Report No: ICR00234 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-85350) ON A LOAN IN THE AMOUNT OF EUR53.7 MILLION (US$60 MILLION EQUIVALENT) TO THE Republic of Gabon FOR Access to Basic Services in Rural Areas and Capacity Building Project { 30-Nov-2024} Energy & Extractives Western And Central Africa The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT CURRENCY EQUIVALENTS (Exchange Rate Effective {Sep 27, 2024}) Currency Unit = Central African Franc 586 CFA= US$1 Euro= 1.12 US$ FISCAL YEAR January 1 - December 31 Regional Vice President: Ousmane Diagana Country Director: Cheick Fantamady Kante Regional Director: Franz R. Drees-Gross Practice Manager: Ashish Khanna Komenan Koffi, Jose Francisco Perez Caceres, Michael David Task Team Leader (s): Thibert ICR Main Contributor: Yang Liu The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ABBREVIATIONS AND ACRONYMS ARSEE Regulatory Agency for Water and Electricity Sectors CEMAC Monetary and Economic Community of Central African States CNEE National Council for Water and Electricity CN-TIPPEE National Commission for Public Works and the Promotion of Business and Employment CPS Country Partnership Strategy DENR Directorate for New and Renewable Energies DGE Directorate General for Energy DGEPN Directorate General for the Environment and Nature Protection DGRH Directorate General for Water Resources EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FM Financial Management FMS Financial Management Specialist GDP Gross Domestic Product GoG Government of Gabon GRS Grievance Redress Service IBRD International Bank for Reconstruction and Development IDA International Development Association IFR Interim Financial Report IPPF Indigenous Peoples Plan Framework ISR Implementation Status and Results Report kWh Kilowatt-hour MERH Ministry of Energy and Hydraulic Resources M&E Monitoring and Evaluation MW Megawatt O&M Operation and Maintenance PAD Project Appraisal Document PASBMIR Projet Accès aux Services de Base en Milieu Rural et Renforcement des Capacités PDO Project Development Objective PIM Implementation Manual PIU Project Implementation Unit PPP Public Private Partnership PSGE Emerging Gabon Strategic Plan/Plan Stratégique Gabon Emergent PV Photovoltaic RAP Resettlement Action Plan RPF Resettlement Policy Framework SEEG Gabonese Energy and Water Utility/Société d’Energie et d’Eau du Gabon SHS Solar Home System SP Société de Patrimoine TOR Terms of Reference TTL Task Team Leader WHO World Health Organization Wp Watt-peak WTP Willingness to Pay XAF Central African Franc, CFA The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT TABLE OF CONTENTS DATA SHEET ................................................................................................................................................. i I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................................................1 II. OUTCOME ...................................................................................................................................................8 III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME...................................................................16 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ............................19 V. LESSONS AND RECOMMENDATIONS ..........................................................................................................22 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................................................24 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION .......................................................28 ANNEX 3. PROJECT COST BY COMPONENT .........................................................................................................31 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................................................32 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT DATA SHEET @#&OPS~Doctype~OPS^dynamics@icrbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name Access to Basic Services in Rural Areas and Capacity P144135 Building Project Product Operation Short Name Investment Project Financing (IPF) GA-Access to Basic Srvces in Rural Areas Operation Status Approval Fiscal Year Closed 2016 Original EA Category Current EA Category Partial Assessment (B) (Restructuring Data Sheet - 30 Jun Partial Assessment (B) (Approval package - 01 May 2019) 2023) CLIENTS Borrower/Recipient Implementing Agency Gabonese Republic Ministry of Economy and Participations, CNTIPPEE DEVELOPMENT OBJECTIVE Original Development Objective (Approved as part of Approval Package on 30-Apr-2019) The project development objectives (PDO) are to expand access to water and energy services in targeted rural areas and to establish mechanisms to improve sustainability of service provision. Current Development Objective (Approved as part of Restructuring Package Seq No 1 on 20-Jun-2019) The project development objectives (PDO) is to expand access to water and energy services in targeted rural areas. s s s s s s s s s s s s s @#&OPS~Doctype~OPS^dynamics@icrfinancing#doctemplate i The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT FINANCING RESTRUCTURING AND/OR ADDITIONAL FINANCING Amount Disbursed Date(s) Type Key Revisions (US$M) • Development Objective • Components • Results 20-Jun-2019 Portal 14.27 • Legal Covenants • Disbursement Estimates • Reallocations • Institutional Arrangement • Components 23-Jun-2020 Portal 20.61 • Reallocations • Results 03-Nov-2021 Portal 35.28 • Disbursement Estimates • Loan Closing Date Extension • Results • Disbursement Estimates 07-Dec-2022 Portal 36.12 • Loan Closing Date Extension • Implementation Schedule 30-Jun-2023 Portal 55.10 • Loan Closing Date Extension @#&OPS~Doctype~OPS^dynamics@icrkeydates#doctemplate KEY DATES Key Events Planned Date Actual Date Concept Review 14-Jan-2013 Decision Review 02-Oct-2014 02-Oct-2014 Authorize Negotiations 27-Oct-2014 27-Oct-2014 Approval 17-Sep-2015 17-Sep-2015 Signing 14-Jan-2016 14-Jan-2016 Effectiveness 21-Oct-2016 ii The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ICR/NCO 29-May-2024 30-Nov-2024 Restructuring Sequence.01 Not Applicable 20-Jun-2019 Restructuring Sequence.02 Not Applicable 23-Jun-2020 Restructuring Sequence.03 Not Applicable 03-Nov-2021 Restructuring Sequence.04 Not Applicable 07-Dec-2022 Restructuring Sequence.05 Not Applicable 30-Jun-2023 ICR Sequence.01 (Final) -- 29-Nov-2024 Operation Closing/Cancellation 29-Nov-2023 29-Nov-2023 @#&OPS~Doctype~OPS^dynamics@icrratings#doctemplate RATINGS SUMMARY Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Unsatisfactory Modest ISR RATINGS Actual Disbursements No. Date ISR Archived DO Rating IP Rating (US$M) 01 25-Jan-2016 Satisfactory Satisfactory 0.00 02 25-Jul-2016 Satisfactory Satisfactory 0.00 03 22-Feb-2017 Satisfactory Moderately Satisfactory 0.00 04 19-Sep-2017 Satisfactory Moderately Satisfactory 6.03 05 15-Apr-2018 Satisfactory Moderately Satisfactory 6.03 06 29-Jun-2018 Moderately Satisfactory Moderately Satisfactory 14.27 Moderately 07 18-Jan-2019 Moderately Unsatisfactory 14.27 Unsatisfactory Moderately 08 03-Aug-2019 Moderately Unsatisfactory 20.61 Unsatisfactory Moderately 09 04-Feb-2020 Moderately Satisfactory 20.61 Unsatisfactory 10 09-Aug-2020 Moderately Satisfactory Moderately Satisfactory 20.61 iii The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT 11 22-Feb-2021 Moderately Satisfactory Moderately Satisfactory 22.60 12 19-Sep-2021 Moderately Satisfactory Moderately Satisfactory 22.85 13 10-May-2022 Moderately Satisfactory Moderately Satisfactory 35.38 14 31-Jan-2023 Moderately Satisfactory Moderately Satisfactory 48.48 Moderately 15 05-Oct-2023 Moderately Unsatisfactory 55.11 Unsatisfactory @#&OPS~Doctype~OPS^dynamics@icrsectortheme#doctemplate SECTORS AND THEMES Sectors Adaptation Mitigation Major Sector Sector % Co-benefits (%) Co-benefits (%) FY17 - Energy and FY17 - Renewable Energy Solar 100 0 42 Extractives Themes Major Theme Theme (Level 2) Theme (Level 3) % FY17 - Environment and Natural Resource FY17 - Climate change FY17 - Mitigation 42 Management FY17 - Private Sector FY17 - Public Private Partnerships 10 Development FY17 - Rural FY17 - Urban and Rural FY17 - Rural Development Infrastructure and 100 Development service delivery iv The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ADM STAFF Role At Approval At ICR Practice Manager Meike van Ginneken Ashish Khanna Regional Director N/A Franz R. Drees-Gross Global Director Anita Marangoly George Demetrios Papathanasiou Practice Group Vice President N/A Guangzhe Chen Country Director Elisabeth Huybens Cheick Fantamady Kante Regional Vice President Makhtar Diop Ousmane Diagana ADM Responsible Team Leader Stephan Claude Frederic Garnier Komenan Koffi Jose Francisco Perez Caceres, Michael Co-Team Leader(s) David Thibert ICR Main Contributor Yang Liu I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. Despite Gabon’s wealth of natural resources, ensuring equitable access to basic services remains a challenge, particularly in underserved regions. Gabon, one of the few countries in Sub-Saharan Africa with upper middle-income status, has living standards and access to basic services, such as health, water, electricity, and sanitation, that fall below those of most countries in its income group. In response, the Government of Gabon (GoG) developed a medium-term strategy called the Plan Stratégique Gabon Emergent (PSGE) 1 in 2009, with the goal of transforming Gabon into an emerging economy by 2025. This strategy’s central objective was to achieve 80 percent access to energy and water in rural areas by 2025 with a focus on expanding rural electrification and enhancing the use of renewable energy sources. The project aligned with the Country Partnership Strategy (2012-2016) by addressing priority infrastructure and strengthening sectoral capacity, supporting the GoG’s reform agenda with a focus on technical and institutional development beyond financial aid. 2. In 2015, while Gabon had a national electrification rate of 87.3 percent 2, rural areas lagged far behind with only 18.1 percent 3 coverage. Gabon has one of the lowest densities of population in Central Africa with 9 1 Retrievable from https://www.cafi.org/sites/default/files/2021-02/Gabon_2015_SMpercent20A_PlanStrategiqueGabonEmergent.pdf 2 Data source: World Bank, retrievable from https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS?display=map252525252020&locations=GA 3 Data source: World Bank, retrievable from https://data.worldbank.org/indicator/EG.ELC.ACCS.RU.ZS?display=map252525252020&locations=GA Page 1 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT people per square kilometer 4 and has 91 percent 5 of its land area covered by forest. Expanding electricity access was challenging due to sparse populations and difficult terrain. According to recent technical studies 6, 71 percent of the population lives in localities electrified by one of the four non-interconnected grid networks 7, 14 percent of the population lives in isolated localities electrified by off-grid systems operated by the SEEG, and 7 percent of the population lives in non-electrified localities, which are very small and far from the MV network 8. Recognizing the importance of reliable energy for economic growth, the government prioritized expanding access and making electricity more affordable to support the country’s development. 3. Gabon has historically relied on hydropower for its energy needs. However, rising electricity demand and inadequate planning prompted a significant shift toward thermal generation. By 2015, thermal power accounted for more than 60 percent of the country’s electricity production, leading to increased generation costs and challenges to financial sustainability. The government set ambitious targets to raise installed capacity from 450 MW to 1,200 MW by 2020 9. These targets highlighted the urgent need for better energy planning and investment to ensure sustainable development in the sector. 4. Although Gabon is rich in water resources, with around 90 percent of the country served by watercourses, these resources are not equitably accessible to the rural population. In 2015, while 92 percent of the population had access to improved water sources, only 25 percent of rural residents had access to safe drinking water, highlighting significant disparities in the availability and quality of water services nationwide. Access to sanitation in Gabon was 50% in 2022, compared to 93% in upper middle-income countries. While the GoG has made efforts to expand water and electricity infrastructure in rural areas, progress has remained slow. 5. In 2015, Gabon was at a critical juncture in reforming the electricity and water sectors. Reforms began in the early 1990s and cumulated in the privatization of the Société d'Énergie et d'Eau du Gabon (SEEG) in 1997 through a concession contract with the international utility operator Veolia. However, this contract was terminated by the government in 2018 10. The Ministry of Energy and Hydraulic Resources (MERH) and the Ministry of Economy and Participations (MEP) oversaw management and regulation until a dedicated regulatory agency (Agence de Régulation du Secteur de l'Eau et de l'Énergie) was established in 2010. Investment responsibilities were shared between the GoG and SEEG, with the GoG responsible for structural investments in generation, transmission, and distribution. SEEG has experienced stagnant turnover over the past six years and is now facing a net loss of US$21.6 million in 2022, mainly driven by declining operational performance, chronic underinvestment, and a tariff freeze since 2018. 