Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00006619 IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA-61680 ON A CREDIT IN THE AMOUNT OF SDR 30 MILLION (US$35 MILLION EQUIVALENT) TO THE REPUBLIC OF TOGO FOR THE ENERGY SECTOR SUPPORT AND INVESTMENT PROJECT June 27, 2024 Energy and Extractives Global Practice Western and Central Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective June 3, 2024) Currency Unit = CFA Franc (CFAF) = US$1 Euro US$ = SDR 1 FISCAL YEAR July 1 - June 30 Regional Vice President: Ousmane Diagana Country Director: Marie-Chantal Uwanyiligira Regional Director: Franz R. Drees-Gross Practice Manager: Kwawu Mensan Gaba Justin Marie Bienvenu Beleoken Sanguen, Task Team Leader(s): Aurelie Yapi, Saliou Aitcheou ICR Main Contributor: Hermann Nangmo Ndengue ABBREVIATIONS AND ACRONYMS ARSE Autorité de Réglementationl du Secteur d’Electricité (National Authority for the Regulation of the Electricity Sector) CAGR Compound Annual Growth Rate CEB Communauté Electrique du Bénin (Benin/Togo Generation and Transmission Power Utility) CEET Compagnie Energie Electrique du Togo (Public Distribution Utility) CPF Country Partnership Framework DPO Development Policy Operation EIRR Economic Internal Rate of Return FNPV Financial Net Present Value GoT Government of Togo GRM Grievance Redress Mechanism HLO High-Level Objective ICR Implementation Completion and Results Report IDEA Inclusive Development through Electricity Access IPP Independent Power Producer ISR Implementation Status and Results Report LV Low Voltage M&E Monitoring and Evaluation MIP Management Improvement Plan MME Ministère des Mines et de l’Energie (Ministry of Mines and Energy) MV Medium Voltage NDP National Development Plan NPV Net Present Value O&M Operation and Maintenance PAD Project Appraisal Document PDO Project Development Objective PIU Project Implementation Unit RPP Revenue Protection Program SAIFI System Average Interruption Frequency Index SBEE Société Béninoise d'Énergie Électrique (Society for the Promotion of Electricity in Benin) SCD Systematic Country Diagnostic T&D Transmission and Distribution TCN Transmission Company of Nigeria TESSIP Togo Energy Sector Support and Investment Project ToC Theory of Change WTP Willingness to Pay TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION .............................................................. 10 II. OUTCOME .................................................................................................................... 11 A. RELEVANCE OF PDOs ............................................................................................................ 11 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 12 C. EFFICIENCY ........................................................................................................................... 16 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 18 E. OTHER OUTCOMES AND IMPACTS ......................................................................................... 19 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 21 A. KEYS FACTORS DURING PREPARATION .................................................................................. 21 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 21 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 22 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 22 B. ENVIRONMENTAL, SOCIAL AND FIDUCIARY COMPLIANCE ...................................................... 23 C. BANK PERFORMANCE ........................................................................................................... 25 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 26 V. LESSONS AND RECOMMENDATIONS ............................................................................. 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 37 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 40 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 41 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 55 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 56 The World Bank Energy Sector Support and Investment Project (P160377) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P160377 Energy Sector Support and Investment Project Country Financing Instrument Togo Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Republic of Togo CEET, MInistère de l'Energie et des Mines Project Development Objective (PDO) Original PDO The objective of the project is to improve the operational performance of the power sector and increase access to electricity in the capital city, Lomé. Page 1 of 56 The World Bank Energy Sector Support and Investment Project (P160377) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 35,000,000 34,858,697 33,998,600 IDA-61680 Total 35,000,000 34,858,697 33,998,600 Non-World Bank Financing 0 0 0 Borrower/Recipient 1,000,000 0 0 Total 1,000,000 0 0 Total Project Cost 36,000,000 34,858,697 33,998,600 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 20-Dec-2017 12-Mar-2018 09-Nov-2020 30-Nov-2022 31-Aug-2023 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 16-Sep-2022 28.32 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 23-May-2018 Satisfactory Satisfactory 0 Page 2 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 02 05-Dec-2018 Satisfactory Satisfactory 1.63 03 23-May-2019 Satisfactory Satisfactory 2.50 04 08-Dec-2019 Satisfactory Satisfactory 7.31 05 09-Jun-2020 Satisfactory Satisfactory 10.25 06 11-Dec-2020 Satisfactory Moderately Satisfactory 14.65 07 21-Jun-2021 Moderately Satisfactory Moderately Satisfactory 22.75 08 16-Dec-2021 Moderately Satisfactory Moderately Satisfactory 27.12 09 21-Jun-2022 Moderately Satisfactory Moderately Satisfactory 27.98 10 02-Feb-2023 Moderately Satisfactory Satisfactory 33.03 11 06-Nov-2023 Moderately Satisfactory Satisfactory 34.01 SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 100 Public Administration - Energy and Extractives 7 Energy Transmission and Distribution 93 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Environment and Natural Resource Management 100 Climate change 33 Mitigation 28 Adaptation 5 Energy 100 Energy Efficiency 100 Energy Policies & Reform 26 Access to Energy 81 Page 3 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ADM STAFF Role At Approval At ICR Regional Vice President: Makhtar Diop Ousmane Diagana Country Director: Pierre Frank Laporte Marie-Chantal Uwanyiligira Director: Riccardo Puliti Franz R. Drees-Gross Practice Manager: Charles Joseph Cormier Kwawu Mensan Gaba Justin Marie Bienvenu Beleoken Franklin Koffi S.W. Gbedey, Task Team Leader(s): Sanguen, Aurelie Yapi, Saliou Manuel Jose Millan Sanchez Aitcheou ICR Contributing Author: Hermann Nangmo Ndengue Page 4 of 56 The World Bank Energy Sector Support and Investment Project (P160377) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Togo, a West African nation with a population of about 8 million, is strategically located with a natural deep-water harbor, fertile lands, and mineral resources. It is bordered by Ghana, Benin, and Burkina Faso and has a rich cultural diversity with 37 ethnic groups. The country’s geography includes productive agricultural land and significant phosphate and limestone deposits, and it hosts the region’s deepest port, which is crucial for neighboring landlocked countries. 2. Despite experiencing economic growth, Togo’s economy has vulnerabilities to shocks, with moderate gross domestic product growth rates between 5.0 and 5.6 percent from 2015 to 2017. However, infrastructure investments critical for development were not made in a fiscally sustainable way, leading to rapidly increasing public debt and looming financial crisis risks. Environmental challenges, such as climate change impacts on agriculture and flooding risks, also pose threats. 3. While Togo has made strides in poverty reduction and equity, the slow decline in poverty rates from 61.7 percent in 2006 to 55.1 percent in 2015 suggests it is unlikely to eradicate extreme poverty by 2030. Growth has not been evenly distributed, with the poorest 35 percent experiencing a decrease in consumption. 4. At the appraisal stage, recommendations for Togo included fostering sustainable poverty reduction through robust, inclusive, and sustainable economic growth with a strong emphasis on private sector engagement. This growth should be supported by effective government policies, public investments, and services to ensure broader and more resilient economic development. Sectoral and Institutional Context 5. At the time of appraisal, Togo’s energy sector was overseen by the Ministry of Mines and Energy (MME), which was mainly responsible for the strategy and planning of the electricity sector. The regulatory agency for the electricity subsector, ARSE (Autorité de Réglementation du Secteur d’Electricité), was established in 2000 within the MME. Compagnie Energie Electrique du Togo (CEET) served as the public utility responsible for distributing electricity throughout the country. CEET sourced 50 percent of its electricity from the Communauté Électrique du Bénin (CEB), a binational company managing the development and operations of the grids in Togo and Benin. CEB supplied wholesale power primarily through import contracts from neighboring countries under a single-buyer model. The remaining 50 percent of electricity was purchased from Contour Global, a private independent power producer (IPP) 6. Over the years, the institutional framework of the Togolese power sector went through significant changes. In May 2016, the Togolese Agency of Rural Electrification and Renewable Energies was created by presidential decree to implement the country’s rural electrification vision; promote renewable energies; and ensure that even the most remote communities in Togo have access to electricity through a combination of electricity grid expansion, rural mini-grids, and solar home systems. Since November 2019, the mandate of CEB has been limited to a transmission system operator, while its prior responsibility as an electricity importer was transferred to the two distribution utilities of Togo and Benin (CEET and Page 5 of 56 The World Bank Energy Sector Support and Investment Project (P160377) SBEE (Société Béninoise d'Énergie Électrique), respectively). A wheeling charge of CFAF 10/kWh was adopted. 7. At appraisal, Togo’s electricity access rate was 29.2 percent lower than the Sub-Saharan African (SSA) average of 37.0 percent. Urban areas had a 56.4 percent access rate, while rural areas had only 5.5 percent, well below the SSA rural average of 15.0 percent. In 2017, Togo experienced significant power outages, with the System Average Interruption Duration Index (SAIDI) indicating 89 hours of interruption, and the System Average Interruption Frequency Index (SAIFI) averaged 39 interruptions per customer for the year. 8. In addition, the peak electricity demand was around 174 MW, with the household sector being the largest consumer at 54 percent of total usage, followed by the industrial sector at 31 percent, and the service sector at 15 percent. The main challenges to sector investments included limited experience with IPPs, lack of an integrated electrification strategy, and technical and commercial losses due to nonpayment and aging infrastructure. Rationale for World Bank’s Assistance 9. The World Bank recognized the potential to create a positive impact by reestablishing its partnership after a prolonged absence in the country. With Togo’s power sector facing considerable strain, obtaining private sector financing has proven challenging, primarily due to the perceived risk and lengthy payback periods inherent in the energy sector. As a result, the World Bank’s and other donors’ support has been deemed essential in laying the groundwork for mobilizing the investment financing necessary for advancing sector expansion. 10. The World Bank’s involvement aligned with the 2017–2020 Country Partnership Framework (CPF) Report No. 112965-TG, which corresponded with Togo’s growth and employment strategy. The CPF aimed to address governance issues in the electricity sector, such as supply insecurity, unreliability, high connection fees, and inefficiencies, which affected the sector’s financial health and appeal to investors. 11. The project also supported Togo’s National Strategy1 to become an emergent economy in 15–20 years, facilitated by the General Policy Statement. The World Bank Group contributed significantly by helping address governance challenges within the electricity sector, thus supporting the country’s economic growth ambitions. Project Relevance to Higher Level Objectives 12. At the time of project approval, Togo was collaborating with development partners, including the World Bank, to enhance its electricity sector—a sector acknowledged as fundamental to sustainable development. This concerted effort demonstrated the Togolese leadership's recognition that robust and reliable power systems were essential for advancing the country's development agenda. By investing in upgrades and expansions to electricity generation, transmission, and distribution networks, Togo aimed to increase access to electricity, enhance service reliability, and ultimately create new opportunities for businesses and households. 13. The project also aimed to support the World Bank's overarching mission to eliminate poverty and promote shared prosperity by improving access to reliable and affordable electricity. This is crucial for stimulating business growth, creating employment opportunities, and increasing incomes. 1 IMF Country Report No 14/225 Page 6 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 14. The project also sought to improve the country’s framework for private sector participation and investment in the energy sector. Activities under the project included implementing a revenue protection program (RPP), constructing and rehabilitating electricity networks, connecting new subscribers, and restructuring CEET, all of which aimed to increase electricity demand, improve CEET’s performance, and encourage private sector involvement, especially in electricity generation. Theory of Change 15. During the appraisal phase of the project, it was not a requirement for project documents to include a Theory of Change (ToC). Nevertheless, a ToC has been retrospectively formulated from the project’s results chain and is displayed in Figure 1. 