the implementation of livelihood restoration measures, and the support provided to vulnerable Project affected persons, among other aspects. Resettlement funds will be included in the annual Project auditing exercises and will be managed as specific transaction/expenditures related to resettlement in the Project’s general ledger to facilitate audit. The Project will also mobilize internal and external auditors and will conduct auditing exercises to verify the appropriate use of the funds. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Operation Information Proposed Changes Operation Information Proposed Changes Development Objective No Loan Closing Date Extension No Summary Description No Loan Cancellations No (Operation Abstract) Legal Operational Policies No Reallocations No MFD/PCE No Financial Management No Page 6 The World Bank WAPP Ghana-Cote d'Ivoire Interconnection Project - Phase 1 WA-REMP MPA (P178923) Results No Procurement No Risks No Institutional Arrangement No Legal Covenants No Implementation Schedule No Conditions No Implementation Modalities No Disbursements Estimates No Disbursements Arrangements No DDO No Clients No Appraisal Summary No Components No @#&OPS~Doctype~OPS^dynamics@restrhybriddetailedchanges-disclose#doctemplate IV. DETAILED CHANGE(S) COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? Yes Last approved as part of PAD Data Sheet (Approval) on 31-Jan-2025 Is this project Private Capital Enabling (PCE)? Yes Last approved as part of PAD Data Sheet (Approval) on 31-Jan-2025 LOANS ENVIRONMENTAL & SOCIAL Environmental & Social Assessment According to the E/S Specialist are there changes proposed to the operation’s design that No would impact the Bank’s E&S assessment?” Page 7