6. In Gabon, the electricity and water sectors are jointly managed by MERH, ARSEE, CNEE (Conseil National de l’Eau et de l’Electricité), SP (Société de Patrimoine), and SEEG, each overseeing specific areas. SEEG is 4 World Bank, 2021: https://data.worldbank.org/indicator/EN.POP.DNST?locations=GA 5 World Bank, 2021: https://data.worldbank.org/indicator/AG.LND.FRST.ZS?locations=GA 6 GIS assessment of status of electrification in Gabon, which was prepared in the framework of the Generation-Transmission- Distribution Master Plan, March 2020 financed by the World Bank under PASBMIR. 7 Gabon has 4 non-interconnected networks: RIC Libreville, RIC Louetsi, RIC Nord and RIC Franceville. 8 The average size of these localities is 160 inhabitants, and 66 percent of them are located more than 20 km from the MV network. 9 Source: Project appraisal document (2015) 10 Source : https://www.veolia.com/en/newsroom/press-releases/societe-d-energie-et-d-eau-du-gabon-subsidiary-veolia-group-has- filed-request-conciliation-against-gabon-icsid-response-its-expropriation Page 2 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT responsible for the operation, maintenance, and replacement of electricity and water infrastructure within its concession area, covering production, transmission, and distribution. SP manages the Alenakiri and Cap Lopez thermal power plants, with the energy produced sold to SEEG. CNEE is in charge of public lighting, traffic signals, public fountains, and water points, and is expected to expand its role to manage rural electrification and water supply contracts outside SEEG’s concession areas, thus enhancing service delivery in less urbanized regions. Theory of Change (Results Chain) 7. The project (“PASBMIR” 11) aimed to expand access to basic water and electricity services in rural Gabon by financing the rehabilitation and construction of rural electrification infrastructure and the construction of wells and water pipelines for potable water. The project also provided support for implementation, supervision, and monitoring and evaluation, including the creation of a dedicated institutional framework for rural energy and water services, as well as capacity building and technical assistance in the sector. 8. During the project's appraisal phase, a Theory of Change (ToC) was not required in project documents. However, it has since been recreated for the ICR based on the project's results chain, as shown in Figure 1. 9. The key assumptions of the ToC are established based on the project's design to create a market for basic water and energy services in rural areas: (a) the government had both the commitment and capacity to effectively implement reform recommendations, since the project involved delegating service provision to selected operation and maintenance (O&M) operators; (b) the O&M operators possessed the necessary skills and financial resources to deliver results on time, including equipment installation and service delivery; and (c) a sustainable model, combining cost recovery and subsidies, would enable O&M operators to maintain operations and provide reliable services, thus ensuring long-term sustainability. Figure 1 below illustrates the results framework of this project. 11 PASBMIR is the project acronym for "Projet d'Accès aux Services de Base en Milieu Rural et de Renforcement des Capacités" in French. Page 3 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Figure 1. Theory of change Project Development Objectives (PDOs) 10. The project development objective (PDO) as stated in the Project Appraisal Document (PAD) and in the Financing Agreement was (i) to expand access to water and energy services in targeted rural areas, and (ii) to establish mechanisms to improve sustainability of service provision. However, the PDOs underwent significant changes during a 2019 restructuring as detailed in Section B. Key Expected Outcomes and Outcome Indicators 11. At appraisal, the following PDO indicators were agreed: (a) Number of people provided with access to electricity under the project by household connections [off- grid/mini-grid]; (b) Number of people provided with access to electricity under the project by household connections [renewable sources]; (c) Number of people provided with access to ‘improved water sources’ under the project; (d) Percentage of households in villages covered by an O&M operator under the project with functional electricity and water services; (e) Number of direct project beneficiaries (percentage of which female). Components 12. The original project consisted of three main components: 13. Component A: Expansion of access to basic services in rural areas (Appraisal $45.5 million equivalent; Actual cost $42.3 million) This component aimed to provide access to electricity and water in targeted rural areas, including both individual and social-public spaces. The focus was on villages that, at the time of appraisal, were not expected Page 4 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT to be included in the water and energy concession within five years. Key activities included (a) rehabilitating and constructing rural electrification infrastructure, which involved installing solar home systems (SHSs) and mini-grid solutions; (b) constructing and installing wells and water pipelines for potable water; and (c) providing the necessary goods and equipment to support these initiatives. 14. Component B: Implementation support, supervision, and M&E (Appraisal $6.0 million equivalent; Actual cost $8.7 million) This component focused on financing implementation and support activities, along with a comprehensive communication, education, and awareness program. It comprised of four sub-components: (a) establishing a specific institutional framework for rural energy and water services; (b) conducting implementation and support activities; (c) executing communications, education, and awareness initiatives; and (d) managing, monitoring, and evaluating the project. 15. Component C: Capacity building and sectoral technical assistance (Appraisal $8.5 million equivalent; Actual cost 3.2 million) This component included two subcomponents: (a) institutional capacity-building activities; and (b) sectoral analytical work and specific studies. The project aimed to support GoG in reforming the electricity and water sectors. As the SEEG concession approached its expiration in 2017, the project provided MERH with a resident policy advisor to facilitate the transition. Additionally, assistance was offered to the sector regulator, ARSEE, which faced challenges in effectively fulfilling its legal mandate. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 16. The 2019 restructuring—driven by unresolved issues with the O&M financing mechanism as detailed below— introduced a rural electrification model prioritizing grid-based extensions and mini-grids with SEEG responsible for their operation and maintenance. This eliminated the need for a private O&M operator and consequently, the PDO was revised to focus solely on “expanding access to water and energy services in targeted rural areas,” while dropping the previous objective of “establishing mechanisms to improve the sustainability of service provision”. Revised PDO Indicators 17. The results indicators and targets in the Results Framework were updated to align with the proposed changes. At the PDO level, the indicators included: (a) the number of people provided with access to electricity through household connections; and (b) the number of people in rural areas provided with access to improved water sources under the project. Table 1. Summary of changes in PDO and intermediate indicators during the 2019 restructuring. Indicator Status Baseline Target Original 2019 restructuring PDO level Number of people provided with access to electricity under the project Deleted 0 55000 55000 by household connections (off-grid/mini-grid) Number of people provided with access to electricity under the project Deleted 0 55000 NA by household connections (renewable sources) Page 5 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Percentage of households in villages covered by an O&M operator under Deleted 0 90 NA the project with functional electricity and water services Number of people provided with access to improved water sources Target Updated 0 55000 36000 under the project Number of direct project beneficiaries (percentage of which female) Unchanged 0 55000 55000 (50percent) (50percent) Number of people provided with access to electricity under the project New 0 NA 55000 by household connections (number) Intermediate level Number of villages benefiting from improved access to basic services Target Updated 0 220 140 Number of improved community water points constructed or Unchanged 0 27 27 rehabilitated under the project Number of villages with electricity or water services covered by an O&M Target Updated 0 220 140 operator under the project Master plan for access to basic services in rural areas completed and Unchanged No Yes Yes approved. Number of villages benefiting from communication, education, and Target Updated 0 220 140 awareness campaigns Electricity generation and transmission master plan completed and Unchanged No Yes Yes approved Renewable energy generation capacity constructed under the project New 0 NA 1.5 (MW) HTA distribution lines constructed under the project in rural areas (km) New 0 NA 190 BTA distribution lines constructed under the project in rural areas (km) New 0 NA 162 Tariff study completed and approved New No NA Yes Sector Financial Model completed and approved New No NA Yes Sector reform completed, and Road Map adopted New No NA Yes Number of other electricity and water service providers that the project Deleted 0 2 NA is supporting Revised Components 18. Changes to Component A: During the 2019 restructuring, Component A experienced key changes, including (i) financing for solar home systems was dropped and small remote localities were excluded from the new design; (ii) SEEG assumed responsibility for technical implementation, adapting the rural electrification model to focus on grid extensions and new localities; (iii) financing was made available for the rehabilitation and extension of water networks in rural areas managed by SEEG; and (iv) financing allocated for the installation of water points and latrines for schools and health centers to support human capital development. 19. Changes to Component B: While the focus on implementation support, supervision, and M&E remained unchanged, the activities no longer included efforts to establish a specific institutional framework for rural energy and water services. 20. Changes to Component C. A new activity was added to provide advisory services for SEEG reforms, helping the GoG engage a reputable international advisory firm to support these reforms. Other Changes 21. Reallocation of loan proceeds: The restructuring in June 2019 included a reallocation of loan proceeds across components to provide more targeted support for institutional reforms and sector work in the water and energy sectors. Specifically, the allocation under Component A was reduced by US$2.5 million, while the allocation to Component B was increased by US$1.0 million to support the costs of Owner’s Engineers Page 6 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT responsible for supervising grid extension and water supply activities and project management, and the allocation to Component C was increased by US$1.5 million to finance advisory services for SEEG reforms. Table 2. Summary of reallocation of loan proceeds across components during 2019 restructuring Components in 2019 restructuring Total Cost Original Restructured Component A: Expansion of access to basic services in rural areas 45.50 43.00 Subcomponent A.1: Electricity Basic Services 31.85 28.60 Subcomponent A.1.1: Electrification by grid extension in rural and peri- 20.00 urban areas Subcomponent A.1.2: Decentralized rural Electrification by hybridization 8.60 Subcomponent A.2: Water and Sanitation Basic Services 13.65 14.40 Subcomponent A.2.1: Water Supply by rehabilitation and extension of 13.40 SEEG’s water supply networks in rural areas Subcomponent A.2.2: Construction of sanitation facilities in schools and 1.00 health facilities in project area. Component B: Implementation support, supervision, and M&E 6.00 7.00 Subcomponent B.1: Establishment of a specific institutional framework 0.50 0.50 for rural energy and water services Subcomponent B.2: Implementation and support activities 3.25 3.50 Subcomponent B.3: Communications, education, and awareness 0.75 0.75 Subcomponent B.4: Project management, monitoring, and evaluation 1.50 2.25 Component C: Capacity building and sectoral technical assistance 8.50 10.00 Subcomponent C.1: Institutional capacity-building activities 4.00 4.00 Subcomponent C.2: Sectoral analytical work and specific studies and 4.50 6.00 sector advisory services Total 60.00 60.00 22. Introduction of Covid emergency response: The second project restructuring, approved on June 10, 2020, introduced a new Component D (Contingent Emergency Response; CERC) and a corresponding disbursement category to support the government’s response to the Covid-19 crisis in collaboration with the World Health Organization (WHO) and the United Nations agency for children (UNICEF). Key activities included waste management, installation of hand hygiene systems, provision of handwashing stations in public places and schools, and training and awareness sessions. 