Upload all the data source files

DataSource/000012394-20150108104021.txt

@@ -0,0 +1,514 @@
+                                                                                                               ICRR 14451
+                                                                                               Report Number : ICRR14451
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                      Date Posted : 11/24/2014
+
+               Country : Indonesia
+             Project ID : P112632                                                  Appraisal                Actual
+        Project Name : Cofinancing Grant To                        US$M ):
+                                                    Project Costs (US$M):                         16                 30.68
+                          Pnpm For
+                          Decentralized
+                          Management Of
+                          Natural Resources
+                          And Renewable
+                          Energy
+  L/C Number :                                       Loan /Credit (US$M):
+                                                     Loan/         US$M ):                         0                    0
+      Sector Board :      Social Development                       US$M):
+                                                     Cofinancing (US$M  ):                        16                   34
+
+           Cofinanciers : AusAID, CIDA,            Board Approval Date :                               10/15/2008
+                          DANIDA                            Closing Date :       12/31/2012            12/31/2012
+          Sector (s):     Renewable energy (100%)
+          Theme (s):      Other environment and natural resources management (50% - P); Other social development
+                          (50% - P)
+
+
+Prepared by :             Reviewed by :          ICR Review                   Group :
+                                                 Coordinator :
+Rasmus Heltberg           Robert Mark Lacey      Christopher David           IEGPS1
+                                                 Nelson
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+  The original development objective, as stated in the Project Appraisal Document, was to �?make the utilization of
+natural resources by rural communities .�? The word “sustainable�? was missing from the end of the sentence due to a
+typographical error.
+On January 13 2012, the Board approved Additional Financing of US$ 18 million to support further block grants and
+technical assistance to kecamatan (sub-districts) in the eight target provinces . The development objective was
+unchanged except for correction of the typographical error, and reads “to make the utilization of natural resources by
+rural communities sustainable.�?
+This project is part of "PNMP Green", a pilot funded by multiple trust funds to integrate climate change and natural
+resource management issues into the PNMP Rural development program in Indonesia . According to the Project
+Paper, PNPM Green has the same objectives as the project .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+Yes
+ If yes, did the Board approve the revised objectives /key associated outcome targets?
+Yes
+ Date of Board Approval: 01/13/2012
+
+c. Components:
+ There were two components:
+1. Block grants for natural resource management and renewable energy         (Appraisal cost US$12.5 million, Actual
+cost US$25.5 million). This component funded block grants in target sub -districts to support community investments
+in natural resource management and renewable energy .
+
+2. Facilitation support Appraisal cost US$3.5 million, Actual cost US$7.0 million). Through this component the
+project management unit (PMU) hired consultants and facilitators to assist in project implementation, including
+training and facilitation for beneficiaries at village level . It also covered costs associated with capacity building,
+procurement of project equipment, and facilitation of workshops .
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+   Project costs : Total estimated project costs increased from US$ 16 million at Appraisal to US$34 million at
+Restructuring. The project closed with US$32.5 million actual cost.
+Financing : The project was externally financed by a Trust Fund Grant from the PNPM Support Facility to the
+Government. The original grant was US$16 million. As noted above, Additional Financing provided a further US$ 18
+million. By project closure, US$30.7 million had been disbursed. The balance of US$3.3 million, allocated for a micro
+hydro power sub-projects in Papua remained unspent . The ICR states (p. 11) that these funds were canceled .
+According to the ICR (p. 16), "PNPM Green [the project] relied on several trust funds which were mobilized at
+different times and combined government, CSO [civil society organizations ] and PSF [PNPM Support Facility]
+executed activities." Details are provided in Annex 10 of the ICR.
+Grantee contributions . The Grantee (the Government of Indonesia) made no contribution. There were contributions
+by project communities, totaling US$ 1.8 million (none had been foreseen at appraisal ). These contributions
+comprised 3% of schemes financed through block grants .
+Dates : The project became effective on 12/24/2008, Additional Financing was approved on 1/13/2012, and the
+project closed on schedule on 12/31/2012.
+
+3. Relevance of Objectives & Design:
+
+ a. Relevance of Objectives:
+High.
+High .
+The project development objective was relevant to the latest Country Partnership Strategy (Fiscal Years 2013-2015),
+in particular the "pro-poor" and "pro-green" engagement areas of that strategy . The Bank supports community-level
+poverty reduction in Indonesia through the PNMP, the world's largest CDD program . According to the Country
+Partnership Strategy (p. 26), PNPM's overall objective is to improve governance and reduce poverty by promoting
+community decision making in development planning and management . The Bank also supports green growth,
+biodiversity conservation and efforts to address climate change, particularly in the forest sector . Therefore, the
+development objective of making rural communities' energy and resource use sustainable is highly relevant to the
+Bank's strategy.