16. The essential assumptions made included the following: (a) the Government has the necessary willingness and capacity to implement the recommendations from the master plan and key sector plans, (b) the acquisition of land and compliance with necessary safeguards instruments for project activities were timely, and (c) the enterprises recruited indeed have excellent skills and adequate financial capacities to carry out the works on time. Page 7 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Figure 1. Reconstructed ToC Components Activities Outputs Intermediate Outcomes PDO / Outcomes LT Impact Rehabilitation of around 71 km MV b Distribution networks cables, and 41 MV/LV Transformer rehabilitated in Lome including Length/Number of new stations LV/MV cables and Transformer and reinforced distribution Power stations. Construction of 15 MV/LV lines/ cables and Distribution Distribution networks constructed substations in Lomé Transformer stations, 2 Switching Improvement stations, 9 MVAR capacitor banks, 88 in Lomé including LV/MV and km of MV lines and 225 km of LV lines. cables/lines, transformer stations, Reduced power outages Expansion switching stations and capacitor and technical losses To contribute to 20,000 new electricity connections in banks improve a better the outskirts of Lomé access and more Number of new connections achieved reliable electricity in Togo. Review contract performance between Reduction in Improved CEET and the Government. Reduction of distribution Contract performance between cumulative duration of livelihoods Implementation of the Revenue system losses, especially CEET and the Government is non-technical, due to the power outage per year and economic Protection Program, targeting large reviewed and implemented. PPR implementation. in new and productivity customers and government electricity bill payment. The RPP is implemented targeting Improvement of the CEET rehabilitated stations. Preparation of (i) a master plan for large consumers and Government governance. Increase in people Increased generation, transmission, and office. Power Some keys development provided with new or Performance Sector distribution; (ii) a sector financial model A master plan for electricity plans are developed for a improved electricity in electricity and viability assessment; (iii) a generation, transmission, and better decision-making for Reform connection and sector in Togo diagnostic study of CEB and the distribution, and others’ key plan are the electricity sector. implementation of reforms identified; prepared. service. and (iv) and the preparation and The diagnosis of the electricity sector implementation of MIP for the CEET. a To contribute to (CEET, CEB, and MoE) is realized and Strengthen the planning capacities of revitalization actions plans are improve performance the MoE and CEET. of the energy sector. proposed and implemented. Review of the sector legal and Improved financial regulatory framework. sustainability of CEET. Electricity utility (CEET) staff trained Reduction in electricity Recruitment of an owner's engineer losses per year in the for project supervision Number of staff recruited and Number of trained staff in Project project area. trained the energy utility/PIU Management Project management Owner’s engineer team hired and Owner’s engineer presence and Capacity Building staff capacity by training on the ground related to utility management and/or deployed Building project implementation Equipment acquired Critical Assumptions: (a) the Government has the necessary willingness and capacity to implement the recommendations from the master plan and key sector plans; (b) the timely acquisition of land and compliance with necessary safeguards instruments for project activities; (c) the enterprises recruited indeed have excellent skills and adequate financial capacities to carry out the works on time. Page 8 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Project Development Objectives 17. The objective of the project is to improve the operational performance of the power sector and increase access to electricity in the capital city, Lomé. The Project Development Objective (PDO) remained consistent throughout the project. Key Expected Outcomes and Outcomes Indicators 18. The key expected outcomes of the project were to (a) Improve the operational performance of the power sector and (b) Increase access to electricity in the capital city, Lomé. 19. At appraisal, the following PDO indicators were agreed: (a) People provided with new or improved electricity service (number) (Corporate Results Indicator), of which women (percent) (b) Distribution system loss reductions in areas of Lomé affected by Lomé A, Lomé B, and Lomé Siege substations (percentage) (c) Increased collections from targeted high-consuming customers (percentage). Components 20. The project was designed with three components: (a) power distribution improvement and expansion, (b) power sector reform, and (c) project management. Component 1: Power Distribution Improvement and Expansion (US$27 million, of which IDA US$26 million and the GoT US$1 million equivalent) 21. The component was divided into three main tasks. The first subcomponent focused on rehabilitating substations in Lomé (Lomé A, Lomé B, and Lomé Siege), refurbishing approximately 71 km of underground medium voltage (MV) cables, constructing 10 new MV/low voltage (LV) transformer stations, and renovating about 41 MV/LV transformer stations. The second subcomponent aimed to strengthen the MV network in Lomé by constructing around 39 km of underground MV cables and approximately 49 km of overhead MV lines, installing 9 MVAR capacitor banks to reduce technical losses, and building two switching stations. The third subcomponent aimed to extend the network to the outskirts of Lomé, adding 20,000 new connections. This included building approximately 225 km of LV lines and 5 MV/LV transformer stations for new customers. Component 2: Power Sector Reform (US$6.6 million) 22. The activities outlined in this component are primarily focused on four key areas: (a) reforming the CEET and its relationship with the GoT through the development and implementation of a Management Improvement Plan (MIP), along with an assessment and enhancement of the existing RPP aimed at large customers and government electricity bill payments; (b) planning, including the preparation of a master plan for generation, transmission, and distribution, and the enhancement of planning capacities within the Ministry of Mines and Energy (Ministère des Mines et de l’Energie, MME) and CEET; (c) developing a sector financial model and conducting a viability assessment; and (d) reviewing the legal and regulatory framework of the sector. Additionally, this component involved conducting a Page 9 of 56 The World Bank Energy Sector Support and Investment Project (P160377) diagnostic study of the Benin/Togo Generation and Transmission Power Utility (Communauté Electrique du Bénin, CEB) and implementing identified reforms and reviewing the performance contract with CEET. Component 3: Project Management and Capacity Building (US$2.4 million) 23. This component financed project supervision and implementation management activities, including operational expenses, vehicles, office equipment, and project supervision and project management capacity building. 24. Actual and estimated cost of the project. The project was successfully implemented without discrepancies between the estimated component costs during the appraisal phase and the actual component costs, as indicated in annex 3. Table 1 presents the project cost breakdown by component at appraisal and completion. Table 1. Project Cost by Component and Financing Original Estimated Actual Cost at Project Project Component Cost (US$, millions) Closing (US$, millions) Power Distribution Improvement and Expansion 26.00 26.00 Power Sector Reform 6.60 6.46 Project Management and Capacity Building 2.40 2.40 Total 35.00 34.86 Source : PAD 2304 (November 2017) B. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDO Indicators 25. The PDO and outcome target were not revised during the project implementation. Revised PDO Indicators 26. The project underwent a level 2 restructuring in September 2022, prompting to alterations to the PDO indicators. Notably, the targeted reduction in distribution system loss within Lomé areas shifted from an initial 20 percent to a more ambitious 15.6 percent. Moreover, the restructuring process led to the removal of both technical and nontechnical loss reduction sub-indicators. These adjustments signify refining the project’s objectives and assessment criteria, aiming to better align with its progress and the prevailing conditions. Table 2 summarizes these modifications, detailing the original and revised targets post restructuring and highlighting the dropped indicators. Table 2. Revised PDO Related to Distribution System Loss Reduction Baseline Target Indicators Indicator Level Original Revised Original Revised Distribution system loss reductions PDO indicator 24 15.60 20 15.60 in areas of Lomé affected by Lomé A, Lomé B, and Lomé Siege substations (Percentage) Page 10 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Baseline Target Indicators Indicator Level Original Revised Original Revised System loss reductions in areas of PDO sub-indicator 13 dropped 11 dropped Lomé affected by Lomé A, Lomé B, and Lomé Siege substations- Non- Technical (Percentage) System loss reductions in areas of PDO sub-indicator 11 dropped 9 dropped Lomé affected by Lomé A, Lomé B, and Lomé Siege substations- Technical (Percentage) Source: PAD2304 and Restructuring Paper 50797 (2023). Revised Components 27. There were no alterations made to the project components throughout the implementation phase. Other Changes 28. The September 2022 restructuring extended the closing date by nine months to August 31, 2023. This adjustment was made to accommodate the completion of project activities that experienced delays for several reasons, including procurement setbacks and delays related to COVID-19, such as the installation of smart meters and the completion of the RPP. Rationale for Changes and Their Implications on the Theory of Change 29. The adjustments made to the project during the restructuring primarily focused on ensuring the completion of all activities with their intended outcomes and modifying the results framework. Despite these changes, the PDOs and components remained unaltered throughout the implementation. Therefore, following the guidelines set by the World Bank’s Implementation Completion and Results Report (ICR), the ToC remained unchanged as well. II. OUTCOME A. RELEVANCE OF PDOs Assessment of the Relevance of PDOs 30. The project’s objectives remain fully aligned with the country’s priorities presented through the Government’s 2025 road map, in which it planned the implementation of two flagship projects around the country in the energy sector, namely ‘Continuation of the electrification policy for all’ and ‘Increase in electricity production, transmission, and distribution capacity’. The goals expected by the country in the energy sector are to ‘achieve an electrification rate of 75% in 2025’ and ‘establish an additional electrical capacity of 270 MW’. The project contributed to this by, among other things, (a) implementation of the RPP, (b) construction and rehabilitation of electricity networks, (c) connection of new subscribers, (d) development of the sector master plan, and (e) actions to restructure CEET. All this has allowed for an improved electricity access rate but also increased the electricity demand and improved CEET’s Page 11 of 56 The World Bank Energy Sector Support and Investment Project (P160377) performance, contributing to encouraging private intervention in the sector, particularly for the development of additional electricity generation capacity. 31. The PDOs of the Togo Energy Sector Support and Investment Project (TESSIP) are, therefore, fully aligned with the country’s priorities and have contributed to the achievement of the defined development objectives. The project has contributed to these objectives by providing 80,000 people with new or improved electricity service, building, and rehabilitating the distribution network in Lomé, and improving utility performance. 32. The PDOs have aligned perfectly with the World Bank’s strategies in Togo, reinforcing the project’s international relevance and support. They were consistent with the World Bank’s CPF for the period FY 17–20 (Report No. 112965-TG), primarily through its Focus Area 1, ‘private sector performance and job creation’, articulated around four objectives, one of which is objective 1.3, ‘Strengthen energy, ICT and logistics services’. 33. Based on the above analysis, the relevance of the PDO is deemed High. There was no shortcoming in the relevance of the project objectives to the current policy documents, further solidifying the project’s alignment with national and international priorities. B. ACHIEVEMENT OF PDOs (EFFICACY) 34. The PDOs can be unpacked into two outcomes: improve the operational performance of the power sector and increase access to electricity in the capital city. Assessment of Achievement of Each Objective / Outcome PDO-1: Improve the Operational Performance of the Power Sector 35. The objective of improving the sector’s operational performance is deemed Substantial. This determination is based on the achievement of most the indicators associated with this objective. Out of the two indicators at the PDO level, one exceeded expectations, while the other reached a substantial completion level. Four of five intermediate indicators linked to this goal were also successfully attained. Table 3 illustrates the indicators associated with the objective. Table 3. Outcome Indicators with Respective Level of Achievement Indicator Objective Unit of Status of Indicator Name Baseline Target Value Results Measure Achievement Improve the PDO-Level Indicator operational Distribution system loss Percentage 24.00 13.60 14.79 Substantially performance of reductions in areas of achieved the power sector Lomé A, Lomé B, and Lomé Siege substations Increased collections Percentage 0.00 4.00 4.72 Exceeded from targeted high- consuming customers Intermediate Indicators Least Cost Development Yes/no No Yes Yes Achieved Plan approved Page 12 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Indicator Objective Unit of Status of Indicator Name Baseline Target Value Results Measure Achievement Electricity Sector Master Yes/no No Yes Yes Achieved Plan approved Sector financial plan and Yes/no No Yes Yes Achieved viability assessment completed Management Yes/no No Yes Yes Achieved Improvement Plan for CEET effective Power outages per year Number 33.00 10.00 28.00 Substantially in substations achieved rehabilitated by the project Source: PAD and Implementation Status and Results Reports (ISRs). 36. Distribution system loss reduction in areas of Lomé A, Lomé B, and Lomé Siege substations. The project faced several challenges in achieving its distribution system loss reduction target in the areas of Lomé A, Lomé B, and Lomé Siege substations. The baseline value for this indicator was inaccurately set during the project’s preparation stage, which later affected the ability to measure and achieve the intended reduction in system losses. The project’s scope, which included investments aimed at reducing nontechnical losses, was not sufficient to meet the goal of a 4 percent reduction in system losses. Additionally, CEET reported difficulties in separating technical losses from nontechnical losses. This led to the removal of the separate sub-indicators for these losses, complicating the assessment of the project’s effectiveness in loss reduction. 37. While the value achieved did not fully meet the target set for this indicator, the project helped reduce distribution system losses from 15.59 percent to 14.79 percent. This substantial improvement is particularly significant given the context of the national utility’s infrastructure, which had yet to see substantial investments in recent decades and was aging. In addition, the considerable increase in new consumers, estimated at 17.19 percent per year (between 2017 and 2021), further deteriorates certain network parts, requiring more investment. However, almost all the investments planned for the extension, rehabilitation, and reinforcement of the grid within the framework of the project have been carried out. Still, the nonexistence of electricity grid modeling does not allow CEET to assess the real impact expected from these investments in the project’s intervention zones. The Inclusive Development through Electricity Access (IDEA, P176769) project, currently being approved, will support CEET on this point. 