23. Changes in closing dates: The project was extended three times through further simple restructurings in 2021, 2022, and 2023: from October 22, 2021, to November 30, 2022; then from November 30, 2022, to June 30, 2023; and finally from June 30, 2023, to November 29, 2023. At the time of the extensions which primarily addressed implementation delays, the implementation progress and the development objective were considered modestly satisfactory. Rationale for Changes and Their Implication on the Original Theory of Change 24. The rationale for the 2019 restructuring stemmed from the inability to proceed with disbursements under Component A due to unresolved issues surrounding the O&M financing mechanism. While the bid evaluation for the water services procurement package was completed, the contract could not be awarded because the financing mechanism for O&M was not approved. Similarly with the rural electrification package, proposals were received but the financing framework was not finalized. The O&M mechanism, meant to fund Page 7 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT private operators through consumer payments and government subsidies, faced delays due to fiscal constraints and the lack of government approval. No satisfactory solution was found despite attempts to resolve these issues, preventing any disbursements under Component A as stipulated in the Loan Agreement. 25. The 2019 restructuring introduced a new rural electrification model that prioritized grid-based extensions and mini-grids in underserved areas. SEEG assumed responsibility for the O&M of these systems, with funding secured through a combination of tariffs and government subsidies. This shift eliminated the need for a separate account to fund private O&M operators and allowed the removal of related disbursement conditions. The modifications to the key components and theory of change are outlined above. II. OUTCOME A. RELEVANCE OF PDO Assessment of Relevance of PDOs and Rating 26. The Project is highly relevant to the World Bank country and sectoral strategies, as well as to the country’s current development priorities. The relevance of the PDO is considered High for the following reasons. 27. The Project contributed to Gabon's new Country Partnership Framework (CPF)12. It directly supported two pillars of the 2023-2027 CPF: “Increased access to social services” and “A strong public service delivery system”. By expanding access to electricity, water, and sanitation, the project aimed to enhance household resilience, especially for the most vulnerable populations, and became a key component of the country's development strategy. The objectives also aligned with the 2012-2016 CPF focused on: (a) improving governance and public sector capacity; (b) increasing Gabon’s competitiveness and employment; (c) addressing vulnerability and resilience; and (d) fostering gender equity. 28. The PDO’s focus was on improving access to basic water and electricity services in rural areas. By enhancing access to essential social services in underserved regions, the project aligned with national priorities and the Bank's engagement strategy in Gabon, including the Plan Stratégique Gabon Émergent (PSGE) adopted by GoG in 2012 13, which emphasizes the pillar of “developing a sustainable, diversified, and accessible electricity supply for all”. 29. The PDOs are well-aligned with national sector policies, as reconfirmed in the recent Gabon Transition Development Plan (PNDT) for 2024-2026 14. This plan emphasizes strategic orientations aimed at improving the supply of drinking water, sanitation, and energy services to meet citizens' needs and support Gabon's economic development. By aligning with the PNDT, the PDOs reinforce the government's commitment to enhancing essential services and promoting sustainable growth. B. ACHIEVEMENT OF PDOs (EFFICACY) 30. At appraisal, the PDO consisted of expanding access to water and energy services in targeted rural areas and establishing mechanisms to improve the sustainability of service provision. However, during the 2019 restructuring, the PDO was revised to focus solely on expanding access to water and energy services in 12 Source : https://documents.worldbank.org/pt/publication/documents-reports/documentdetail/099250010182231338/bosib08344da550660892902b6debd0b5f1 13 Source : https://www.gouvernement.ga/2-premier-ministre/1086-le-psge-presente-aux-partenaires-techniques-et-financiers-/ 14 Source : https://www.primature.gouv.ga/2-actualites/1406-economie-/2270-le-premier-ministre-lance-les-travaux-du-plan-national-de-developpement-de-la- transition/ Page 8 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT targeted rural areas. As the project objectives, scope, or key outcome targets were revised during implementation through a restructuring, a split rating will be applied (Split 1 with the original target and Split 2 with the revised or reduced target). Assessment of Achievement of Each Objective/Outcome PDO-Objective 1: Expand access to energy services in targeted rural areas 31. The project's first objective to enhance access to electricity, is deemed Modest. This objective was measured through the one PDO and eight intermediate indicators presented in Table 3, which provides an overview of their achievements at project closure. Table 3. Overview of the Associated Indicators and Their Achievements At Closure Indicator Value Original Split 1 target Split 2 target achieved targets (Before (After restructuring) restructuring) PDO indicator Number of people provided with access to electricity 14,952 55,000 55,000 55,000 under the project by household connections (27% achieved) (27% achieved) Intermediate indicators HTA distribution lines constructed under the project 189 190 New target after 190 in rural areas (km) restructuring (99% achieved) BTA distribution lines constructed under the project 179 162 New target after 162 in rural areas (km) restructuring (110% achieved) Renewable energy generation capacity constructed 0.35 1.5 1.5 1.5 under the project (MW) (23% achieved) (23% achieved) Electricity generation and transmission master plan Yes Yes Yes Yes completed and approved (100% achieved) (100% achieved) Tariff study completed and approved Yes Yes Yes Yes (100% achieved) (100% achieved) Sector Financial Model completed and approved Yes Yes Yes Yes (100% achieved) (100% achieved) Sector reform completed, and Road Map adopted Yes Yes Yes Yes (100% achieved) (100% achieved) Master plan for access to basic services in rural areas Yes Yes Yes Yes completed and approved. (100% achieved) (100% achieved) 32. Number of people provided with access to electricity under the project by household connections: SEEG installed 2,492 electricity meters out of the initially planned 7,516. With an average household size of six people, the estimated number of individuals provided with access to electricity through these connections is approximately 14,952, which represents 27percent of the originally planned 55,000. This outcome falls significantly short of expectations. It is important to note that the installation of water and electricity meters was the financial responsibility of SEEG and the MERH and fell outside the project’s original scope. Funding constraints and a lack of ownership by SEEG hindered its ability to purchase the necessary meters. While the Bank agreed to cover the costs for purchasing and installing meters during the project's final stage in 2023, SEEG and the Bank could not reach a consensus on the procurement modality. These factors collectively contributed to the project's difficulties in achieving its targets related to meter installation. It is important to Page 9 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT note that the upstream infrastructure for both water and electricity is now in place. The SEEG should relatively easily extend services to the intended households by focusing on procuring and installing the meters. 33. Distribution MV/LV lines constructed under the project in rural areas: The project successfully constructed 189 km of medium-voltage (MV) distribution lines and 179 km of low-voltage (LV) distribution lines in rural and peri-urban areas, achieving 99percent and 110percent of the initial forecasts, respectively. This included extending the MV/LV network in localities such as Igoumié, Bambouchine, Malibé, Andjogo-Franceville axis, Aboumi, Sindara, Iboundji, and the Trois Frontières zone in Bitam for village electrification. 34. Renewable energy generation capacity constructed under the project: The project increased solar energy production capacity by 0.3456 MW through the installation of five hybrid solar photovoltaic/diesel mini grid power plants in Aboumi, Ndangui, Guiétsou, Batouala, and Mourindi. The project benefitted 307 households, representing approximately 1,842 individuals, based on an average household size of six people. However, this achievement represents only 23percent of the initial target of 2 MW. The target was overestimated during preparation as the forecasts relied on demand estimates for larger regions served by SEEG, while the project focused on specific areas. The target was not revised during restructurings, primarily because the mini-grid projects were implemented in the project’s final years, missing timely opportunities for target adjustment. 35. Sectoral studies and advisory services: The project successfully completed sectoral analyses and consultancy services to support MERH. These activities financed targeted studies to facilitate strategic decision-making and policy implementation. Key outputs include the master plan for access to basic water and electricity services in rural areas, advisory support for reforms in the electricity and water sectors, a study on electricity and drinking water tariffs, the development of an economic and financial model for energy and water sectors, and a master plan for the production, transmission, and distribution of electrical energy systems by 2040. 36. The project achieved community connections, including 25 schools and 17 public administration buildings, and installed 1,629 streetlights. However, these achievements were not reflected in the project’s outcome indicators. 37. While the project completed the construction of MV and LV distribution lines and all sectoral studies, with only 2,492 meters installed out of the planned 7,516, the PDO indicator for the number of people provided with access to electricity through household connections stands at 27percent of the target. The actual increase in access to electricity depends on meter installations, which was beyond the project's scope and was solely the responsibility of SEEG. Therefore, the project is rated Modest for both Split 1 and Split 2 based on this shortfall. PDO-Objective 2: Expand access to water services in targeted rural areas 38. The project's second objective to enhance access to water, is deemed Modest. Table 4 presents an overview of the associated indicators and their achievements at closure. Page 10 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Table 4. Overview of the Associated Indicators and their Achievements at Closure Indicator Value Original Split 1 target Split 2 target achieved targets (Before (After restructuring) restructuring) PDO indicator Number of people provided with access to improved 9,312 36,000 55,000 36,000 water sources under the project (17% achieved) (26% achieved) Intermediate indicators Number of villages benefiting from improved access 121 140 140 140 to basic services (86% achieved) (86% achieved) Number of improved community water points 27 27 27 27 constructed or rehabilitated under the project (100% achieved) (100% achieved) Tariff study completed and approved Yes Yes Yes Yes (100% achieved) (100% achieved) Sector Financial Model completed and approved Yes Yes Yes Yes (100% achieved) (100% achieved) Sector reform completed, and Road Map adopted Yes Yes Yes Yes (100% achieved) (100% achieved) Master plan for access to basic services in rural areas Yes Yes Yes Yes completed and approved. (100% achieved) (100% achieved) 39. Number of people provided with access to improved water sources under the project: The project provided around 6,342 people in rural areas with access to improved water sources, assuming an average household size of six. In addition, 2,970 people benefitted from 27 community water points, each serving an estimated 110 individuals. As a result, the project reached a total of 9,312 beneficiaries, corresponding to 17 percent of the initial target of 55,000 people and 26 percent of the revised target of 36,000 people. It is noted that there is no overlap of beneficiaries between the water and energy projects, as they are implemented at separate sites. 40. Number of villages benefiting from improved access to basic services: The project included the supply and installation of 40,916 meters of water distribution pipelines. Moreover, a 500 m³ metal water tower was constructed in Lambaréné, along with an aeration cascade adjacent to the existing iron removal tower. Overall, 121 villages received improved access to basic services, specifically in electricity and water, achieving 84percent of the target of 140 villages. 41. Number of improved community water points constructed or rehabilitated under the project: Twenty-seven (27) boreholes were rehabilitated in the Estuaire, Moyen-Ogooué, and Ogooué-Maritime provinces, significantly improving the availability of potable water. 42. Operational Support for Water Department: To support the operational capabilities of the Water Department, two batches of essential maintenance equipment for village water pumps were procured. The first batch included complete pumps, HPV 60 pedals, fountain sealing plates, complete valve boxes, guide nuts, and various components necessary for pump functionality and maintenance. The second batch comprised additional complete pumps, piston sets, toolboxes, plumber’s tool sets, maintenance parts for manual pumps, and sodium hypochlorite for disinfection. Page 11 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT 43. The project also provided water access to 14 primary schools, five middle and high schools, and 45 public administration buildings. However, these achievements were not reflected in the outcome indicators. 