38. Upon completing the project, CEET reported increased collection from targeted high-consuming customers. Initially, the project targeted large customers, estimated at 75,014 subscribers with consumption exceeding 20 A, representing only 10 percent of CEET’s total customer base but accounting for over 65 percent of the total consumption. Additionally, MV subscribers were estimated at 887, constituting 0.12 percent of the total customers, contributing to 47 percent of CEET’s overall consumption. After the project’s completion, CEET reported setting up the RPP for 680 customers, including 50 MV customers. The data collected showed a 4.72 percent increase in consumption, indicating a potential decrease in commercial losses. Although comprehensive recovery data, usually evaluated over Page 13 of 56 The World Bank Energy Sector Support and Investment Project (P160377) a year, has yet to be available, the noted 4.72 percent improvement indicates the project’s success. This activity is expected to continue under the IDEA project (P176769) approved by the Board in May 2024.2 39. Power outages per year. Upon the project’s completion of key rehabilitation activities, there has been a discernible improvement in the reliability of the electricity distribution network. SAIFI for Lomé, which stood at 33 during the 2016 appraisal, has been reduced to 26 at completion. It was 28 in 2022 and 2021.3 Furthermore, the data from the three upgraded substations show a significant decline in power interruptions, from 227 in 2021 before the beginning of works to 163 in 2023, indicating a noteworthy improvement.4 It is important to note that the project’s work included the replacement of only some of the old and worn MV cell frames, as well as an increase in the capacity of these substations to accommodate the observed rise in demand. Therefore, the project has substantially reduced consumers’ power disruption frequency. 40. Least-Cost Development and Electricity Master Plans. These plans were crafted during the project, receiving Government approval, and have guided the country’s focus toward executing recommended main projects and actions with donor support. They were meticulously formulated based on objective technical, economic, and financial criteria, employing a methodology covering the entire energy mix, including transmission and distribution grids. Furthermore, sector managers underwent training in energy planning tools to ensure the plans can be regularly updated. 41. Tariff studies for CEET and CEB. The studies were conducted to benefit CEET and CEB in a challenging environment characterized by tariff adjustment issues. While the CEB study gained approval from the beneficiary, final reports for the CEET study were not validated due to misunderstandings between the consultant and the GoT. Nevertheless, the Government approved and utilized interim reports, which then engaged a new firm to complete the study. 42. CEET’s MIP. The plan was formulated based on CEET’s insights during project execution and is a transformative plan that has been developed and endorsed. The ongoing implementation of proposed actions aims to restore CEET’s financial stability and enhance its attractiveness for private investments, which is crucial for Togo’s electricity sector development. The plan also includes updates to CEET’s administrative, commercial, technical, accounting, and financial procedures in alignment with the World Bank’s recommendations. The validated report is being enacted within CEET, with expectations of improving internal management and operational efficiency across various domains, leading to enhanced efficacy and efficiency, and contributing to Togo’s progress. 43. Sector financial plan and viability assessment. The assessment encompassed actions aimed at boosting sector revenues through enhancements in billing collection, system loss reduction, and utility fixed cost optimization. Additionally, it addressed outstanding debt and offered projections regarding the evolution of service costs, providing the Government with insights into the trajectory of energy subsidies. The assessment was finalized after the project’s conclusion, and its significant findings were disseminated among various stakeholders. 2 This rate was calculated by assessing the consumption of the largest customers, in particular MV customers, over the same period of years before (2022) and after (2023) the implementation of the RPP. 3 Data provided by CEET during ICR mission. 4 RES507797. Page 14 of 56 The World Bank Energy Sector Support and Investment Project (P160377) PDO-2: Increase Access to Electricity in the Capital City 44. The project’s second objective of enhancing access to electricity in the capital city is deemed substantial. Table 4 presents an overview of the indicators linked to this objective, providing a comprehensive illustration of the project’s progress in achieving this goal. Table 4. Outcome Indicators with Respective Level of Achievement Indicator Objective Unit of Target Status of Indicator Name Baseline Results Measure Value Achievement Increase PDO-Level Indicator access to People provided with Number 0.00 80,000.00 80,000.00 Achieved electricity in access to electricity the capital under the project by city, Lomé household connections (grid or off-grid) Female Number 0.00 40,000.00 40,000.00 Achieved Intermediate Indicators Distribution lines Kilometer 0.00 159.00 135.30 Substantially constructed or achieved rehabilitated under the project Distribution LV lines Kilometer 0.00 225.00 210.00 Substantially constructed under the achieved project Distribution Number 0.00 56.00 73.00 Exceeded transformer stations constructed or rehabilitated under the project New household Number 0.00 20,000.00 20,000.00 Achieved connections Source: PAD and ISRs. 45. Project beneficiaries. The key PDO indicator under this outcome was met as the project succeeded in providing improved electricity services to 80,000 people or 20,000 households.5 Additionally, the project met the gender sub-component of this indicator, with 50 percent of the beneficiaries being women. 46. This key indicator has effectively monitored the significant advancements in delivering new or improved electricity services to people, focusing on women, underscoring the critical strides taken to improve energy access. The project also prioritized the connection of new households to the electrical grid, and the count of these newly electrified households is recorded as an intermediate indicator within this objective. 47. Provision of electricity to new households. As planned, the project acquired 20,000 prepaid meters, enabling 20,000 households to connect to the interconnected grid in the Lomé area. 5 On average, a household had four people. Page 15 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 48. Distribution MV lines constructed or rehabilitated. This indicator’s achievement level was 85 percent, as only 135.3 km of distribution lines out of 159 km were rehabilitated or constructed by the end of the project. In fact, during the preparation of the tender documents and the construction phase, the estimates made during project preparation exceeded the reality on the ground. This justifies the reduction to 135.3 km required for the rehabilitation, reinforcement, and extension works planned under the project. 49. Distribution LV lines constructed under the project: 210 km were completed out of 225 km of LV lines initially planned. During the preparation of the tender documents and during the construction phase, it was found that the estimates made during project preparation exceeded the reality on the ground. This justified the reduction to 210 km required for the LV lines extension works planned under the project. 50. Distribution transformer stations constructed or rehabilitated under the project: 73 out of the 56 planned were completed. This represents a completion rate of over 130 percent. Given the greater need for transformer rehabilitation and construction noted during the preparation of the tender documents, as well as during the construction phase, and the cost savings resulting from the reductions mentioned above in MV and LV line kilometers, adjustments have been made to consider a more significant number of transformers. This justifies the observed surpluses. 51. During the implementation phase, adjusting the initial project design was crucial. These adjustments were necessary and a testament to the project’s adaptability and efficient management. As the project advanced, new requirements surfaced, requiring their inclusion in the renovation, and upgrading strategies for the distribution substations. Justification of Overall Efficacy Rating 52. The project’s overall efficacy is considered Substantial, as it has achieved its main objectives to a considerable extent. The rating is justified by the fact that the project’s main activities were carried out in terms of construction, rehabilitation of the electrical network, and implementation of activities to improve the performance of the CEET. Moreover, a year after completion, there has been an increase in revenue of over 4 percent for the CEET from customers affected by the RPP. C. EFFICIENCY Assessment of Efficiency and Rating 53. The project was well executed with a six-year implementation period, promoting efficiency. Despite facing several challenges, including unforeseen complications due to the COVID-19 pandemic, the project adeptly navigated these issues without incurring significant cost overruns. At the project's conclusion, an impressive 99.65 percent of the total agreed financing had been disbursed, demonstrating thorough planning and unwavering commitment to its developmental objectives. Table 5 summarizes the status of the project’s funding at completion. Table 5. Summary of Project’s Financing Net Commitment Amount Disbursed Amount Undisbursed Credit Number % Disbursed (US$, millions) (US$, millions) (US$, millions) IDA-61680 35.00 34.88 0.12 99.65 Source: World Bank Operations Portal. Page 16 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Operation and Implementation Efficiency 54. The variance between the initially projected budget and the disbursed funds can be attributed to two events: fluctuations in exchange rates and the balance resulting from the non-finalization of the CEET tariff study. As global financial markets are volatile, the value of the initial budget in the local currency often significantly increases or decreases by the time funds are disbursed, affecting the overall financial planning. 55. Delays in procurement and financial management were primarily due to the slow hiring of specialists and their initial lack of familiarity with the World Bank processes. However, the team's dedication to the project’s success has been unwavering. The setbacks in the procurement aspect have had far-reaching implications for the project, but the team’s commitment has helped mitigate these challenges. The delays in hiring a procurement specialist have disrupted the timeline and hindered the efficiency of procurement process. Additionally, the lack of familiarity with the World Bank’s procedures and systems among the selected candidates has further exacerbated the situation, affecting the project’s ability to meet its objectives effectively. 56. The project’s execution faced several setbacks, with specific studies taking an extended period to complete, primarily due to successive modifications in the original terms of reference. Additionally, the procurement process for meters, essential for the RPP, experienced a disruption when the initial contract award was annulled, necessitating a re-tendering process. Indeed, the contract with the winning bidder was terminated for the supplier’s inability to fulfill all its obligations under the contract and for the use of false documents in submitting supporting documentation of the qualifications and performance of the proposed new manufacturer. The contract was subsequently awarded to the firm that came second in the procurement process. This led to significant delays in the implementation of the activity. It is also crucial to acknowledge the broader context in which the project unfolded, particularly the adverse effects of the COVID-19 pandemic and Russia’s invasion of Ukraine, which have considerably affected the project’s overall implementation. 57. The project experienced a slower-than-expected disbursement rate of its allocated funds. As of June 2021, four years after its approval, only 64 percent of the total funding had been disbursed. This sluggish pace can be attributed to a confluence of issues, including the protracted process of recruiting a financial management specialist, the delayed formation of a steering committee, and the bureaucratic obstacles faced during the approval stages of fund disbursements. These factors collectively contributed to the hindered financial flow of the project. 58. Despite many obstacles, the project team has consistently demonstrated adaptability and unwavering commitment. The team’s resilience has been instrumental in ensuring the project’s completion within a reasonable time frame. In comparison to similar initiatives in the region, the project only required a modest nine-month extension, primarily due to the impacts of COVID-19 and Russia’s invasion of Ukraine, to complete the remaining tasks. 59. Considering the factors above, the project’s operational efficiency is deemed Substantial. Page 17 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Economic and Financial Efficiency 60. During the appraisal stage, an economic and financial analysis was carried out to weigh the costs and benefits of the scenario with the project against the one without it. This analysis focused on Component 1, the sole component involving capital investments. 61. The economic analysis comparisons conducted during the appraisal stage in the PAD and in the ICR are summarized in Table 6. 62. During the ICR preparation, the team uncovered issues with the quality of the data used during the original project appraisal stage. Specifically, they found that flaws and inaccuracies in the underlying data led to significant miscalculations of the project's net present value (NPV) and anticipated rate of return. This suggests that the initial assessment of the project's financial viability may have been fundamentally flawed from the outset. in the appraisal, the NPV was US$ 146 million, and the economic rate of return (ERR) was 24 percent, but with the goods data from the utility, they should be respectively US$ (9.8) million and 1 percent. Economic analysis. 63. At completion, the project achieved an economic internal rate of return (EIRR) of 3.9 percent and an NPV of US$ 22.3 million, taking into account the greenhouse gas (GHG) analysis (GHG emissions damage reduction benefits). The EIRR and NPV values upon project completion are higher than the revised estimates made during the appraisal phase. Table 6. Project Economic Analysis Summary At Appraisal At Appraisal with At ICR Component the goods data NPV before NPV before NPV before NPV with NPV with EIRR environment EIRR environment EIRR environment environment environment (%) benefits (%) benefits (US$ (%) benefits benefits benefits (US$ million)) (US$ (low) (US$ (high) (US$ million)) million) million) million) Power Distribution Improvement 24.1 145.9 1.8 -9.8 3.9 -3.9 9.2 22.3 and Expansion Source: PAD and ICR team. Financial analysis. 64. At closing, the financial internal rate of return stand at 14.9 percent and project’s NPV with the loan not borne by CEET is estimated at FCFA 5.9 billion (or US$ 9.8 million). 65. Based on the above analysis, the project’s efficiency is deemed Substantial at closing. 66. A full and detailed discussion of the financial and economic analysis of the project and the utility’s financial analysis at the time of appraisal and ICR is found in annex 4. D. JUSTIFICATION OF OVERALL OUTCOME RATING 67. The project’s overall outcome is deemed Satisfactory, considering various elements. The project is firmly grounded in its relevance, efficacy, and efficiency. Its high relevance is emphasized by its alignment with Togo’s national energy priorities and the strategic objectives of the World Bank to enhance Page 18 of 56 The World Bank Energy Sector Support and Investment Project (P160377) energy access and bolster sector performance. Substantial efficacy is demonstrated through the project’s accomplishments, particularly in improving the operational performance of CEET and extending electricity access, which are crucial elements for stimulating economic growth and alleviating poverty. Meanwhile, substantial efficiency is reflected in the project’s careful resource utilization and the successful completion of project activities within the designated time frame, despite the intricate nature of the energy sector and the challenging environment in Togo. E. OTHER OUTCOMES AND IMPACTS Gender 68. Gender indicators in the results framework. The project defined a key indicator to assess its gender impact: the count of women who benefitted from new or improved electricity services. By the project’s end, it was approximated that 40,000 women had experienced positive outcomes from the endeavors facilitated by the project. 69. Gender-based violence. During the ICR preparation, no instances of gender-based violence were reported throughout the project’s implementation. Mobilizing Private Sector Financing 70. The project’s strategic investments have significantly enhanced the attractiveness of the CEET to private sector stakeholders, particularly within the realm of electricity generation. By targeting and funding areas previously deemed unattractive to private investors, the project has opened new opportunities for growth and development within the sector. Additionally, the initiative to connect a more significant number of subscribers has played a crucial role in ramping up the demand for electricity, further bolstering the sector’s appeal for improved public-private collaboration in infrastructure development. Institutional Strengthening 71. The project’s allocation of funds for specific studies, including the least-cost plan and tariff studies, was designed to bolster the long-term strategic planning efforts of key stakeholders such as the National Authority for the Regulation of the Electricity Sector (Autorité de Réglementationl du Secteur d’Electricité, ARSE) and the Directorate General for Energy (Direction Générale de l'Energie, thereby facilitating the successful implementation of the Government’s prescribed road map. 72. The approved study reports guided the Government’s decision-making. The findings of studies financed by the project, such as the electricity master plan and a recommendation of the Energy Policy and Strategy document prepared by the GoT in 2011, have served as the basis for prospective World Bank- financed project. 73. The project’s objective was to contribute to the World Bank’s goals of eradicating poverty and fostering shared prosperity. This goal was to be achieved by enhancing access to reliable and competitively priced electricity, which is crucial for fostering business development, job creation, and income generation and bolstering international competitiveness. Page 19 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 74. Finally, the experience gained by the project team is anticipated to offer significant advantages for future initiatives. The knowledge and skills developed—such as a better understanding of World Bank procurement and financial mechanisms through overcoming project challenges—contribute to lasting institutional strengthening. COVID-19 75. The unexpected outbreak of the COVID-19 pandemic had a noticeable effect on the project and its progress. The pandemic significantly affected the RPP, especially regarding installing smart meters. The original contractor failed to meet its contractual duties, including meter provision, and consequently lost the contract. The project encountered disruptions from logistical challenges, limited workforce availability, and supply chain interruptions due to the pandemic. Therefore, it was imperative to establish alternative plans to maintain the project’s momentum and reduce the pandemic’s detrimental effects on its execution. For instance, these alternative measures entailed a rigorous adherence to the various health protocols implemented by the Government at the different project sites. 76. In addition to the effects of the health crisis, the global economy—especially that of the developing nations—has felt the economic consequences of Russia’s invasion of Ukraine. Russia’s invasion of Ukraine has caused a decline in external demand and a surge in energy, fertilizers, and food costs. Consequently, these developments have led to decreased agricultural output and increased food prices in the local markets, negatively affecting household purchasing power. This situation, in turn, has adverse effects on electricity consumption. Citizen Engagement 77. Upon approval, CEET established a call center dedicated to the outage management system. This strategic move allowed for efficient gathering of customer feedback whenever outages occurred. A key project objective was to expand the call center’s capabilities to assess customer satisfaction. By doing so, the company aimed to address immediate concerns and measure and understand the customer experience. The data collected through this enhanced system were intended to be made public, reinforcing the company’s commitment to transparency and accountability. 78. After the project, the regulatory authority ARSE played a pivotal role in promoting transparency by releasing annual data that highlighted the impact of citizen engagement on service quality. The most recent report from ARSE revealed a significant decline in consumer complaints, which served as an indicator of increased customer satisfaction with CEET’s services. This positive development suggested that the project’s efforts to engage with citizens and address their concerns were effective. Poverty Reduction and Shared Prosperity 79. The increase in energy supply in the capital city region considerably affected the country’s economic activity and growth. The project has played a significant role in poverty reduction by focusing on improving access to electricity in the capital city and its surrounding areas. Through various activities, the project has successfully increased the access rate to electricity, resulting in an improved energy supply and quality for many residents and small and medium enterprises. This improved energy supply has positively affected the households’ and businesses’ livelihoods and economic opportunities, contributing to poverty reduction efforts. Page 20 of 56 The World Bank Energy Sector Support and Investment Project (P160377) III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEYS FACTORS DURING PREPARATION 80. World Bank reengagement in Togo. After a period of absence, the World Bank reengaged with Togo in May 2008 following the clearance of arrears. This reengagement was steered by strategic plans, including the 2004 Country Re-engagement Note, which focused on critical needs such as fostering human capital, revitalizing the economy, and enhancing the provision of social services.6 Within this context, TESSIP was conceived as an early step in the World Bank's reentry into Togo's energy sector. 81. Project design and development objectives. The country’s conditions were conducive to the project’s ambitious goals. The identified indicators were in line with the operational objective of the project. The components were well structured, logically organized, and relevant to achieving objectives. The country’s context facilitated the establishment of a well-defined sequence of tasks and activities. The results framework was clear at appraisal (and updated under the subsequent restructuring), establishing a logical and plausible connection between the planned activities and the expected outcomes. The intermediate indicators were aligned with the operational objectives, and appropriate targets were set. 82. Implementing agency. The project acknowledged the limited capacity of the implementing agency as a significant risk to its success. In response to this challenge, the project’s strategy included recruiting additional specialized staff, such as procurement and environmental and social experts, to strengthen the team’s capabilities. However, the recruitment process was not without its delays, which in turn affected the overall timeline of the project. 83. In addition, the project emphasized the importance of enhancing capacity by providing comprehensive training opportunities to specialists within the project team. These training sessions were designed to equip team members with the necessary skills and knowledge to contribute effectively to the project’s objectives. B. KEY FACTORS DURING IMPLEMENTATION Factors Subject to Government and/or Implementing Agency Control 84. The project had a slow start, characterized by various issues, primarily stemming from issues surrounding the current financial law, which required updating. Furthermore, setbacks were experienced due to the limited capacity of the project implementation team and prolonged internal approval processes within the Government’s procurement commission. These delays collectively hindered the project’s progress during its initial stages. 85. Significant delays in procurement. In the project’s early phases, the Project Implementation Unit (PIU) encountered significant obstacles in procurement processes. Notably, completing bidding documents for the works, constituting 75 percent of the project’s financing, experienced notable delays. These setbacks, often due to limited staffing and capacity issues, hampered the project’s timely progression, requiring focused attention and remedial action to ensure effective procurement procedures moving forward. 6 Togo Country Re-engagement Note - A Joint Framework for Strengthening International Assistance. PIN107. Page 21 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 86. Data quality and accuracy. The quality of the data linked to indicators and the predetermined target values influenced the project’s implementation. Challenges arose due to the data used in defining specific indicators, impeding the accuracy and reliability of progress tracking within the project. However, monitoring system loss reduction posed a more intricate challenge in tracking and analysis. This complexity emphasized the necessity of enhancing data quality and improving data collection and analysis methodologies to measure and adequately address crucial project objectives. As a result, sub-indicators concerning technical and nontechnical losses were gradually eliminated as the project advanced. Factors Subject to the World Bank’s Control 87. The World Bank took a proactive approach and supported the client throughout the project, from preparation to closing. Despite a change in the project task team leadership, the supervision during project implementation was mainly satisfactory. After the project was approved, the World Bank continued to closely supervise and collaborate with the borrower to address any obstacles and expedite the launch of activities. 88. During the project’s implementation, the World Bank maintained communication with the client through implementation support missions and virtual meetings, ensuring continuity during the COVID-19 pandemic. Aide memoires and ISRs were prepared for all pertinent matters, offering concise and actionable measures. These documents were consistently generated promptly throughout the project’s implementation period. 89. The project team from the World Bank also actively took the required steps and consistently provided valuable inputs on various deliverables. Factors outside the Project’s Influence 90. The project’s implementation has faced significant hurdles due to the COVID-19 pandemic and Russia’s invasion of Ukraine. The pandemic has caused widespread disruptions in global supply chains and labor markets while hindering the progress of project activities. Russia’s invasion of Ukraine has compounded these challenges, significantly affecting the manufacturing and delivery of critical equipment and necessitating revisions to the RPP figures. Despite these obstacles, the project team has been proactive in integrating measures to mitigate the impact of these external factors. This has involved adjusting project timelines and revising the results framework to ensure that the project continues to move forward and achieve its objectives in the face of these unforeseen challenges. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 91. The results framework was a critical component in creating a direct correlation between the PDO and the specific targets for project interventions. Initially established in the PAD and later refined during the project's restructuring, the framework served as an essential mechanism for systematically monitoring and evaluating the project's performance and outcomes. Despite facing challenges related to the quality of information during the preparation phase and the complexities within the energy sector, the framework provided a structured approach that was fundamental in overseeing the project's progress and in facilitating the assessment of its impact and achievements. Page 22 of 56 The World Bank Energy Sector Support and Investment Project (P160377) M&E Implementation 92. Despite delays, the implementation units monitored the project’s progress and shared important indicators with the World Bank team. They achieved this by preparing regular reports that summarized the activities carried out for each project component and highlighted significant activities and measures taken during each period. 93. Furthermore, the Results Framework, which outlines the expected outcomes and indicators, was updated throughout the project’s implementation. These updates were based on the findings and recommendations from the supervision missions conducted by the World Bank, as well as continuous discussions among the key stakeholders. M&E Utilization 94. The implementing agency and the World Bank team utilized indicators to track the project’s physical progress and make necessary plan adjustments. These indicators served as benchmarks to assess the project’s performance and determine whether it was on track to achieve its objectives. 95. The information gathered, including the indicators, was thoroughly discussed during each supervision mission. This allowed the team to identify areas facing challenges or experiencing difficulties. By analyzing the data and discussing the findings, the team could gain insights into the project’s strengths and weaknesses. Justification of Overall Rating of Quality of M&E 96. The project was implemented in accordance with the relevant standards and received technical support for energy projects. Collaborative efforts with other stakeholders ensured effective resource utilization. Additionally, to ensure compliance, the preparation and supervision teams followed best practices and maintained regular reporting involving all team members and specialists. 