44. While most rehabilitation and construction work on the water tower, distribution pipes, and boreholes was completed, only 1,057 water meters were installed out of the planned 5,439, due to the reasons noted in paragraph 33. The PDO-level indicator for the number of people provided with access to improved water sources achieved around 12percent of the initial target and 18percent of the revised target. However, with the upstream infrastructure in place, achieving the target should be relatively straightforward by focusing on completing meter installations. Therefore, the project is rated as Modest for both Split 1 and Split 2. PDO-Objective 3: Establish mechanisms to improve sustainability of service provision Table 5. Overview of the Associated Indicators and their Achievements at Closure Indicator Value Original Split 1 target Split 2 target achieved targets (Before (After restructuring) restructuring) PDO indicator Establish mechanisms to improve sustainability of service No Yes No Dropped provision Intermediate indicators Percentage of households in villages covered by an O&M 0 0 90.00 Dropped operator under the project with functional electricity and water services (Percentage) 45. The PDO objective to establish mechanisms for improving the sustainability of service provision was initially aimed at creating a viable O&M financing mechanism to support private operators in delivering basic services through a combination of consumer payments and government subsidies. While a financing mechanism was proposed in January 2017, it failed to receive government approval. Despite numerous efforts and workshops between the GoG and the Bank to find a resolution, no satisfactory solution was achieved. As a result, this PDO indicator, along with the related intermediate indicator, was dropped during the 2019 restructuring. Following this, the GoG decided to designate the national utility, SEEG, as the O&M operator for this project. 46. As Objective 3 was not achieved due to the contributing activities being dropped (alongside the relevant indicators) at restructuring, the project is rated as Negligible for Split 1. Justification of Overall Efficacy Rating 47. Overall efficacy ratings are considered Modest, based on the Modest ratings for Objectives 1 and 2 (Split 1 and Split 2 respectively), and Negligible rating for Objective 3 for split 1. C. EFFICIENCY Assessment of Efficiency and Rating 48. At the ICR stage, the economic analysis of the project was assessed using the Economic Internal Rate of Return (EIRR) and the Economic Net Present Value (ENPV). The results of the efficiency analysis conducted at the ICR stage, compared to those at both the appraisal and restructuring stages, are summarized in Table Page 12 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT 6 for the overall project and each component. A more detailed discussion on the assumptions and analysis can be found in Annex 4. Table 6. Summary of the Economic Analysis At appraisal At Restructuring (2019) At ICR Economic Internal Rate of Return 11.3% 29.8% 3.2% Basic Electricity Supply Services 11.7% 41.8% (grid extension) 4.1% (grid extension) 16.3% (hybrid mini grids) 6.7% (hybrid mini grids) Basic Water and Sanitation Services 11.2% 20.2% -1.8% Economic Net Present Value (US$ million) $2.6 $128.0 -$17.1 Basic Electricity Supply Services (US$ million) $1.2 $101.9 -$0.4 Basic Water and Sanitation Services (US$ $1.4 $26.2 -$8.4 million) 49. The 2019 restructuring brought extensive modifications to the project’s design, scope, and objectives, including a significant shift from SHS to grid expansion through SEEG. Originally, PASBMIR was intended to provide rural populations with standalone electricity and water solutions (such as solar home systems and water pumps). However, the final design changed to more profitable grid-based solutions, which led to higher ENPV and EIRR at restructuring compared to appraisal. Due to significant changes in the project's scope and nature following the 2019 restructuring, the ICR assessment was based on the same spreadsheet model and parametric information from the restructuring, using an eight percent discount rate and assuming a 25-year asset lifespan. 50. Although most of the rehabilitation and construction of electricity and water infrastructure were completed, the project's PDO indicators—specifically, the number of people provided with access to improved water sources and the number of people provided with access to electricity through household connections—were not fully achieved due to the shortfall in meter installations. By project closure, only 33 percent of the planned electricity meters and 19 percent of water meters had been installed 15. These PDO indicators were crucial for assessing the project's impact on service delivery and efficiency. Despite some beneficiaries gaining access to electricity and water, the inadequate installation of meters significantly hindered the project's ability to accurately measure and report on these achievements. Consequently, both the EIRR and ENPV were notably lower at the ICR stage, reflecting the project's diminished financial and operational benefits tied to installation of meters. 51. The EIRR at ICR stage is 3.2 percent, below projections at restructuring (29.8 percent), appraisal (11.3 percent), and, most importantly, the discount rate of eight percent. The ENPV is negative at -US$17.1 million, again below both values at appraisal (US$2.6 million) and restructuring (US$128 million). The electricity supply subcomponent is also economically unviable, with an EIRR of 6.7 percent for hybrid mini-grids and 4.1 percent for grid extension, both falling below the estimates at appraisal and restructuring. Meanwhile, the water supply subcomponent is unviable, with a negative EIRR of -1.8 percent, compared to the more 15 The model at the restructuring used even higher targets for connections: 10,000 electricity meters and 7,500 water meters. Page 13 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT favorable results at the two previous analysis stages. Table 6 summarizes these findings, with the corresponding ENPVs. The lackluster results are largely explained by a failure to bring electricity and water services to a large portion of the planned target beneficiaries, with under 3,549 households reached by the project, well below the 17,500 assumed by the analysis at the 2019 restructuring. 52. Financial assessment. At appraisal, the national policy of free access to basic services for poor households was assumed for all beneficiaries and thus, by the original project design, rural provision of water and electricity services was never going to be financially profitable for the GoG. However, the 2019 restructuring led to the eventual inclusion at ICR of many urban beneficiaries, leading to revenue from new electricity and water grid connections which outstripped project costs. The analysis done at restructuring calculated positive returns of 9.3percent FIRR and $143 million FNPV at a 0.49 percent after-tax discount rate. However, at ICR, the project is found to be financially unviable, with a FIRR of -2.57% and FNPV of -US$17.9 million, at the same after-tax discount rate of 0.49 percent. These unsatisfactory results can be attributed to project underperformance in reaching metered beneficiaries as planned, while still incurring significant costs. Addressing SEEG’s annual O&M shortfall would be the key to covering the national utility’s long-term financial operating deficit. 53. The project’s implementation experienced general shortcomings that affected efficiency. First, a disbursement condition delayed Component A for several years until lifted through a 2019 restructuring, which introduced extensive changes to the project’s design, scope, and objectives. Second, repeated delays were caused by insufficient oversight on construction sites, unfavorable weather and road conditions, SEEG’s difficulties with meter procurement and installation, and frequent changes in project management due to political instability, particularly the coup in August 2023. Third, two project works operators selected were not the least-cost options, contributing to unnecessary cost overruns. Last, higher-than-expected expenditures were further exacerbated by currency fluctuations and the rising cost of materials during the COVID-19 pandemic. 54. Efficiency rating. Due to changes in the project design and various implementation inefficiencies, the project’s efficiency is rated as Modest. This rating is reflected in the lower-than-expected ENPV and EIRR results at the ICR stage. It is important to note that with upstream infrastructure already in place, future meter installations are expected to expand the beneficiary base and boost payments, which should help the project reach profitability. D. JUSTIFICATION OF OVERALL OUTCOME RATING 55. The Overall Outcome Rating is considered Moderately Unsatisfactory. This rating was determined by the weighted value of all objectives, with the shortfall in meter installations notably impacting the final assessment, despite progress in other areas like the construction of electricity and water distribution lines. For the record, a split evaluation has been carried out, as shown in Table 7 below. Page 14 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Table 7. Overall Outcome Rating 16 Based on Split Evaluation Objectives After Original Objectives 2019 Restructuring Relevance of PDO High Efficacy Modest Modest PDO objective 1: Expand access to energy services in targeted rural areas Modest Modest PDO objective 2: Expand access to water services in targeted rural areas Modest Modest PDO objective 3: Establish mechanisms to improve sustainability of service provision Negligible NA Efficiency Modest Moderately Moderately 1 Outcome ratings Unsatisfactory Unsatisfactory 2 Numerical value of the outcome ratings 3 3 3 Disbursement US$14.27 million US$40.08 million 4 Share of disbursement 26% 74% 5 Weighted value of the outcome rating (Row 2 X Row 4) 0.78 2.22 Moderately Unsatisfactory 6 Final Outcome rating (0.78 + 2.22 = 3) E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 56. PASBMIR has had a positive impact on women and girls. More specifically, the project conducted building capacity on gender-based violence in rural communities. Since women bear the burden of water and firewood collection over long distances, having access to water and electricity services represents significant time savings for women that frees up time to care for children, go to school, and develop business using water as an input. Improved water services are also critical to reducing maternal mortality. Institutional Strengthening 57. The project’s allocation of funds for specific studies, including the least-cost plan and tariff studies, bolstered the long-term strategic planning efforts of key stakeholders such as MERH, ARSEE and SEEG. 58. The experience gained by the PIU is anticipated to offer significant advantages for future initiatives. The PIU was based at the National Commission for Public Works and the Promotion of Business and Employment (CNTIPPEE), an entity under the MEP, serving as a support unit for all projects financed by the Bank. The knowledge and skills developed—such as a better understanding of Bank procurement and financial mechanisms through overcoming project challenges—contribute to institutional strengthening. 16 Highly Unsatisfactory (1); Unsatisfactory (2); Moderately Unsatisfactory (3); Moderately Satisfactory (4); Satisfactory (5); Highly Satisfactory (6) Page 15 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Mobilizing Private Sector Financing 59. Electrification is a crucial factor in fostering entrepreneurship and stimulating private sector development, particularly in underserved regions. According to Enterprise Surveys, electricity was identified as the main challenge in Gabon's business environment, with 23.4% of firms citing it as the top obstacle to business activity. Therefore, access to reliable electricity enables businesses to operate more efficiently, reduces operational costs, and allows for the adoption of modern technologies. Poverty Reduction and Shared Prosperity 60. The project targeted underserved populations in rural and peri-urban areas, particularly in low-density regions where constructing distribution networks was impractical. Upon the installation of meters, the population can fully utilize the constructed infrastructure, which would create economic opportunities for the poor and vulnerable. Other Unintended Outcomes and Impacts 61. The project contributed significantly to improving community sanitation. A total of 50 toilet blocks were constructed or rehabilitated, providing 211 cubicles for public use. Additionally, sanitary facilities were installed across key community centers in Cocobeach, Lambaréné, Bakoumba, Gamba, Ndendé, Makokou, Medouneu, and Minvoul, enhancing access to clean and safe facilities. 62. Under Component D (Contingent Emergency Response, CERC), the project installed handwashing stations at 757 schools, achieving 100percent of its target and benefiting approximately 400,000 students and teachers. Additionally, 6,000 school staff were trained in hygiene protocols, disinfection, and water quality management, reaching 375percent of the target. A total of 1,041 schools received risk communication materials and cleaning protocols, achieving 49percent of the target to enhance community awareness of hygiene and sanitation. The project also installed one incinerator at the Port Gentil Regional Hospital, achieving 25percent of its target. It is noted that these sanitation activities are not included under the PDO indicators. 63. The use of solar energy and improved operational performance supported climate change mitigation through reduced greenhouse gas emissions. The development of hybrid solar-diesel power stations represents significant savings in greenhouse gas emissions compared with the preceding diesel generators. 