97. The World Bank’s country management team was crucial in providing high-level assistance for the project. It facilitated policy and dialogues and offered the necessary support at the country level. The technical support provided by the World Bank team to the borrower is evident through the production of technical reports, Aide Memoires, and high-quality deliverables. 98. Based on the analysis above, the project’s M&E system is rated Substantial overall. B. ENVIRONMENTAL, SOCIAL AND FIDUCIARY COMPLIANCE Environment Compliance 99. The project was classified as a ‘B’ safeguard category during the appraisal stage, indicating that the planned interventions were not expected to significantly affect the population or the environment. However, two safeguard policies were triggered during the project’s preparation: the Environmental Assessment OP/BP 4.01 and Physical Cultural Resources OP/BP 4.11. Under Component 1 of the project, localized adverse environmental impacts were identified. As a result, an Environmental and Social Impact Assessment and an Environmental and Social Management Framework were prepared to address these impacts. These assessments and frameworks were developed to ensure the project activities were carried out to minimize potential environmental and social consequences. 100. It is important to note that these studies were delayed, which impacted the overall progress of the project. Page 23 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Social Compliance 101. The project has exhibited a strong commitment to social compliance throughout its implementation. It actively involved affected communities and individuals, allowing them to express their concerns and grievances. A total of 52 complaints were documented, spanning various issues such as compensation, property ownership, access to business premises, worker behavior, information dissemination, and property valuation. Notably, all 52 complaints were resolved upon the project ’s completion, underscoring the effectiveness of its grievance redress mechanism (GRM) and proactive approach to addressing social issues. This underscores the project’s dedication to managing and mitigating the social impacts of its activities, ultimately contributing to its overall success and sustainability. Table 7 summarizes the complaints recorded throughout the project. Table 7. Complaint Types and Status Status of Complaint Type Number Percentage Achievement Claim for compensation 10 19 Resolved Erroneous assignment of ownership of affected property 1 2 Resolved Restriction of access to business premises 8 15 Resolved Restriction of access and extortion of money by workers 3 5 Resolved Lack of information before starting up and delay in repairs 5 11 Resolved Disruption of activities and nonfulfillment of repairs 1 2 Resolved Poor repair 1 2 Resolved Incorrect property valuation 1 2 Resolved Destruction of goods 22 42 Resolved Total 52 100 Source: PIU and ICR team. Procurement 102. Throughout its implementation, the Togo Energy Sector Support and Investment Project faced a series of procurement-related challenges. The Project Implementation Unit (PIU) initially struggled with issues of procurement capacity, navigating the complexities of the Systematic Tracking of Exchanges in Procurement (STEP) system, and the detailed approval processes required by the Government's procurement commission. These issues consistently caused delays of approximately two weeks at each stage of procurement, slowing down the project's momentum. The PIU's early procurement challenges were further complicated by delays in contract execution and the impact of the COVID-19 pandemic, which extended the project's timelines. The lack of rigorous monitoring within the procurement process also presented obstacles, making it difficult to identify and rectify issues in a timely manner. Complications were further exacerbated by the delayed communication of significant contract issues, adding to the project team's array of challenges. 103. Despite these obstacles, the project team’s proactive measures to mitigate these issues helped secure a Moderately Satisfactory rating upon completion. Financial Management 104. In May 2018, the financial management rating was lowered because, while the PIU possessed the essential fiduciary tools to handle the funds at an acceptable level of risk, specific measures were still Page 24 of 56 The World Bank Energy Sector Support and Investment Project (P160377) required for future consideration. These included integrating a budget module into the existing accounting software and hiring a dedicated full-time financial management professional. 105. After implementing these recommendations, notable improvements were observed, such as the on-time submission of audit reports and a satisfactory execution rate of the work program agreements. 106. Considering the developments, the project’s financial management has been assessed as Satisfactory. C. BANK PERFORMANCE Quality at Entry 107. Despite facing numerous challenges, the quality at entry for this project is deemed Satisfactory. One of the key obstacles the team has had to navigate was the lack of recent project financing in the country, which has made it difficult to access reliable, up-to-date data to inform the project's design. However, the World Bank has demonstrated remarkable resourcefulness in overcoming these issues. Through extensive preparatory efforts and in-depth consultations with a diverse range of stakeholders, the team has been able to shape a robust project framework that has gained the crucial support of all parties involved. 108. The partnership between the World Bank and other development partners in Togo has been instrumental in ensuring the successful design of the project. The EU's financing of critical sectoral studies, for instance, has provided the Bank team with data and insights that have significantly enhanced the accuracy and reliability of the project's design. By thoroughly analyzing the findings from this sectoral assessment, the team was able to develop a project framework that was grounded in the realities and needs of the local context at appraisal. Quality of Supervision 109. The project's supervision quality is rated as Satisfactory, reflecting the World Bank's diligent oversight, and monitoring throughout the initiative's duration. 110. The bank conducted regular supervision missions – average of two missions per year, which proved instrumental in closely tracking the project's activities and progress. These on-site visits allowed the team to closely observe the project's implementation, identify any potential challenges or issues as they arose, and make timely interventions to address them. 111. Furthermore, the consistent presence and involvement of the Bank's task team leaders based directly in the field further bolstered the quality of supervision. Their on-the-ground involvement meant that issues could be identified and dealt with expeditiously, without delays or miscommunications. This hands-on, proactive approach to supervision was a key factor in the overall satisfactory rating, as it allowed the project to stay on track. Justification of Overall Rating of the Bank Performance 112. The World Bank’s support was crucial in addressing the unique challenges of the power sector. Upon completion, the project enabled 20,000 households, i.e. more than 80,000 people, to gain access to electricity through the acquisition and installation of 20,000 meters and the construction of the LV network. At the time of appraisal, the average household in Lome consisted of four people. Page 25 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 113. Additionally, despite that some sub-indicators were dropped during implementation and the impact of COVID-19, supervision missions and the consistent on-site presence of task team leaders enabled diligent monitoring and timely issue resolution. This proactive approach was essential in maintaining the project's progress and achieving the development objectives. 114. Based on the above analysis, the overall performance of the Bank is considered Satisfactory upon the project's completion. D. RISK TO DEVELOPMENT OUTCOME 115. The project encountered several moderate risks that posed potential threats to achieving its intended development outcomes upon completion. Key concerns revolved around the sustainability of investments and the ongoing maintenance of positive results. Specific risks included challenges in maintaining the physical infrastructure implemented during the project's operational phase, along with capacity issues within procurement systems that could hinder efficient service delivery. Moreover, the sustainability of income-generating initiatives launched as part of the project was uncertain, raising doubts about their ability to sustain reliable revenue streams. 116. In addition to these internal factors, external risks such as political instability, governance issues, and unfavorable macroeconomic conditions also posed significant threats to the project's outcomes. 117. Ultimately, effectively addressing these sustainability and capacity-building challenges would be critical for ensuring the project's long-term success in achieving its core objectives. Securing the durability of investments and outcomes was paramount for realizing the intended developmental impacts over time. V. LESSONS AND RECOMMENDATIONS 118. The project’s preparation and implementation experience has yielded the following key findings: 119. External factors to projects. The COVID-19 pandemic and Russia’s invasion of Ukraine have highlighted the need to modify operational approaches to improve resilience, flexibility, and innovation. Considering the repercussions of these unforeseeable events and the prevailing sociopolitical landscape in neighboring countries, forthcoming initiatives must incorporate contingency measures to anticipate and alleviate potential ramifications. Incorporating such measures is vital for ensuring preparedness in the face of uncertainty, enabling organizations to respond swiftly and effectively to emerging challenge. 120. Need to continue reducing electricity system loss activities in future World Bank-financed projects. The sustained decrease in electricity system losses represents a pivotal aim for forthcoming projects supported by the World Bank. This emphasis on loss reduction enhances the efficient provision of electricity to consumers and aligns with overarching objectives related to ensuring a stable energy supply. Consistent advancement in this sphere holds the potential for substantial economic advantages for the communities benefiting from these projects while reinforcing the World Bank’s dedication to fostering access to dependable and cost-effective energy in Togo. 121. Reducing bureaucracy hurdles for better project implementation. The implementation team encountered a major setback as it struggled to secure the required support from the different government authorities involved in the project. This lack of cooperation significantly impeded the progress of project activities, leading to substantial delays. Despite its best efforts, the team faced many challenges in Page 26 of 56 The World Bank Energy Sector Support and Investment Project (P160377) obtaining the necessary approvals and resources, which affected the project's efficiency and effectiveness. Implementing future initiatives will increase efficiency if simplified decision-making mechanisms address all cumbersome administrative procedures. 122. Promptness in compensating people affected by the project. In preparation for upcoming initiatives, the Togolese Government must promptly perform an environmental and social assessment before finalizing any agreements. This assessment should aim to identify, prevent, minimize, mitigate, or alleviate any environmental and social risks and impacts associated with the project throughout its entire duration. Doing so will facilitate swift validation by the World Bank, thereby preventing further delays in project implementation. 123. A robust M&E framework should be incorporated into the project’s design from the outset, considering its importance in enhancing the impact of the project outcomes. By establishing a robust M&E framework early on, project stakeholders can systematically track progress, identify potential challenges, and measure the achievement of objectives throughout the project lifecycle. This proactive approach enables timely adjustments and ensures alignment with project goals, ultimately enhancing accountability, transparency, and learning. 124. Staffing project units with members from the implementing agency to ensure sustainable project execution. By involving personnel who are intimately familiar with the agency’s policies, procedures, and organizational culture, the project stands to benefit from enhanced coordination, streamlined communication, and expedited decision-making processes. Moreover, leveraging internal expertise fosters a sense of ownership and accountability among project team members, driving commitment and dedication toward achieving the project objectives. Also, integrating agency staff into project units facilitates knowledge transfer and capacity building, empowering individuals to develop new skills and competencies that can be applied beyond the project’s scope. 125. Safeguard of CEET’s digital infrastructure. Incorporating digital activities (RPP, geographic information system) into the project underscores the necessity for CEET to prioritize cybersecurity measures. To mitigate the risk of cyber threats, including ransomware attacks, it is important for CEET to maintain current licenses and software updates. This proactive approach is essential in fortifying the company’s digital infrastructure against potential security breaches. . Page 27 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: People provided with new or improved electricity service Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion People provided with new or Number 0.00 80,000.00 80,000.00 improved electricity service 30-Nov-2017 30-Nov-2017 31-Aug-2023 People provided with new Number 0.00 40,000.00 40,000.00 or improved electricity service - Female People provided with access Number 0.00 80,000.00 80,000.00 to electricity under the project by household 30-Nov-2017 30-Nov-2017 31-Aug-2023 connections (grid or off- grid). Comments (achievements against targets): This indicator was achieved. Page 28 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution system loss Percentage 15.60 13.60 14.79 reductions in areas of Lomé affected by Lomé A, Lomé B 31-Dec-2017 31-Dec-2017 31-Aug-2023 and Lomé Siege substations Comments (achievements against targets): The baseline indicators underwent revision during the project restructuring to accurately reflect the prevailing circumstances. Consequently, the target indicators were also adjusted accordingly. As the project ended, it was noted that the set target value for this indicator was partially attained. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increased collections from Percentage 0.00 4.00 4.72 targeted high-consuming customers 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): Upon the project's completion, it was reported that this target was surpassed, with an actual increase of 4.72 percent in collections from the targeted customer group. Page 29 of 56 The World Bank Energy Sector Support and Investment Project (P160377) A.2 Intermediate Results Indicators Component: Power Distribution Improvement and Expansion Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution lines constructed Kilometers 0.00 159.00 135.30 or rehabilitated under the project 30-Nov-2017 30-Nov-2017 31-Aug-2023 Distribution lines Kilometers 0.00 88.00 56.30 constructed under the project 30-Nov-2017 30-Nov-2017 31-Aug-2023 Distribution lines Kilometers 0.00 71.00 79.00 rehabilitated under the project 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): The project successfully constructed or rehabilitated distribution lines totaling 85 percent of the intended kilometers. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution LV lines Kilometers 0.00 225.00 210.00 constructed under the project 30-Nov-2017 30-Nov-2017 31-Aug-2023 Page 30 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Comments (achievements against targets): This indicator was partially achieved at completion of the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Distribution transformer Number 0.00 56.00 73.00 stations constructed or rehabilitated under the 30-Nov-2017 30-Nov-2017 31-Aug-2023 project Comments (achievements against targets): The end target value was exceeded. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Power outages per year in Number 33.00 10.00 28.00 substations rehabilitated by the project 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): The end target for the number of power outages in the rehabilitated substations was partially achieved. Page 31 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Project -related grievances Percentage 0.00 100.00 100.00 registered under the project GRM and addressed 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): 52 complaints were received and promptly treated during the project's implementation Component: Power Sector Reform Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Least Cost Development Plan Yes/No No Yes Yes approved 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): A Least Cost Development Plan was approved and implemented by the Government. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Sector financial plan and Yes/No No Yes Yes Page 32 of 56 The World Bank Energy Sector Support and Investment Project (P160377) viability assessment 30-Nov-2017 30-Nov-2017 31-Aug-2023 completed Comments (achievements against targets): A CEET financial model was developed under the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Management Improvement Yes/No No Yes Yes Plan for CEET effective 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): The Management Implementation Plan was approved and implemented by CEET. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increased collections from Yes/No No Yes No targeted high-consuming customers 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): This indicator was achieved upon the project’s completion. Page 33 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Electricity Sector Master Plan Yes/No No Yes Yes approved 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): Upon completion of the project, the electricity sector master plan was approved and implemented by the government. Component: Project Management and Capacity Building Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion New household connections Number 0.00 20,000.00 20,000.00 30-Nov-2017 30-Nov-2017 31-Aug-2023 Comments (achievements against targets): The end for total of new household connections was met Page 34 of 56 The World Bank Energy Sector Support and Investment Project (P160377) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Improve the operational performance of the power sector 1. Distribution system loss reductions in areas of Lomé A, Lomé B, and Lomé Siege Substations Outcome Indicators (Percentage) 1. Increased collection from targeted high-consuming customers (Percentage) 2. Least Cost Development Plan approved (Yes/No) 3. Electricity Sector Master Plan approved (Yes/No) Intermediate Results Indicators 4. Sector financial plan and viability assessment completed (Yes/No) 5. Management Improvement Plan for CEET effective (Yes/No) 6. Project-related grievances registered under the project GRM and addressed (Percentage) 1. The distribution system loss in Lomé was reduced to 14.79%. 2. The collection rate from targeted high-consuming customers was 4.72 percent—exceeding the set target value. Key Outputs by Component 3. A least-cost development plan was approved by the Government. (linked to the achievement of the 4. An electricity sector master plan was prepared and approved by the end of the project. Objective/Outcome 1) 5. An MIP was prepared and implemented during the project. 6. The sector financial plan and viability assessment were performed during the project. 7. Acquisition and installation of 3,500 smart meters was completed. Objective/Outcome 2: Improve the operational performance of the power sector 1. Distribution system loss reductions in areas of Lomé A, Lomé B, and Lomé Siege Substations Outcome Indicators (Percentage) 1. Increased collection from targeted high-consuming customers (Percentage) 2. Least Cost Development Plan approved (Yes/No) 3. Electricity Sector Master Plan approved (Yes/No) Intermediate Results Indicators 4. Sector financial plan and viability assessment completed (Yes/No) 5. Management Improvement Plan for CEET effective (Yes/No) 6. Project-related grievances registered under the project GRM and addressed (Percentage) Page 35 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 1. The distribution system loss in Lomé was reduced to 14.79%. 2. The collection rate from targeted high-consuming customers was 4. 72 percent—exceeding the set target value. Key Outputs by Component 3. A least-cost development plan was approved by the government. (linked to the achievement of the 4. An electricity sector master plan was prepared and approved by the end of the project. Objective/Outcome 2) 5. An MIP was prepared and implemented during the project. 6. The sector financial plan and viability assessment were performed during the project. 7. Acquisition and installation of 3,500 smart meters was completed. Page 36 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Franklin Koffi S.W. Gbedey, Manuel Jose Millan Sanchez Task Team Leader(s) Kouami Hounsinou Messan, Mathias Gogohounga Procurement Specialist(s) Alain Hinkati Financial Management Specialist Angelo Donou Financial Management Specialist Abdoul Wahabi Seini Social Specialist Juliana Chinyeaka Victor Team Member Natalie Tchoumba Bitnga Team Member Natalie Tchoumba Bitnga Team Member Esinam Hlomador-Lawson Team Member Abdoul Ganyi Bachabi Alidou Environmental Specialist Issa Thiam Team Member Amadou Mamadou Watt Team Member Ali Ouattara Team Member Supervision/ICR Justin Marie Bienvenu Beleoken Sanguen, Aurelie Yapi Task Team Leader(s) Kouami Hounsinou Messan Procurement Specialist(s) Josue Akre Financial Management Specialist Saliou Aitcheou Procurement Team Corinne Maximine Akouvi Assogba Team Member Georges Lanmafankpotin Social Specialist Kossiwa Naman Team Member Page 37 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Veronique Ossohou Epse Kone Team Member Adjoua Veronique Ouattara Team Member Hubert Maurice Waterinckx Social Specialist Nicholas David Elms Team Member Landrine Fomete Songmene Team Member Hermann Nangmo Ndengue Team Member Komlan Kpotor Environmental Specialist Gisele Belem Team Member John Donald Rennie Procurement Team Thomas Flochel Team Member Alexandra Annabelle Niesslein Social Specialist Haoua Diallo Procurement Team Lucine Flor Lominy Procurement Team Fatoumata Diallo Social Specialist Nikolai Alexei Sviedrys Wittich Procurement Team Esinam Hlomador-Lawson Procurement Team Pedro Antmann Team Member Natalie Tchoumba Bitnga Team Member Serdar Jepbarov Team Member Kristyna Bishop Social Specialist Mohammad Ilyas Butt Procurement Team Page 38 of 56 The World Bank Energy Sector Support and Investment Project (P160377) B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY17 18.619 82,656.35 FY18 6.259 38,588.26 FY19 4.645 27,721.89 Total 29.52 148,966.50 Supervision/ICR FY18 12.240 107,843.16 FY19 17.305 110,868.85 FY20 38.677 267,667.65 FY21 35.499 165,799.34 FY22 20.992 112,166.60 FY23 32.027 156,807.59 FY24 9.640 63,424.21 Total 166.38 984,577.40 Page 39 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Closing Percentage of Components (US$, millions) (US$, millions) Approval Power Distribution Improvement 26.00 26.00 74.3 and Expansion Power Sector Reform 6.60 6.46 18.4 Project Management and Capacity 2.40 2.40 6.9 Building Total 35.00 34.86 99.6 Page 40 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 4. EFFICIENCY ANALYSIS Power Sector Context, Institutional Framework, and Sector Governance 1. At the time of appraisal, Togo’s energy sector was governed by MME, mainly responsible for electricity sector strategy and planning. The electricity subsector regulatory agency, ARSE, was set up in 2000 within the MME structure. CEET was the public distribution utility responsible for the distribution of electricity within the country. It was purchasing 50 percent of its electricity from CEB, a binational company that at that time was overseeing the development and operations of the Togo and Benin grids, supplying wholesale power primarily through import contracts from neighboring countries under a single buyer model, and 50 percent from Contour Global, a private IPP. 2. Over the years, the institutional framework of the Togolese power sector went through significant changes. In May 2016, the Togolese Agency of Rural Electrification and Renewable Energies was created by presidential decree to implement the country’s rural electrification vision; promote renewable energies; and ensure that even the most remote communities in Togo have access to electricity through a combination of electricity grid expansion, rural mini-grids, and solar home systems. Since November 2019, the mandate of CEB has been limited to a transmission system operator, while its prior responsibility as an electricity importer was transferred to the two distribution utilities of Togo and Benin (CEET and SBEE, respectively). A wheeling charge of CFAF 10/kWh was adopted. In December 2020, the GoT issued a decree supporting national deployment of fiber-optic networks and mandating non-telecom utilities to systematically deploy fiber-optic infrastructure during civil works in the energy, water, and transport sectors, thus on new power transmission lines to be built by CEB. These assets would subsequently be transferred to the state-owned enterprise, Société des Infrastructures Numériques, which is the digital infrastructure company created in 2016. However, the digital deployment plan is still being developed. 3. Besides, at the end of 2019, the GoT launched the ‘CIZO cheque’,7 in partnership with off-grid companies to increase rural electrification access through a monthly subsidy of CFAF 2,000 (~ US$3.30) for monthly household payments for solar home systems over three years. Households would be responsible for paying the remaining amount not covered by the subsidy (about CFAF 2,800/US$4.70 per month). In 2021, a decree was approved by the Council of Ministers creating the ‘TINGA Fund’ to accelerate universal access to grid and off-grid electricity services. Underlying studies which helped the reflection on structuring this fund were financed by TESSIP. Instead of the prohibitive connection fees (CEET grid connection fee at an average of CFAF 104,000 or US$173), households benefiting from the TINGA Fund pay a small up-front access fee (from CFAF 1,000, less than US$2) for a grid connection, affordable to the poorest households. The remainder of the connection fee is paid to the operator, CEET or the off-grid distributor, as a reimbursable grant by the TINGA Fund. The pilot phase for the grid access component of the fund was recently completed, and the operational phase has been launched in March 2023. 4. The recent years also saw the promotion of public-private partnerships, the increase in generation capacity with the commissioning of the Kekeli thermal power plant (65 MW), and the 7 CIZO is Togo Rural Electrification Project financed by the African Development Bank. Page 41 of 56 The World Bank Energy Sector Support and Investment Project (P160377) inauguration of the 50 MWp Blitta solar power plant in 2021 with a capacity of 50 MWp, which generates 82,000 MWh annually. These efforts contributed to improving the national electrification access rate to 56 percent in 2021, but in rural areas, the rate was still one of the lowest in West Africa, at around 25 percent of the population. In 2022, the World Bank approved the Regional Emergency Solar Power Intervention Project (P179267) which will finance a 25 MWp solar photovoltaic plant with 36 MWh battery storage in Dapaong, thus providing access to electricity for over 12,000 households in the country’s fragile Savanes region and increasing the grid’s capacity to integrate more renewables. 5. Still, the institutional framework of the power sector suffers from significant gaps, limited resources, and inadequate management. Despite attempts to strengthen the organizational structure and human resources, gaps persist in technical skills, project management, strategic planning, and coordination between different entities, hindering effective policy implementation. TESSIP laid the foundation for technical assistance to the sector, and through Component 3 of the IDEA project, the World Bank intends to also finance additional technical assistance and capacity-building activities for key sector institutions. Figure 4.1. Institutional Framework of the Electricity Sector of Togo as of April 2024 Source: World Bank team. Operational Performance of the Sector 6. At appraisal time, the overall performance of Togo’s electricity sector was below the average of regional peers, with an overall access rate in 2015 of only 29.2 percent, lower than the Sub-Saharan African average of 37 percent. Security of supply, heavy reliance on imports from neighboring countries, reliability, and efficiency were also cited as major issues for Togo’s power system. Unreliable imports and lack of domestic sources of electricity increased the frequency of power cuts in the country. Due to weak sector governance and lack of investment in and maintenance of the distribution system, the system also suffered from severe voltage drops, and total system losses were estimated at 24 percent in 2016. Page 42 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 7. In 2015, 90 percent of Togo’s electricity was imported from Nigeria and Ghana through CEB’s interconnections, with the rest being supplied by Contour Global (running on heavy fuel oil at that time, and later on natural gas) and other minor domestic diesel-based sources. Togo has also been affected by frequent disruptions created by issues in Nigeria’s and Ghana’s power systems at the generation and transmission levels. 8. As of 2022, power supply in Togo is still dependent on imports, which accounted for 53 percent of generation. The remaining 47 percent of the electricity supply is locally generated, comprising thermal power from Contour Global (now combined cycle) and Kekeli power plants (41.7 percent), solar power from the AMEA Power Plant in Blitta (4.8 percent), and CEET own generation from diesel and small hydro plant (0.4 percent). Most of the generation and distribution infrastructure are in the southern part of the country around the capital Lomé, where about one-quarter of the population lives. The Least-Cost Development Plan finalized in 2022 calls for the addition of 300 MW of solar with BESS in 2023 and 60 MW in 2024, mostly in the north. Investment in additional transmission infrastructure is also planned to facilitate the transport of electricity between the north and the interconnected grid in the south. A high voltage line linking Kara to Mandouri in the Savanes region will be commissioned by the end of 2024, completing the north–south transmission backbone and facilitating power exchange with neighboring countries. Additional transmission lines are planned to improve service reliability and major distribution investments in the northern and central parts of the country where electricity access rates are the lowest. Figure 4.2. 