64. Improved access to water supply is expected to significantly reduce mortality and morbidity from waterborne diseases in the project areas. Diarrheal diseases are a leading cause of death, while WASH-related issues, including neonatal conditions and malaria, contribute significantly to the national disease burden. Enhancing water access can play a critical role in tackling these health challenges. III. KEY FACTORS AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 65. During the preparation phase, the assumptions regarding the availability of adequate O&M funding proved to be overly optimistic, leading to some challenges with disbursement and sustainability of the project's infrastructure and services. There was also an overestimation of the local institutional reform capacity, which affected the implementation of rural electrification. In response, the government designated SEEG as the technical focal point during the project’s restructuring in 2019. This led to a significant shift in the project Page 16 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT scope from solar home systems to grid extension within SEEG's concession area. Coordination between the MERH and SEEG could be improved, particularly in aligning their sector recovery reforms and strategies. Moreover, SEEG's involvement in the project design was limited at the outset, resulting in a lack of inputs on critical aspects such as technical specifications, investments priorities, and operational feasibility, including the installation of water and electricity meters. The absence of clear responsibility delineation between the MERH and SEEG also contributed to challenges in decision-making and accountability. 66. In Gabon, where electricity and water services are overseen by a unified utility and ministry, it is crucial for projects to integrate both sectors effectively. The project design specifically sought to exploit the synergies between these two sectors to maximize benefits for the population, recognizing that energy is a crucial input for water services, such as pumping, treatment, and distribution. Additionally, the interdependence of the two sectors was highlighted by the need for water to maintain and clean solar panels in mini grids. However, the project design did not fully leverage these interconnections, as water and electricity components were not implemented at the same sites and the overall effectiveness and sustainability of the infrastructure could have been improved through stronger synergy between the two sectors. This limited the potential for better integration and resource optimization, which could have enhanced service delivery. As both sectors are under the control of the same ministry, better integration could have reduced costs associated with implementation and coordination. 67. During the design of the PASBMIR, the Bank and MERH agreed that fiduciary activities were managed by CNTIPPEE. This arrangement aimed to address the country’s limited capacity and fiduciary risks by leveraging a well-staffed team, which provided essential expertise and facilitated cost-sharing. However, the project did not fully assess whether CNTIPPEE had the necessary personnel and capacity to dedicate sufficient resources to each project. This shortcoming contributed to the challenges faced during implementation as stated below. B. KEY FACTORS DURING IMPLEMENTATION Factors under the government control 68. One of the key challenges encountered was the inability to proceed with disbursements under Component A, due to unresolved issues with the O&M financing mechanism, which was a precondition for disbursement and stalled contract awards. The project required government counterpart funding to support the O&M financing mechanism, which was intended to fund private operators through consumer payments and government subsidies. However, this funding was not approved due to fiscal constraints, necessitating the 2019 restructuring to address these challenges and facilitate project continuation. 69. SEEG's inability to supply and install the necessary water and electricity meters for the project has posed a significant challenge. The project design did not allocate project funds for the procurement and installation of these meters, placing the responsibility solely on SEEG. Financial constraints and a lack of ownership led to substantial delays in meter delivery. By the project's final stage in 2023, the Bank agreed that SEEG would order 6,000 electricity meters and 3,400 water meters, with PASBMIR covering the costs. However, both parties failed to agree on practical procurement arrangements before project closure. Although the Minister of MERH supported the procurement solution, its lack of enforcement power over SEEG limited its effectiveness. Unfortunately, SEEG’s performance did not meet expectations, resulting in a shortfall of approximately 5,000 electricity meters and 2,500 water meters at the time of project closure. 70. Changes in management at the MERH and SEEG affected the project. Between 2015 and 2017, three different ministers led the MERH, which delayed the signing of decrees needed to establish the Project Steering Page 17 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Committee and appoint its members. SEEG experienced frequent changes in personnel, including seven General Managers and senior staff, causing some disruptions in operations and delays in validating technical files due to questions raised about previous management decisions. Factors under the PIU control 71. The audit conducted by Deloitte revealed shortcomings in CN-TIPPEE’s financial management capacity, with only one FM staff member assigned to oversee four Bank operations. There is a need for additional personnel to ensure optimal project execution. The mutualization approach also increased the workload for certain positions, like project assistants, who took on tasks beyond their terms of reference. Furthermore, this policy has extended beyond support functions, impacting key budgeted roles, such as procurement and financial management, which remained unfilled and adversely affected overall project performance. CNTIPPEE often faced overwhelming demands during urgent project phases, leading to implementation delays. As it relies solely on funding from Bank projects, there are concerns about stability if a project closes or is undisbursed. There is a need to improve the CNTIPPEE's funding mechanism and operations for better efficiency. 72. Procurement and contract management have also contributed to delays during implementation. A lack of familiarity with procurement regulations initially hindered progress; however, this improved as a senior procurement specialist joined the PIU team in late 2021 and received coaching from the Bank's procurement team. Despite these improvements, the PIU struggled to update procurement information in the Systematic Tracking of Exchanges in Procurement (STEP) promptly, which had been an agreed action from implementation support missions (ISMs) until the final year of the project, when this issue was largely resolved. Contract management remained a significant challenge throughout implementation, characterized by limited proactive engagement to ensure adherence to timelines, resulting in some contracts expiring before the PIU could either process an extension or cancel them. Two of the project’s works operators selected were not the least-cost options and thus unnecessary cost overruns were observed. Factors beyond the project control 73. The project encountered a significant constraint due to changes in processing times for international financial transactions in the Central African Economic and Monetary Community (CEMAC) region that substantially slowed procurement, with suppliers requiring full payment before delivery. This also affected the PIU function, leading to delays in consultant payments and ultimately hindering overall project efficiency. 74. On August 30, 2023, a military coup d'état in Gabon led to the suspension of disbursements from August 15 to December 11, 2023. This event affected the entire Gabon portfolio and required the enforcement of OP 7.30 measures. Consequently, delays occurred in the financial execution of specific activities and transaction volumes became concentrated as the project neared its closing date, increasing the risk of receiving goods and deliverables past the deadline. 75. The project faced additional challenges due to rising equipment and transportation costs, along with poor road conditions that complicated the transport of goods and personnel. These issues were further exacerbated by the COVID-19 pandemic, which disrupted global supply chains and labor markets, which significantly impacted the manufacturing and delivery of essential equipment and led to higher-than-expected expenditures. Page 18 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 76. There are some shortcomings in the project's M&E design. The results framework effectively measured intermediate outputs, such as the construction of distribution lines, renewable energy generation capacity, and number of community water points. However, the project could monitor the number of people benefiting from improved electricity supply service quality. This indicator would allow for the inclusion of a significant number of individuals who previously had access to services but experienced enhanced quality or reduced outages due to the rehabilitation and construction of distribution lines in the assessment. Furthermore, the electricity access indicator only accounted for household connections, excluding community connections such as school and public lighting. No indicators were established to capture sanitation activities, despite the project completing significant improvements in sanitation facilities. Lastly, the target for renewable energy generation capacity was overestimated during preparation, relying on SEEG's demand forecasts for entire regions rather than focusing on the specific zones where project activities were planned. M&E Implementation 77. Monitoring was conducted using Excel rather than the tool for Operational Monitoring and Assessment of Technical and Economic Performance (TOMATE) software, which allows evaluating and analyzing the operational performance of the project. This increased the risk of errors and data loss. The system also lacked an internal data transmission mechanism within the PIU. 78. The PIU found the services provided by the owner's engineers to be mediocre due to a lack of vigilant oversight on construction sites. Field data collection relied on control missions and online meetings between these teams and the PIU. However, PIU staff were unable to participate in all the technical supervision missions due to budget constraints. Consequently, the project's results reporting across ISRs was inconsistent, particularly regarding the installation of meters. M&E Utilization 79. Monitoring and evaluation were guided by the results framework, targets, and indicators. However, many of these activities were executed close to the project's closing date, and as a result, the project did not revise or update the target during the restructuring processes. 80. Monitoring and evaluation data were used to make informed decisions on project management. Progress against indicators were a point of discussion during ISMs and monthly meetings with the PIU and implementing agencies, with the goal of keeping the project on track to achieve its objectives prior to closure. Following the revisions to Component A activities, associated results indicators were modified accordingly. Justification of Overall Rating of Quality of M&E 81. The results framework allowed for reliable monitoring of progress against the achievement of the PDOs. However, the M&E design had a shortcoming in not accounting for community connections for electricity and sanitation activities, which could have been modified during restructuring to better demonstrate the substantial impact of the project. There were also minor shortcomings in the implementation of the M&E system, with respect to the miscalculation of some indicators during project implementation, which could have Page 19 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT been avoided with a more robust and transparent monitoring platform. Thus, the quality of the project’s M&E is rated Modest. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 82. Environmental and social safeguards were integrated from the project's preparation phase, with PASBMIR classified as having moderate risk. The project complied with key Bank policies 17. All compliance requirements were met through the development of key frameworks and safeguard tools 18. Challenges during preparation included delays in hiring firms for impact assessments and obtaining compliance certificates from the Directorate General for the Environment and Nature Protection (DGEPN). 83. Financial management for execution of Annual Activity Implementation Plan and related budget and procurement plan (PTBA) faced delays due to its placement within CNTIPPEE, which oversees multiple projects, slowing the production of essential documents like IFRs. Initially, there were deficiencies in internal control and record- keeping, leading to delayed submissions of quarterly IFRs and external auditor reports, which did not meet quality standards. However, after changes in the PIU and the recruitment of an experienced financial specialist, these issues were largely resolved. The project consistently submitted timely, quality IFRs and certified annual external audit reports, achieving a last three ratings of Moderately Satisfactory, though the overall risk level remained Substantial. 