2022 Energy Delivered to the Network (Left) and Installed Capacity (Right) Source: World Bank analysis using ARSE’s annual reports. Table 4.1. Key Parameters of Togo Power Sector Operational Performance 2016 (Appraisal Time) 2022 2023 National Electricity Access 46.7% 62.1% 65% Rate Installed 205 MW 254 MW 254 MW Capacity (Domestic) Peak Demand 193 MW 279.9 MW 304.6 MW Energy Generated and 1,200 GWh 1,740 GWh 1,996 GWh Purchased Page 43 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 2016 (Appraisal Time) 2022 2023 Electricity Delivered to 1,158 GWh 1,727 GWh n/a the Grid Number of Grid 328,459 customers 748,779 customers (13.71% 689,380 customers Customers increase) Distribution Network • LV network: 5,104 km • LV network: 7,120 km • LV network: 7,442 km Length • MV network: 3,163 km • MV network: 5,042 km • MV network: 5,095 km 2016 (Appraisal Time) 2021 2022 CEET Total System Losses 16,27% 16.04%  14.92% Electricity Bill Collection 85.6% 86.3% n.a. Rate Standalone Solar Systems n.a. 3.65 MW 4.10 MW - Total Capacity Standalone Solar Systems n.a. 72,815 82,070 - Number Active Source: World Bank team using CEET and ARSE reports and shared documentation. Financial Performance of the Utility at the Time of Appraisal and during the Project’s Implementation 9. At the time of appraisal, the power sector was struggling with financial sustainability issues, and reforms were needed to improve sector performance. Although high, the average tariff (US¢19/kWh) was below the average cost of service in 2011–2015 (US¢29/kWh). The reasons for this imbalance were mainly (a) a systemic lack of planning capability (no least-cost generation plan), (b) the absence of an operational regulator with a systematic pricing mechanism, (c) an obsolete organizational and legal framework, (d) poor utility performance, and (e) the shortage of financial resources for new investments and private sector attraction. CEET had insufficient autonomy and commercial orientation, affecting its cost efficiency and financial discipline. To address the utility challenges, one key recommendation was the establishment of an MIP to reform internal processes, create an RPP, lay the basis for a sector performance contract with the Government, and optimize the generation dispatching. 10. Moreover, in 2016, the project’s preparation team completed a forward-looking analysis of the utility’s performance over the period 2017–2021. This analysis noted that CEET’s cost of service, estimated at CFAF 216/kWh (≈ US¢0.49/kWh) in 2016 (compared to an average of US¢29/kWh over the period 2011–2015), would remain high in 2017 at CFAF 202/kWh (≈ US¢0.36/kWh) and would have followed steadily the same trend from 2017 up to 2019, before decreasing in 2021 to CFAF 123/kWh (≈ US¢25 /kWh). The listed assumptions for this decrease were the reduction of technical and commercial losses at 24 percent at the appraisal time and the improvement in utility management, with the investments and reforms supported by TESSIP. This analysis also found that CEET would not be able to cover its current expenses until the end of the study period and that without an improvement of its commercial and technical performance, the company would continue to face poor profitability, liquidity issues, high debt leverage, and low asset efficiency. CEET was also forecast not to be able to cover its costs related to its financing obligations and would remain a highly leveraged company with a chronic deficit. The analysis concluded that sector and company reforms and required investments in the system would allow the company to recover from its current dire financial situation moderately. Once the changes are implemented, the company may be able to cover its costs related to its financing obligations. Page 44 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 11. Given the fact that the sector’s financial sustainability was at a crucial stage during the project’s preparation, a historical financial analysis of the sector and utility over the time of the project’s implementation has been carried out to assess the progress of the sector’s performance following the project’s approval in 2017. This analysis was realized by the World Bank team leading the preparation of the new access project in Togo, the IDEA project (P176769, US$200 million, approved on May 23, 2024). The difficulties in getting audited financial statements and annual reports of the utility from counterparts on time should be noted. The team working on TESSIP implementation and during the ICR preparation regularly faced reluctance from the counterparts to share relevant information needed to do the analytical work in a complex dialogue environment. Some sector data have been recently made available following the intervention of high-level World Bank management as part of preparing the Development Policy Operation (DPO) and the IDEA project in March–April 2024. Still, the counterparts have not given the clearance to use 2022 audited data and annual reports for this ICR. As such, the ICR team deep-dive analysis in this document is limited to 2021, with some recent information related to the operational aspects. 12. Profitability. Sector revenues have slightly increased over the last years, from CFAF 115 billion (≈ US$209 million) in 2017 to CFAF 142 billion in 2021 (≈ US$244 million), at a compound annual growth rate (CAGR) of 5.4 percent, driven by an increase in sales volume. However, the net income of CEET has decreased since 2018. Current electricity tariffs have remained unchanged since January 2011 despite a significant increase in costs due to new power purchase agreements and gas supply contracts to reduce dependency on imports. CEET has not been receiving operating subsidies from the Government and has had a negative net income since 2018. The unaudited 2022 annual reports estimate a negative net income of CFAF 23.5 billion (≈−US$38 million). 13. Average cost of service and tariff. Over 2017 to 2021, the average tariff has been insufficient to cover the average cost of service (Figure 4.3). This led to increased debt and financial unsustainability challenges. Costs of fuel and power purchases represent about 70 percent of the total costs, including depreciation. A stabilization of power generation and purchase costs in 2019 has helped close the price cost margins. In 2021, CEET benefitted from (a) the renegotiation of the natural gas supply contract, (b) the commissioning of the cheaper AMEA Power Plant and Kekeli Gas Turbine, and (c) the reduction of imports from the Volta River Authority. However, the improvements observed are mostly attributable to the renegotiation of fuel import contracts for the CG and the Kekeli gas plants in 2021 at the early stage of COVID-19 when the market had collapsed. Page 45 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Figure 4.3. CEET’s Average Cost of Service and Average Tariff (US$/kWh) Source: World Bank analysis using CEET’s annual reports. 14. Arrears to suppliers and clients’ receivables at appraisal time. The liquidity of the company was weak, and CEET had not been able to pay its current expenses (imported energy from CEB, IPP, and fuel) due to its inability to collect its energy billed from public administration promptly. Indeed, the arrears accumulated by the public sector entities to CEET amounted to CFAF 44 billion (US$88 million) at the end of 2016 (36 percent of the collection rate). As a result, CEET could not honor its payments to CEB, accumulating arrears of CFAF 29 billion (US$58 million) at the end of 2016. 15. To complement the initiatives supported by TESSIP, two DPOs (Togo - First and Second Fiscal Management & Infrastructure Reform Development Policy Operations, P159844 and P166739) were prepared in parallel with TESSIP. Under pillar 2 of this operation, strengthening financial viability and service delivery in the energy sector was to be achieved through (a) taking measures to clear arrears and improve collection rates in the sector and including electricity payments in the budget, (b) implementing a least-cost generation plan with lower cost imports and renewables, and (c) strengthening the tariff- setting process and setting tariffs to cover costs as well as establishing a methodology for determining the price of wholesale power on a cost-reflective basis. 16. To address the collection issue, these operations’ prior actions focused on clearing arrears between the Government, CEET, and CEB and establishing a payment discipline for the public administration’s electricity bills.8 It was expected that CEET would increase the revenue collection from the General Government from 36 percent in 2016 (baseline) to 95 percent or more in 2019 (revised 8P159844 - Prior Action 5. To strengthen the financial position of the electricity production and distribution companies, the recipient has ensured regularization of the payment obligations of the General Government to CEET and of CEET’s payment obligations to the jointly owned CEB through offsetting the central government payment arrears to CEET at end-2016 against tax arrears and agreement with two commercial banks to provide bridge financing in 2017 for cash payment directly to CEB on behalf of CEET. P159844 - Prior Action 6. To ensure timely payment of the statutory fuel subsidy and the electricity bills of the General Government, the recipient has established a centralized system of payment through the Ministry of Finance in the context of the 2018 Budget Act. Page 46 of 56 The World Bank Energy Sector Support and Investment Project (P160377) target). At the ICR time of these operations, this target was substantially achieved, reaching 82.86 percent in 2019, which however represented more than a doubling of the collections. 17. In December 2019, another programmatic series of DPOs (DPF1 – P169867; DPF2 – P172023) was approved for the period 2019–2021 for a combined amount of US$250 million. Pillar 29 of DPF1 aimed at strengthening the energy sector’s financial viability and use of renewable energy, with measures to the sector’s revenues through the repayment of the government arrears to CEET, the implementation of the RPP for large customers, and the adoption of a mechanism to secure the payment of CEET’s arrears to CEB. It was expected that CEET would increase the revenue collection from the overall public sector (central and local governments and state-owned entities) from 72 percent in 2018 (baseline) to 95 percent or more in 2022. The ICR of this new series is being prepared. Still, this target might have been substantially achieved, reaching the rate of 98.5 percent in 2021 before falling to 77.8 percent in 2022. Regarding CEB arrears, trigger 5 of DPF1 was targeting a mechanism proposed by CEB, by which the Togolese Government would assume CEB’s arrears to its external suppliers corresponding to the Togolese consumption. However, this measure was removed to reflect that the agreement between CEB and CEET on the mechanism to be put in place could take longer than expected. 18. The RPP supported by TESSIP was successfully completed. This activity was expected to help the utility reduce its commercial losses, thus increasing its revenue from sales of electricity. CEET received and installed all 20,000 prepaid meters (16,000 2-phase meters and 4,000 4-phase meters) and related connection equipment at the time of ICR. This has allowed the connection of 20,000 new connections in Grand Lomé, extending access to approximately 80,000 people. In addition, about 778 largest customers, as of May 2023, have received new prepaid meters as part of the RPP. However, the impact of the RPP on the CEET’s commercial performance will be better observed in the next years, as the RPP was completed at the end of 2023. 19. Liquidity and solvency during the project’s implementation. CEET receivables remained high, and payables have increased over the last two years. At the end of 2021, receivables stood at about seven months of revenues and payables at ten months of operating expenditures, reflecting the alarming liquidity situation of the utility, which the negative effect of the COVID-19 crisis has worsened. In addition, since 2017, the net debt position of CEET has increased by 10 percent (CAGR) to CFAF 123 billion (approximately US$212 million) in 2021, above its revenue growth (CAGR of 5 percent), which is unsustainable given the declining earnings before interest, taxes, depreciation, and amortization margin of the company. The company has contracted long-term loans to finance major electrification programs. Shareholders’ equity has been negative due to accumulated net losses over the period. 9P169867 - Prior Action 5. To protect the revenues of the energy sector, (a) all state-owned entities and central and local government entities have paid their outstanding arrears as of December 31, 2018 to CEET; (b) the water utility, (TdE), and Togo Telecom (TOGOCOM) have established escrow accounts at a certified bank to help ensure that they remain current on their bills to CEET; and (c) CEET has paid its outstanding arrears as of December 31, 2018, to CEB. P172023 - Prior Action 6. To protect the revenues of the energy sector, the recipient has established and operationalized an RPP for its large consumers and mandated by arrêté the installation of smart meters for central government entities and pre-paid meters for local public entities. Page 47 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Figure 4.4. CEET’s Debt to Revenues Source: World Bank team using CEET’s annual reports. Table 4.2. CEET’s Financial Highlights (FCFA Billion) Source: World Bank team at the ICR time using CEET’s annual reports. 20. During project’s implementation, collections from general administration have significantly improved while collection rates from public and para-public entities and municipalities have decreased, and arrears to main suppliers have continued to increase, according to the sector’s historical performance included in the recent performance contract signed between CEET and the Togolese Government in May 2023. There are still rooms for improvement, and it is expected that with ongoing support to the utility through the IDEA project and technical assistance from other donors, the utility should improve its commercial performance. 21. Impact of TESSIP on the overall sector’s performance. TESSIP (P160377) supported an MIP and a reinforcement of the existing RPP. It financed the Restructuring Report and Financial Model for CEET, which informed a series of governance and performance improvement measures. These include (a) contract renegotiations that reduced the cost of supply in 2020/21; (b) the Least-Cost Plan that helped Page 48 of 56 The World Bank Energy Sector Support and Investment Project (P160377) prioritize sector investments, including the transmission line under Component 1 of the IDEA project (P176769, US$200 million); and (c) grid investments and network modeling to estimate technical and nontechnical losses. The RPP financed the acquisition of 5,000 smart meters to increase revenues from the largest CEET consumers (of which 680 are installed to date), including the new performance contract between the GoT and CEET (dated May 5, 2023), as part of Togo’s First Sustainable and Inclusive Development Policy Financing (DPF1, P179294) and the plans to adopt a new tariff structure and methodology in 2024. The tariff studies under TESSIP are being finalized using government funds. The outcomes of these studies should support the application of the prior action under the second phase of the DPO, Togo’s Second Sustainable and Inclusive Development Policy Financing (DPF2, P181238), scheduled for Board in October 2024. This prior action aims to improve the targeting of subsidized electricity services exclusively on low-income households, facilitate decentralized renewable energy production, and preserve industrial competitiveness by adopting and implementing an optimized structure for electricity tariffs reflecting system costs based on a formula for calculating CEET’s revenue requirements. 