84. A total of sixty-one (61) contracts were awarded under the project, amounting to USD 58,562,352.81, with 59 of them archived in the STEP system. The total value of these signed contracts represents 97.60percent of the project's overall budget. However, this strong performance should not overshadow the difficulties encountered during the first two years, when activities under the project's most critical component (Component A) were unable to commence. As a result, the contracts awarded during that period did not lead to significant disbursements, which hindered the overall performance improvements of PASBMIR. C. BANK PERFORMANCE Quality at Entry 85. At appraisal, the project was rated as having a high overall risk, reflecting its ambitious goals and significant challenges. While the project had the potential for substantial and transformative returns, it faced considerable stakeholder, sector and sustainability risks. To mitigate these challenges, a staggered approach was adopted for the roll-out of investments and the new O&M model, allowing for necessary adjustments during implementation. The project planned to engage a single operator to test the implementation arrangements and assess performance. Following the establishment of this operator in the first region, 17 Key Bank operational policies were triggered, including OP 4.01 (Environmental Assessment), OP 4.11 (Physical and Cultural Heritage), OP 4.10 (Indigenous Peoples), and OP 4.12 (Involuntary Resettlement). 18 The Environmental and Social Management Framework (ESMF), the Resettlement Policy Framework (RPF), and the Indigenous Peoples Planning Framework (IPPF), which were later updated during project restructuring. Grievance Redress Mechanisms (GRMs) for general complaints and Gender-Based Violence (GBV) were also implemented. Additional safeguard tools, such as Environmental and Social Impact Assessments (ESIA), Impact Notices (ESIN), Environmental and Social Management Plans (ESMP), and Abbreviated Resettlement Plans (ARP), were developed and applied where needed. Page 20 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT additional operators were to be recruited, incorporating lessons learned and improvements from the initial experience to enhance project effectiveness. Despite the project's design incorporating a proactive approach to risk management, the anticipation of government counterpart funding for O&M financing mechanisms and the establishment of a clear institutional framework for access to basic services in rural Gabon may have been somewhat optimistic. SEEG should have been involved from the beginning as the technical point. 86. Despite the project’s capacity-building component aimed at enhancing ministry-level capabilities, significant challenges remained, leading to delays in project readiness and implementation. The reliance on international technical experts did not sufficiently address the underlying issues of institutional capacity, and the transition to permanent positions funded by GoG as suggested in the PAD was not effectively realized. While CN- TIPPEE's familiarity with Bank procedures was expected to promote efficiency in project execution at appraisal, the risks associated with insufficient staffing and increased workloads were not adequately addressed. 87. Quality at entry is rated Moderately Unsatisfactory due to the above reasons. Quality of Supervision 88. The Bank took a proactive role in supporting the client throughout the project, from preparation to closing. Despite changes in project task team leadership, the supervision during implementation remained overall satisfactory. Following project approval, the Bank closely supervised and collaborated with the borrower to address obstacles and expedite activity launches. It ensured compliance with environmental and social standards in line with the triggered operational policies and safeguard instruments. 89. The PASBMIR benefited from multiple Bank supervision missions, including virtual ones during the COVID-19 pandemic, averaging two per year. The team clearly communicated progress, observed issues, and made recommendations in timely and detailed aide-memoires and ISRs. The team also conducted monthly meetings with the PIU, as well as more regular communication with key staff, to follow up on contract management and works progress between missions. The Bank played a crucial role in project implementation and supported the client during key phases such as restructuring and times of significant constraints related to international financial transactions, including direct payments to suppliers and companies. Additionally, the Bank played a key role in pre- and post-expenditure reviews, monitoring project outcomes via environmental, social, and financial management reports. Its availability as an advisor and facilitator was highly valuable throughout the project’s implementation. Despite challenges in meter installation at SEEG and delays from the government, the Bank proactively developed solutions and financial arrangements to facilitate the supply and installation of meters, even though these efforts were outside the project’s original budget. 90. In response to the urgent Covid-19 situation, the Bank swiftly restructured the project to include a new Contingent Emergency Response component. One of the first initiatives of its kind in Africa, it was launched in collaboration with WHO and UNICEF to support the government’s Covid-19 response. The project installed handwashing stations in 757 schools, benefiting 400,000 students and teachers, and trained 6,000 staff in hygiene protocols. The Bank’s quick action strengthened government ownership and effectively addressed critical public health needs. 91. Quality of supervision is rated Moderately Satisfactory. Page 21 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Justification of Overall Rating of Bank Performance 92. Overall Bank performance is rated Moderately Unsatisfactory. Despite some positive aspects of supervision, the rating is determined by the lower of the two dimensions—quality at entry or quality of supervision given that the project’s overall outcome rating is Moderately Unsatisfactory. D. RISK TO DEVELOPMENT OUTCOME 93. The project has fallen short of its development objectives, primarily due to the precarious situation surrounding SEEG. The utility's failure to supply and install the necessary water and electricity meters has left many beneficiaries without essential services, leading to disappointment among communities that had anticipated significant improvements in their living conditions. This extended delay risks escalating frustration, which could further strain relations between the population and SEEG field agents responsible for service delivery. Such dissatisfaction not only undermines the trust between the utility and the community but also threatens the long-term effectiveness of the project’s interventions. 94. Furthermore, the sustainability of the hybrid (thermal-solar) plants is increasingly in jeopardy, as their success hinges on the operator's ability to train staff effectively in managing these newly installed systems across various locations. SEEG continues to struggle with limited capacity and financial viability, which severely constrains its ability to provide consistent service. Ongoing delays in meter installation and the contractor's failure to build the distribution line pose significant risks to the continued operation of the water system. If these challenges are not promptly addressed, the durability of existing infrastructure may wane, further compromising access to essential services for the communities reliant on them. It is important to note that the Bank is currently preparing the new lending operation, Projet d'Accès aux Services de Base et d’Amélioration des Performances (PASBAP, P179643). Part of this project will finance the unfinished components of PASBMIR and is committed to supporting SEEG in enhancing its financial and operational performance. V. LESSONS AND RECOMMENDATIONS To improve the efficiency and effectiveness of future projects in Gabon’s energy and water sectors, this report presents key recommendations focusing on project coordination, institutional capacity, sector governance, private sector participation, and long-term sustainability, as detailed below: Project coordination and stakeholder engagement 95. It is crucial to strengthen coordination between key actors in the sector during both the design and implementation stages. Strengthening coordination between the government and utility companies through a joint task force will streamline decision-making and ensure alignment of project goals. Involving SEEG early in the project planning and design phases, by allowing them to contribute to defining objectives, setting targets, and developing solutions, will ensure that projects are aligned with SEEG’s capabilities and priorities, thereby fostering a stronger sense of ownership and accountability. Additionally, both MERH and PIU should establish and enforce a clear supervision framework that facilitates close field monitoring of project progress in partnership with technical bodies, allowing for the validation of key decisions and compliance throughout the project lifecycle. Institutional strengthening and utility performance improvement 96. Addressing the challenges in Gabon's energy sector requires tackling both systemic issues and operational inefficiencies within SEEG. The underperformance in meeting project targets highlights weak regulatory authority Page 22 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT and insufficient enforcement, leading to misalignment between government agencies and utility companies over service targets, arrears, subsidies, and investments. Political and institutional fragmentation further undermines oversight. Enhancing institutional coordination, public performance reporting, and independent audits can improve transparency and accountability. Looking ahead, strengthening SEEG’s performance improvement plan and financial viability through loss reduction, better revenue collection, and tariff adjustments are essential for long-term sustainability of the sector. Sustainability-focused business models and performance-based incentives tied to milestones can drive timely, high-quality results and ensure long-term impact. PIU staffing and capacity building 97. To ensure the successful implementation of projects, it is essential that the umbrella PIU (CNTIPPEE) managing multiple initiatives has adequate staffing and technical assistance to effectively support each project. While leveraging this existing PIU can mitigate capacity risks, the high volume of projects may prevent staff from dedicating sufficient time to key activities such as procurement and financial management. Governments and project teams should carefully assess the capacity of CNTIPPEE before assigning additional projects, ensuring that personnel have the necessary bandwidth to manage each one effectively. For future projects, CNTIPPEE should focus more on managing fiduciary standards and safeguard policy adherence with technical specifications and institutional strengthening being delegated to SEEG. Furthermore, hands-on technical assistance should be prioritized over one-off workshops to provide project-based staff with the practical skills required for successful execution. Private sector participation 98. To improve the effectiveness of Gabon’s utility sector and encourage private sector participation, it is essential to address the challenges faced during its privatization and re-nationalization processes. The 20-year concession of SEEG to Veolia in 1997 brought initial improvements but struggled with issues such as misaligned incentives, investment disputes, and strained government relations, ultimately leading to re-nationalization in 2018. The project’s lack of government support for a private O&M operator financing framework further demonstrates barriers to successful private sector engagement. Moving forward, any future PPPs should have corresponding focus on strengthening regulatory frameworks, ensuring clear and enforceable contracts, and creating incentives for private investment, particularly in underserved areas. A more transparent, accountable, and well-regulated environment is key to fostering sustainable partnerships between public and private stakeholders. Strategic planning and sustainability 99. Enhancing the effectiveness of the Bank's intervention in Gabon's energy and water sector requires strategic planning and a sustainable business model. To ensure long-term success in rural projects, operational efficiency and sustainability must be prioritized. A sustainable business model, based on thorough market analysis, clear value propositions, and reliable revenue sources, is crucial for financial viability. Given regulatory uncertainties surrounding access to electricity and water in rural areas, a phased approach with conservative financial planning is necessary to avoid overly optimistic projections. Although Gabon has relatively high energy and water access rates, significant disparities remain between urban and rural areas, future projects should prioritize improving service quality, reliability, and equity over merely expanding access. This includes focusing on infrastructure upgrades, advanced metering, and strengthening governance through a robust regulatory framework. Ensuring equitable access for rural and low-income communities, modernizing operations, and expanding renewable energy are key priorities. Public-private partnerships and continuous stakeholder engagement are essential for aligning priorities and ensuring long-term success. Page 23 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS @#&OPS~Doctype~OPS^dynamics@icrresultframework#doctemplate A. RESULTS FRAMEWORK PDO Indicators by Outcomes Expand access to water and energy services in targeted rural areas Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year People provided with access to 0.00 Sep/2015 55,000.00 Jun/2023 14,952 Nov/2024 electricity under the project by household connections - grid/mini- grid (Number) People in rural areas provided with 0.00 Sep/2015 36,000.00 Nov/2022 9,312 Nov/2024 access to Improved Water Sources under the project (Number) Direct Project Beneficiaries 0.00 Sep/2015 55,000.00 Jun/2023 24,264 Nov/2024 (Number) Female beneficiaries 0.00 50.00 50.00 (Percentage) Intermediate Indicators by Components Not Categorized Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Component D: Contingent Emergency Response Component Page 24 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Number of hospitals benefitting from 0 Jun/2020 1 Nov/2020 1 Nov/2023 installation of incinerators (Number) Number of schools benefitting from 0 Jun/2020 757 Nov/2023 757 Nov/2023 handwashing stations (Number) Component A: Expansion of access to basic services in rural areas Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Number of villages benefiting from 0 May/2019 140 Nov/2023 140 Nov/2023 communication, education, and awareness campaigns () Improved community water points 0.00 Sep/2015 27.00 Nov/2022 27 Nov/2023 constructed or rehabilitated under the project (Number) Renewable energy generation 0.00 May/2019 0.34 Nov/2023 0.34 Jan/2023 capacity constructed under the project () Number of villages benefiting from 0 May/2019 140 Nov/2023 140 Nov/2023 improved access to basic services () Distribution HTA lines constructed 0.00 May/2019 190.00 Jun/2023 189 Sep/2023 under the project in rural areas (Kilometers) Distribution BTA lines constructed 0.00 May/2019 162.00 Jun/2023 179 Sep/2023 under the project in rural areas (Kilometers) Component B: Implementation support, supervision, and monitoring & evaluation Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Page 25 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Master plan for access to basic No Sep/2016 Yes Nov/2023 Yes May/2020 services in rural areas completed and approved. () Component C: Capacity building and sectoral technical assistance Indicator Name Baseline Closing Period (Original) Closing Period (Current) Actual Achieved at Completion Result Month/Year Result Month/Year Result Month/Year Result Month/Year Tariff study completed and approved No Sep/2015 Yes Nov/2023 Yes Nov/2023 () Sector Financial Model completed No Sep/2015 Yes Nov/2023 Yes Nov/2023 and approved () Sector reform completed, and Road No Sep/2015 Yes Nov/2023 Yes Nov/2023 Map adopted () Electricity generation and No Sep/2015 Yes Nov/2022 Yes Nov/2023 transmission master plan completed and approved (Yes/No) Page 26 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT B. KEY OUTPUTS Objective/Outcome: Expand access to energy services in targeted rural areas 1. People provided with access to electricity under the project by household connections - PDO Indicators grid/mini-grid 1. HTA distribution lines constructed under the project in rural areas Intermediate Results 2. BTA distribution lines constructed under the project in rural areas Indicators 3. Renewable energy generation capacity constructed under the project 4. Number of villages benefiting from improved access to basic services Component A 1. 14952 people provided with access to electricity under the project by household connections 2. 189 km HTA lines constructed under the project in rural areas Key Outputs by 3. 179 km BTA distribution lines constructed under the project in rural areas 4. 0.35 MW solar+battery storage mini grid power capacity constructed under the project component Component B (linked to the 5. Master plan for access to basic services in rural areas completed and approved achievement of the PDO Component C Outcome) 6. Electricity generation and transmission master plan completed and approved 7. Tariff study completed and approved 8. Sector Financial Model completed and approved 9. Sector reform completed, and Road Map adopted Expand access to water services in targeted rural areas PDO Indicators 1. People in rural areas provided with access to improved water sources under the project 1. Number of villages benefiting from improved access to basic services Intermediate Results 2. Number of improved community water points constructed or rehabilitated under the project Indicators Component A 1. 9312 people in rural areas provided with access to improved water sources Key Outputs by 2. 27 improved community water points constructed or rehabilitated component 3. 120 villages benefiting from improved access to basic services (linked to the Component B achievement of the PDO 4. Master plan for access to basic services in rural areas completed and approved Component C Outcome) 5. Tariff study completed and approved 6. Sector Financial Model completed and approved 7. Sector reform completed, and Road Map adopted Page 27 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS At preparation Name Role Stephan Claude Frederic Garnier Team Lead Christopher Saunders Energy Specialist Fabrice K. Bertholet Senior Financial Analyst Sylvain Adokpo Migan Senior Water &Sanitation Specialist David Vilar Energy Specialist Franklin Koffi S.W. Gbedey Energy Specialist Maya Abi Karam Senior Counsel Senior Counsel Ruxandra Costache Counsel Aissatou Diallo Senior Finance Officer Amadou Watt Energy Specialist Lucienne M. M'Baipor Senior Social Development Specialist Emeran Serge M. Menang Evouna Senior Environmental Specialist Kouami Messan Senior Procurement Specialist Rick Tsouck Ibounde Senior Economist Manuel Berlengiero Senior Energy Specialist Laurence Hougue Bouguen Program Assistant Marie Lolo Sow Program Assistant Marie-Paule Ngaleu Program Assistant Sonia Vanecia Boga Program Assistant At ICR Name Role Komenan Koffi Team Leader Jose Francisco Perez Caceres Team Leader Michael David Thibert Team Leader Yang Liu Senior Energy Economist Anna Aghababyan Senior Operations Officer Daksha Shakya Operations Officer Francis Tasha Venayen Financial Management Specialist Hugues Agossou Financial Management Specialist Henie Dahlia Takodjou Meku Epse Nsinga Financial Management Specialist Lanssina Traore Procurement Specialist Rose Caline Desruisseaux-Cadet Procurement Specialist Charlie Foyet Sonkeng Environmental Specialist Faustin Ondamba Ombanda Environmental Specialist Page 28 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Graciela Sanchez Martinez Social Specialist Nicole Nguema Metogo Social Specialist Antoinette Pongui Procurement Team Lovasoa Christine Razanamahandry Ep Allanaissem Team Member Serdar Jepbarov Team Member Roger Coma Cunill Team Member Haoua Diallo Team Member Sylvie Munchep Ndze Team Member Sonia Uwera Team Member Landrine Fomete Songmene Team Member Sidonie Jocktane Team Member Frank Ngoussome Consultant Yaxin Zhu Consultant @#&OPS~Doctype~OPS^dynamics@icrannexstafftime#doctemplate B. STAFF TIME & COST Staff Time & Cost Stage of Project Cycle No. of Staff Weeks US$ (including travel and consultant costs) Preparation FY13 14.925 344,399.03 FY14 27.400 317,149.03 FY15 21.354 169,587.00 FY16 14.133 77,518.61 FY17 0.245 1,190.21 FY18 0.140 772.33 FY19 0.400 1,087.52 FY20 0.022 61.17 Total 78.62 911,764.90 Supervision/ICR FY14 0.000 5,166.39 Page 29 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT FY16 3.300 14,280.08 FY17 6.127 39,163.34 FY18 22.840 131,272.67 FY19 27.075 153,811.85 FY20 23.103 202,748.46 FY21 24.913 134,769.31 FY22 27.525 129,805.97 FY23 23.659 143,797.96 FY24 21.547 137,147.41 FY25 0.235 24,444.97 Total 180.32 1,116,408.41 Page 30 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ANNEX 3. PROJECT COST BY COMPONENT Component Amount at Approval (US$M) Actual at Project Closing (US$M) Component D: Contingent 0.0 1.7 Emergency Response Component Component A: Expansion of access to 43.0 42.3 basic services in rural areas Component B: Implementation support, supervision, and monitoring 7.0 8.7 & evaluation Component C: Capacity building and 10.0 3.2 sectoral technical assistance Page 31 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT ANNEX 4. EFFICIENCY ANALYSIS I. INTRODUCTION 1. At appraisal, the Economic and Financial Analysis (EFA) assessed Component A of PASBMIR, namely the economic and financial impacts of the efforts to bring basic electricity and water service to rural areas through standalone, off-grid solutions. In 2019 however, a project restructuring shifted focus to grid-based solutions. Thus, at this Implementation Completion and Results Report (ICR) stage, the Efficiency Analysis assesses the economic and financial viability of the completed project using the same cost/benefit analysis (CBA) methodology (which include an eight percent discount rate) as that used at the 2019 reconstruction, and actual costs incurred throughout implementation. 2. There are other significant differences in key PDOs and, ultimately, assumptions made in the analyses made at appraisal and ICR. For one, it was assumed at appraisal that the project would benefit 55,000 people with standalone, off-grid power and water access solutions. Following five project restructurings that subsequently occurred, at ICR the analysis evaluated a project whose primary aim became to provide grid-based power to 55,000 beneficiaries and water access solutions to 36,000 beneficiaries. This, amongst several other key factors thereafter divulged, proved to be a major cause behind the different results of the two analyses. 3. Section II presents a summary of findings of the Efficiency Analysis, Section III presents a detailed efficiency assessment of project implementation, Section IV presents the design and implementation efficiency assessment, and Section V outlines the conclusions of the efficiency assessment. II. SUMMARY OF FINDINGS Table 1: Efficiency Analysis Results At appraisal At Restructuring (2019) At ICR Economic Internal Rate of Return 11.3% 29.8% 3.2% Basic Electricity Supply Services 11.7% 41.8% (grid extension) 4.1% (grid extension) 16.3% (hybrid mini grids) 6.7% (hybrid mini grids) Basic Water and Sanitation Services 11.2% 20.2% -1.8% Economic Net Present Value (US$ million) $2.6 $128.0 -$17.1 Basic Electricity Supply Services (US$ million) $1.2 $101.9 -$0.4 Basic Water and Sanitation Services (US$ million) $1.4 $26.2 -$8.4 Sources: Project Appraisal Document, 2019 Restructuring Paper and ICR Project Economic & Financial Model 4. PASBMIR is found to be economically unviable at ICR. The EIRR at ICR stage is 3.2percent, below projections at restructuring (29.8 percent), appraisal (11.3 percent), and, most importantly, the discount rate of 8percent. The ENPV is negative at -US$17.1 million, again below both values at appraisal (US$2.6 million) and restructuring (US$128 million). The electricity supply subcomponent is also economically unviable, with an EIRR of 6.7 percent for hybrid mini-grids and 4.1 percent for grid extension, both falling below the estimates at appraisal and restructuring. Meanwhile, the water supply subcomponent is unviable, with a negative EIRR of -1.8 percent, compared to the more favorable results at the two previous analysis stages. Table 1 summarizes these findings, with the corresponding ENPVs. The lackluster results are largely explained by a failure to bring electricity and water services to a large portion of the planned target beneficiaries, with under 3,549 households reached by the project, well below the 17,500 assumed by the analysis at the 2019 restructuring. Page 32 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT 5. Financial assessment. At appraisal, the national policy of free access to basic services for poor households was assumed for all beneficiaries and thus, by the original project design, rural provision of water and electricity services was never going to be financially profitable for the GoG. However, the 2019 restructuring led to the eventual inclusion at ICR of many urban beneficiaries, leading to revenue from new electricity and water grid connections which outstripped project costs. The analysis done at restructuring calculated positive returns of 9.3percent FIRR and $143 million FNPV at a 0.49percent after-tax discount rate. However, at ICR the project is found to be financially unviable, with a FNPV of -US$17.9 million, at the same after-tax discount rate of 0.49percent. Once more, these unfortunate results can be attributed to the underperformance of the project in reaching far less beneficiaries as originally planned, while still incurring significant costs. In the long run, subsidizing SEEG’s annual O&M shortfall would be the key to covering the national utility’s long-term financial operating deficit. Design and Implementation efficiency 6. Overall design and implementation efficiency experienced significant shortcomings, as the project went through five restructurings, which changed the Component A’s design altogether, added another Component, and ultimately pushed back the project end date on three occasions to give the implementation team more time to try and hit the PDO targets. Additionally, logistical and project management issues affected the project implementation. Further details are provided in the following sections. Efficiency rating 7. Efficiency is rated modest. The project failed to achieve all its development objectives. It resulted in negative ENPV and a positive EIRR with positive EIRR and ENPV, however it must be noted that it only did so after many restructurings and, ultimately, the final PDO results failed to reach the original aim of 55,000 water & sanitation service beneficiaries. III. EFFICIENCY ASSESSMENT OF PROJECT IMPLEMENTATION A. ECONOMIC VIABILITY ASSESSMENT 8. At appraisal and the 2019 restructuring, the Component A’s economic viability was assessed using CBA techniques focused on the economic valuation of increased access to electricity, which were compared with the project’s