22. However, not all expected results were achieved, and there is still room for improvement, as previously mentioned. In addition to the technical assistance provided under IDEA to all the Togolese institutions, a road map was drawn up in March 2024 between the GoT and the World Bank for the implementation of priority interventions concerning (a) the restructuring of CEET’s debt, (b) technical assistance for the management of the US$/CFA franc exchange rate risk, and (c) analysis of the restructuring of Togo’s electricity sector. In October 2023, the Togolese and Beninese authorities signed a decision to approve a road map prepared by the World Bank in their efforts to help stabilize CEB’s operational and financial situation. A working group in charge of the company’s restructuring and revitalization has been set up. Advisory Services and Analytics10 have been identified and secured to support these major sectoral reforms. 23. Forecast analysis. The company is heavily reliant on imports of power and fuel to meet its domestic power needs, jeopardizing its supply security and the resilience of its financial situation. Gas supply difficulties in international markets have recently led to the reduction of electricity supplies from Ghana in February–March 2024. In addition, the company’s debts exceeded US$400 million in 2023. The World Bank carried out a prospective financial analysis of CEET to assess the potential growth drivers of an improved financial situation. The main levers that could help the company reach a sustainable financial situation include (a) optimization of CEET’s operating cost, (b) optimization of tariffs (supported under the ongoing DPO), (c) restructuring of CEET’s debt for which the World Bank has offered to support the Government and is continuing discussions on restructuring options to help with the debt burden, (d) renegotiation of electricity and gas purchase contracts, and (e) introduction of more renewable energies into the energy mix, based on the least-cost approach. The IDEA project makes significant investments in planning capacity at the ministry and building the grid’s infrastructure needed for more renewable energies. 10 Strengthening Financial Viability of Power Distribution Utilities in Western and Central Africa (P180988); Energy Sector Management Assistance Program Trust Fund Grants (TF0C1207; TF0C3986). Page 49 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Project’s Economic Analysis 24. At the time of appraisal, a project economic analysis was carried out using a cost-benefit approach. The analysis considered Component 1 as the only one with capital investments and was mainly focused on the benefit/cost analysis of the new 20,000 connections done as part of Component 1. Investment costs were derived from estimates provided by CEET. The analysis accounted for factors such as the reduction of technical and commercial losses, demand increase due to growth in customer base, increases per customer, cost of distribution network expansion, connection, and prepayment meter fees. 25. Still, at the time of appraisal, the World Bank team emphasized data scarcity and reliability issues to assess these benefits. To capture the benefits of first-time electricity supply to new households, it was assumed that the consumption of new households would be like that of households already connected to the grid. It was conservatively assumed that the benefits derived from the consumption of a unit of electricity were, in monetary terms, equal to the electric tariff rate. In addition, there was no breakdown of the 20,000 new connections by type of consumers (households, businesses, and public buildings). The analysis assumed an average monthly consumption per connection of 105 kWh/month and an average willingness to pay (WTP) of US$0.25/kWh. Due to the lack of a detailed household energy survey, there was no information available regarding the spending of unconnected households on alternative sources of energy, such as candles, kerosene, and batteries. The tariff offered by the national utility was used as an estimate of the WTP. The benefits of improved reliability to existing customers could not be captured for the project. The environmental benefits of switching from diesel and kerosene used by unconnected households to electricity were difficult to capture. The absence of data sources documenting the energy demand patterns of unconnected households and firms made it difficult to estimate the amount of diesel generation capacity likely to be displaced when the grid becomes accessible. At the time of appraisal, this was ignored in the analysis. 26. Key inputs of the economic and financial analysis at appraisal are found in Table 4.3. Table 4.3. Main Inputs of the Project’s Economic Analysis at the Time of Appraisal Elements Units Value Technical loss % 11 Nontechnical loss % 13 Reduction of distribution losses due to the project % 4 Consumption growth % 5 Number of new connections # 20,000 Consumption per connection kWh/month 23 Connection cost US$ 119.48 Tariff US$/kWh 0.19 WTP (base case) US$/kWh (CFAF/kWh) 0.25 (141) Source: World Bank team at the time of appraisal 27. At the appraisal time, the project’s EIRR and NPV were estimated at 1.8percent and US$(9.8) million before environmental benefits, respectively. Page 50 of 56 The World Bank Energy Sector Support and Investment Project (P160377) 28. A project economic analysis was also carried out at the project’s closing. This analysis also follows a standard cost-benefit approach at a discount rate of 6 percent. The economic analysis is confined to the project activities that generate quantifiable benefits and for which an economic value can be clearly identified and measured, which limits it to Component 1 of the project. Data related to consumption and incurred costs during the project’s implementation phase shared by the commercial and planning departments of CEET have been used, including the breakdown of the 20,000 connections by type of consumers or by amperage and historical consumption over the period 2021–2023. It is assumed that the WTP is equal to the average energy sold price, which includes tariff applied for energy consumed, taxes, fixed charges, connection maintenance, meter rental, and public lighting charges. This assumption does not include connection costs. Some inputs have also been extracted from the IDEA project, approved on May 23, 2023, to fill some data gaps. Still, beyond the benefits quantified for electricity access in this analysis, higher electrification rates were also expected to increase income-generating activities through productive uses and improve the socioeconomic situation of households, with an expected positive impact on education, lifestyle, and connectivity. Electricity is fundamental to economic development and enhancing social welfare. Businesses, industries, homes, schools, hospitals, and other critical infrastructure all require electricity to function effectively. Due to a lack of data to properly estimate these additional benefits, they were not quantified in this analysis at ICR time. Table 4.4. New Connections Assumptions Average 2023 Power Average Sale Electricity Type of Number as of Consumption Amperage Subscribed Price (2023) Use Connection 2023 per Connection (kVA) (CFAF/kWh) (kWh) Domestic 2-phase 5 1.1 960 231 120 10 2.2 13,079 568 124 15 3.3 1,357 885 127 20 4.4 808 1,148 129 25 5.5 102 1,255 130 30 6.6 470 1,533 132 40 8.8 22 1,835 132 45 9.9 8 2,879 135 50 11.0 3 4,291 136 60 13.2 56 2,120 134 Total - Domestic - 2-phase 16,865 n.a. n.a. 4-phase 10 6.6 161 1,315 126 15 9.9 66 1,284 133 20 13.2 89 1,813 132 25 16.5 18 1,677 135 30 19.8 118 2,534 134 40 26.4 8 6,582 138 60 39.6 20 15,096 139 Total - Domestic - 4-phase 480 n.a. n.a. Non- 2-phase 5 1.1 1 89 119 Page 51 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Average 2023 Power Average Sale Electricity Type of Number as of Consumption Amperage Subscribed Price (2023) Use Connection 2023 per Connection (kVA) (CFAF/kWh) (kWh) domestic 10 2.2 1,230 704 135 15 3.3 247 1,146 138 20 4.4 148 1,036 136 25 5.5 30 854 138 30 6.6 175 1,399 138 40 8.8 7 3,089 138 45 9.9 2 448 133 50 11.0 3 306 139 60 13.2 15 3,721 177 Total - Non-domestic - 2-phase 1,858 n.a. n.a. 4-phase 10 6.6 40 1,782 138 15 9.9 198 1,552 139 20 13.2 191 1,976 141 25 16.5 31 2,712 139 30 19.8 161 3,064 139 40 26.4 24 3,504 139 50 33 6 5,110 140 60 39.6 146 17,238 139 Total - Non-domestic - 2-phase 797 n.a. n.a. Total connections 20,000 n.a. n.a. Source: World Bank team using data from CEET Commercial Department for ICR preparation. Table 4.5. Component 1 Capital Costs Breakdown Amount Foreign Amount Year (CFAF, millions) Exchange Rate (US$, millions) 2018 0 564 0.0 2019 2,838 564 5.0 2020 3,902 564 6.9 2021 4,819 564 8.5 2022 3,680 564 6.5 2023 169 564 0.3 Total - Component 1 15,408 27.0 Source: World Bank team using data from the PIU. Table 4.6. Other Main Inputs of the Project’s Economic Analysis at ICR Elements Units Value Source Average growth after 2025 for all other % 2 Assumed customers, except 5 A and 10 A Page 52 of 56 The World Bank Energy Sector Support and Investment Project (P160377) Elements Units Value Source Average growth of consumption after 2025 for % 1 Assumed 50 A and 60 A customers Transmission and distribution (T&D) losses – % 16 Historical value Togo power sector (2021–2023) T&D losses – Togo power sector (2024–2027) % 15 Assumed T&D losses – Togo power sector (2028–2045) % 14 Assumed Cost of diesel genset generation per kWh US$/kWh 0.35 Assumptions Costs of additional energy generated and US$/kWh 0.13 2022 average supplied Operation and maintenance (O&M) costs (as a % 2 % of capex investments) Grid emission factor for diesel gensets tCO2e 0.002138484 IDEA Economic Analysis Baseline emissions (emissions from alternate tCO2e 0.001399935 IDEA Economic Analysis sources - assuming diesel gensets) Grid emission factor for Togo (West Africa tCO2e 0.000578000 IDEA Economic Analysis Power Pool estimate) Source: World Bank team assumptions at the time of ICR. 29. At closing, the project’s EIRR and NPV are estimated at 4 percent and a negative US$4 million before environmental benefits. The project reaches positive economic benefits of US$10 million and US$22 million with low and high environmental benefits, respectively. Project Financial Analysis 30. At appraisal time, the financial analysis confirmed that the project would be financially viable, resulting in a financial internal rate of return of 9.4 percent and a Financial NPV of US$4.3 million. The project benefits were the increase in electricity sales to newly connected and existing customers owing to the distribution network reinforcement, which generated an inflow from the revenue collected through the average LV tariff applied. The investment cost of the project was estimated at US$27 million. The O&M costs were assumed to be 2 percent of the total investment costs, and distribution commercial costs were assumed to be US$0.03/kWh. 31. At project closing, the financial analysis was conducted based on data related to consumption shared by the commercial and planning departments of CEET and incurred costs during the project’s implementation phase. The analysis follows a standard cost-benefit framework, which compares the present value of project costs (cash outflows) to the stream of revenues (cash inflows) to assess its financial viability using the FNPV and the financial internal rate of return of the project. This analysis is done from the point of view of the distribution utility. An annual financial discount rate of 6 percent is used to calculate the FNPV. The project’s main financial benefits include cash inflows from energy sales to the 20,000 new connections (households, public facilities, and businesses) which gained access to electricity. In addition, incremental billed revenues from electricity sales to the largest customers who benefitted from the installation of new smart meters as part of the RPP have also been accounted for (due to the installation of smart metering equipment allowing for improvement of billing and collection rates). Additional operating cash inflows include proceeds from connection charges, maintenance fees for connection equipment, and fees related to the rental of meters (following CEET's current tariff structure). Page 53 of 56 The World Bank Energy Sector Support and Investment Project (P160377) The main costs related to this project include the capital costs for the investments in the distribution lines and the associated O&M and distribution costs. Additional operating cash outflows include the cost of generating additional electricity supplied. The financing costs of the project include the IDA Credit loan interest payments borne by CEET. Data related to consumption and incurred costs during the project’s implementation phase shared by the commercial and planning departments of CEET have been used, including the breakdown of the 20,000 connections by type of consumers or by amperage, and additional inputs have been drawn from the IDEA project economic and financial analysis. In addition to the data found in Table 4.4 and Table 4.6, the financial analysis uses other assumptions related to the connection fees shared by and discussed with the commercial department of CEET. 32. At closing, the financial internal rate of return stand at 14.9 percent and project’s NPV with the loan not borne by CEET is estimated at FCFA 5.9 billion (or US$ 9.8 million). 33. . 34. Impact of the TESSIP project on CEET’s finances. While the project has helped increase CEET’s customer database and secure better billing with the RPP, it should be noted that the high costs related to the generation of additional electricity distributed and the possible financing costs associated with the possible loan on-lent to the utility might have negatively affected the utility’s performance. However, the sector has enormously benefitted from the various studies undertaken as part of the reform component of TESSIP, which has informed new operations and constituted strategic documents to support the Government’s vision for the Togolese power sector. Page 54 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Page 55 of 56 The World Bank Energy Sector Support and Investment Project (P160377) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) • Financial Agreement for Credit 6168-TG • Project Appraisal Document • Togo Fiscal Reform Credit 2017 • Implementation Status and Results Reports 2018–2023 • Systematic Country Diagnostic 2017 and 2023 • Country Partnership Framework for the Period FY17–FY20 • Restructuring Paper 2017 # RES50797 • Aide Memoires • Midterm Review Report • Management Letters • Financial Management Supervision Mission Reports • Togo Poverty Reduction Strategy Paper July 2014. IMF Country Report No 14/225 • Borrower’s Implementation Completion and Results Report 2023. Page 56 of 56