incremental investment and operational costs. At ICR, the same techniques are used to assess economic viability of the project at completion, using actual implementation data furnished by project monitoring arrangements, consultant reports at completion, and implementation status reports. Basic Electricity Supply Services 9. At appraisal (2015). At appraisal, a fully documented MS-Excel spreadsheet model was developed, which quantified the benefits of the development outcomes of the project (i.e., increased access to electricity and water supply), its costs, and all project assumptions. The economic benefits were measured as the avoided costs of alternative electricity solutions that project beneficiaries would have had to pay if the project did not exist, such as batteries, kerosene-fueled lamps, and diesel gensets. Meanwhile, costs included the capital expenditure on standalone solar home systems (SHS), the energy access solution identified at the time, and the associated operational and maintenance costs. Project support to activities/interventions under this subcomponent was found to be economically viable with 11.7 percent EIRR and a positive economic Net Present Value (NPV) of approximately US$1.4 million using a 10 percent discount rate. Table 2 summarizes the key assumptions and findings. Table 2: Key assumptions and results at appraisal Page 33 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Total number of beneficiaries 55,000 Number of households 15,000 Number of Tier 1 SHS 12,750 Cost of Tier 1 SHS US$978 Tier 1 monthly avoided cost US$18.0 Number of Tier 2 SHS 2,250 Cost of Tier 2 SHS US$1,384 Tier 2 monthly avoided cost US$25.8 Annual O&M Cost 6% CAPEX Discount rate 10% Project life 20 years NPV US$1.4 million IRR 11.7% Sources: *Project Appraisal Document, 2015 10. At 2024 ICR stage. Following the 2019 project restructuring, the SHS solutions were replaced by SEEG-led grid extension, as well as the implementation of mini-grids. Thus, the analysis at ICR, mirroring the one done at this restructuring, required a different approach than at appraisal. The CAPEX costs incurred were the required grid infrastructure, the marginal costs for additional energy provided, and the associated O&M costs. Meanwhile, benefits would now take the form of (1) the beneficiaries’ willingness to pay for new energy service from the SEEG grid, and (2) the avoided fuel costs from no longer relying on fuel-based energy thanks to the new provision of mini-grid service. Key information was sourced from periodic Implementation Status Reports (ISR) and mission Aide Memoires, and the updated results framework. At project completion, 2,492 households benefited from the project’s electricity meters connections, significantly below the 10,000 connections target set at restructuring. Table 3 summarizes key components and results. Table 3: Key assumptions and results for electricity services at 2019 Restructuring & ICR stages Category 2019 Restructuring ICR Source Total number of electricity 10,000 2,492 Restructuring Paper 2019 metered connections Diesel Plant Fuel Heat Rate 0.3 liters/kWh 0.3 liters/kWh Restructuring Paper 2019 Diesel Plant Lubricant Heat Rate 0.002 liters/kWh 0.002 liters/kWh Restructuring Paper 2019 Cost of Light Fuel and 0.98 USD/liters 0.98 USD/liters Restructuring Paper 2019 Transportation Page 34 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Lube Oil Tariff 3.87 USD/liters 3.87 USD/liters Restructuring Paper 2019 Average annual grid willingness to US$0.375/kWh US$0.375/kWh Restructuring Paper 2019 pay (WTP) Annual O&M Cost 1-3% CAPEX 1-3% CAPEX Restructuring Paper 2019 Grid Extension Project life 35 years 35 years Restructuring Paper 2019 Mini-grid Project life 30 years 30 years Restructuring Paper 2019 Discount rate 8% 8% Restructuring Paper 2019 ENPV $101.9 million -US$14.2 million EIRR 16.3% (mini grids) 4.1% 41.8% (grid extension 11. At project completion, the EIRR is 4.1percent while the ENPV is -US$14.2 million. Thus, at completion PASBMIR’s electricity supply component is found to be more economically unviable, unlike at appraisal (EIRR 11.7 percent) and the 2019 restructuring (grid extension EIRR of 41.8percent and 16.3percent EIRR for mini-grid component). 12. The main reason behind the differences between the appraisal and ICR results is the change in project design at the 2019 restructuring, which led to thereafter analyses relying more on the benefits of grid WTP than the rural avoided electricity costs. Finally, the implementation underperformance of the project, evidenced by the significantly low number of actual household meter connected beneficiaries (2,492) than what was originally projected (10,000), explain the different results at 2019 restructuring and ICR. Basic Water and Sanitation Services 13. At appraisal. Just as for Basic Electricity Supply Services, a fully documented MS-Excel spreadsheet model was developed for the Basic Water and Sanitation Services part of the project, which quantified the development outcomes of an increased supply of basic water services. Costs were the expenditure on the expected clean water access solutions at the time: hand water pumps, solar water pumps, and shared mini networks of water access. Meanwhile, economic benefits were the value of the avoided time spent on water collection activities. Project support to activities/interventions under this subcomponent was found to be economically viable with 11.2 percent EIRR and a positive ENPV of approximately US$1.1 million using a 10 percent discount rate. Table 4 summarizes the key assumptions and findings. Table 4: Key Assumptions and Results at Appraisal Number of beneficiaries 55,000 Number of Households 15,000 Number of Hand Pumps 3,000 Cost of Hand Pump US$944 Number of Solar Pumps 9,000 Page 35 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT Cost of Solar Pump US$1,214 Number of Mini-Networks 3,000 Cost of Mini-Network US$1,286 Value of time saved per year from lack of water US$246.1 collection activities Annual O&M Cost 6percent CAPEX Project life 20 years Discount rate 10% NPV US$1.2 million IRR 11.3% 14. At ICR. The 2019 restructuring saw the re-design of the Water & Sanitation Service Access subcomponent. Several new solutions were identified, including the expansion of clean water distribution infrastructure, public sanitation facilities, and three lots of equipment for the maintenance of village pumps. Costs were thus thereafter comprised of the CAPEX spent to acquire these assets, as well as the marginal cost for additional water distribution and O&M. Meanwhile, the bulk of the economic benefits to the target population were now measured by the willingness to pay for a grid-based water connection (at appraisal, it was the value of time saved from no longer undertaking water collection activities). Key information was acquired from data found in periodic ISRs, Aide Memoires, and a final framework report. Finally, the expected number of household beneficiaries at the 2019 restructuring was 7,500, but the actual number at project completion was only 1,057. Table 5: Key assumptions and results for water services at 2019 Restructuring & ICR Category 2019 ICR Source Restructuring Total number of water metered connections 7,500 1,057 2019 Restructuring Paper Average annual grid willingness to pay (WTP) US$1.25/m³ US$1.25/m³ Restructuring Paper 2019 Average household consumption 393 m³/year 393 m³/year Restructuring Paper 2019 Annual O&M Cost 1-3% CAPEX 1-3% CAPEX Restructuring Paper 2019 Project life 25 years 25 years Restructuring Paper 2019 Discount rate 8percent 8percent Restructuring Paper 2019 ENPV US$26.2 million -US$8.4 million EIRR 20.2% -1.8% 15. At completion, the Basic Water Service component of PASBMIR is found to be economically unviable, unlike expectations at appraisal (EIRR of 11.2 percent) and restructuring (EIRR of 20.2 percent). The two main reasons why Page 36 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT are (1) economic benefits now primarily consisting of consumers’ WTP for an SEEG grid connection, as opposed to solely the benefits arising from the value of time saved from no longer engaging in water collection activities, and (2) the project’s underperformance, with only 1,057 households being impacted when 7,500 were expected. B. FINANCIAL VIABILITY ASSESSMENT 16. A key objective of the project at appraisal was to put in place sustainable mechanisms for O&M financing in rural areas. The mechanisms would be applicable to the entire rural sector and not just to the equipment financed by the Bank project. The stated objective of the GoG was to achieve an access rate to basic services of 80 percent in rural areas by 2025 (and 100 percent by 2035). This was estimated to correspond to about 44,000 rural households covered by O&M mechanisms (of which about a third would be connected through the Bank project itself). In this scenario, the total rural access deficit (including O&M and investment) was predicted to amount to $14.0 million per year (2.5 percent of SEEG sales in 2025). It was assumed the GoG could decide to mitigate the burden by financing subsidies for customers receiving service from SEEG. Additionally, solutions such as providing alternative sources of funding for renewal investments or increasing the fee-for-service collected from rural customers were identified. 17. At the 2019 Restructuring, the project redesign led to revenue from the close to 17,500 metered electricity and water connections (the former assuming an average power tariff of US$0.20 per kWh, and the latter a water tariff of US$0.80 per m³) offsetting the US$42.3 million project costs. The FIRR was 9.3 percent while the FNPV is US$143.0 million, at an after-tax discount rate of 0.49 percent. 18. At ICR however, the project was found to be financially unviable, as the 3,549 actual total metered water and electricity connections could not generate enough revenue to offset their significant associated CAPEX costs. The FIRR is -2.57% and below the after-tax discount of 0.49 percent, while the FNPV is -US$17.9 million. In the long run, as was stated at appraisal, due to the tariff and marginal cost of electricity possibly changing, subsidizing SEEG’s annual O&M shortfall would be a prudent way of covering the national utility’s long-term operating deficit, especially with the possible volatility of tariff prices and the marginal cost of electricity production. IV. DESIGN AND IMPLEMENTATION EFFICIENCY 19. The disappointing ICR IRR and NPV results can be explained by the multiple shortcomings of the project’s implementation process. Firstly, the project was approved in 2015 and became effective in 2016, but implementation on Component A was hampered for years due to a disbursement condition. The project was restructured in 2019 to lift this condition. This first restructuring also included (a) changes to the technical design of the original project; (b) change in the scope and costs of activities specifically some activities were dropped, and new ones added including new activities under Component C; (c) change in the PDO of the project and Result Framework; (d) reallocation of the proceeds of the loan and change in Disbursement Estimates; (e) change in Legal Covenants; (f) change in institutional arrangements. 20. The biggest of these changes was the decision to no longer adopt SHS as the electricity access vehicle, but instead look to expand the SEEG grid and finance decentralized localities. Similarly, the water & sanitation component would see its main goal change and be focused upon connecting more population to the water grid. Finally, the plan to undertake a competitive bid for a O&M operator was ditched, and SEEG stepped into the role. 21. However, problems arose thereafter in the form of questionable procurement and contract management by the client, as two of the project works operators selected were not the least-cost options and thus unnecessary cost overruns were observed. Additionally, currency fluctuations and the exponential growth of materials costs led to higher-than- expected expenditures. Page 37 The World Bank Access to Basic Services in Rural Areas and Capacity Building Project (P144135) ICR DOCUMENT 22. Additionally, the project was repeatedly delayed by various factors, such as (a) the COVID-19 pandemic, (b) a lack of vigilant oversight on construction sites, (c) environmental concerns such as unfavorable weather and road conditions, (d) SEEG’s difficulty in procuring and installing meters, and, finally, (e) political instability, as the management team of the project changed on numerous occasions due to the turbulent political climate. These difficulties led to the project being restructured and updated four more times, with the second restructuring (aimed at addressing COVID-19 shocks) occurring in 2020, the third restructuring approved in October 2021 and extending the project closing date to November 2022, the fourth restructuring approved in November 2022 and extending the closing date to June 2023, and the fifth restructuring approved in June 2023 and extending the closing date to November 29, 2023. Ultimately, as a result, the total amount of new electricity and water connections fell massively short of expectations. V. RATING 23. Efficiency is rated as Modest. The Project saw a certain re-design post-approval, as well as inefficiencies during implementation, including procurement and logistical difficulties, and higher than expected material costs. Ultimately, PASBMIR failed to achieve all its development objectives, produced economic and financial IRRs below discount rates, and corresponding negative NPVs. It is important to note that with upstream infrastructure already in place, future meter installations are expected to expand the beneficiary base and boost payments, which should help the project reach profitability. Page 38