+
+The PNPM program and environmental sustainability are also central to the Government of Indonesia ’s development
+strategy and its goals of decentralization and community empowerment .
+
+ b. Relevance of Design:
+Substantial .
+The components were causally linked to the project objectives : the sblock grants component supported green
+schemes and the facilitation component supported what was foreseen as the necessary technical assistance . The
+logical chain from activities to intermediate outcomes to PDO is reasonably clear and allowed for the necessary
+human and financial resources to carry out activities .
+
+
+Nevertheless, activities were not fully congruent with the ambitiously worded PDO . The project financed small block
+grants to communities to invest in conservation, rehabilitation of natural assets, renewable energy, and other natural
+resource management activities and sub -projects. This would not necessarily address the key drivers of resource
+degradation, land conversion, deforestation and other unsustainable uses of natural resources . It addressed certain
+village-level drivers of resource degradation, and aimed to increase well -being, but it is not clear to what extent
+environmental problems in the project areas have village -level or higher (district, national) sources and drivers. Thus,
+the choice of a community-driven development (CDD) model meant that the project could not pay attention to wider
+natural resource management governance issues, or whether annual block grants to villages are the most suitable
+way to support the development objectives .
+
+The Bank has a large program in Indonesia, including in environment, biodiversity and climate change, and some of
+the larger drivers of resource degradation are likely addressed elsewhere . This makes the project design focused on
+local issues suitable. However, the statement of objectives did not adequately articulate what the project team
+described as the project’s outcome targets:
+     To empower communities to assume stewardship over their local natural resources using a CDD approach and
+     village block grants.
+     Through income generating activities, to encourage the participating communities to utilize their local natural
+     resources in a sustainable manner for the purpose of improving their own economy and welfare .
+     To empower communities, increase their livelihood, increase democratic processes and at the same time tackle
+     natural resources degradation at the village level .
+     To pilot a mechanism for PNMP to support environmental and clean energy issues at village level .
+There is a potential incongruity between the community -driven design of PNPM, in which beneficiaries choose
+projects based on local priorities, and the restriction in this project to focus on green sub -projects. The communities'
+priorities may be different from those of the Trust Fund donors based on the "green agenda." This may have had
+implications for empowerment.
+
+ 4. Achievement of Objectives (Efficacy):
+   The degree of achievement of the project development objective -- to make the utilization of natural resources by
+rural communities sustainable – is rated Modest .
+Outputs :
+     The ICR reports that the project financed 1,811 sub-projects. According to Table A2.1, there were 616
+     income-generation, 575 conservation, 342 renewable energy, 150 capacity building, and 128 rehabilitation
+     sub-projects. These benefited 893,000 people, 2.1% lower than the target of 912,000. It was estimated that half
+     of beneficiaries were women.
+     The ICR (p. 24) reports that 160 consultants/facilitators were contracted and to assist communities in natural
+     resource management (NRM) and environmental planning, slightly below the target of 169. It also reports, based
+     on a sample, that 66% of communities were satisfied with the quality of technical assistance provided .
+Outcomes :
+     The ICR (p. 24) reports that 36,277 households derived energy from renewable sources, exceeding the target of
+     32,300 and that more than 95% of them receive at least 50 watts. It also reports that 411 renewable energy
+     projects were financed through the project and were "properly managed". It is unclear on what basis the ICR
+     states that the local renewable energy projects were "properly managed".
+     The ICR also reports that the 1,811 financed sub-projects were "environmentally sound" and/or were Natural
+     Resource Management projects . However, the ICR does not provide sufficient evidence to assess whether or
+     not completed sub-projects promoted "environmentally sound" practices and therefore the achievement of the
+     development objective. The ICR gives no indication of trends and patterns of natural resource and energy use,
+     or of changes in the awareness or behaviors of project communities toward local natural resources, or of
+     sustainability of project interventions . Nor does the ICR make any attempt to construct a counterfactual . This
+     would have been useful, in particular, for the energy interventions to allow an assessment of the types of energy
+     use being displaced by mini hydropower and stove interventions . In the absence of such information, it is not
+     possible to assess the extent to which subprojects have led to more sustainable resource use by the beneficiary
+     communities.
+     The ICR (p. 24) reports that 100% of villages in target sub-districts demonstrated that their green sub -projects
+     were aligned with their mid-term development plans. The ICR could not report on increases in awareness of
+     links between improved Natural Resource Management practices and enhanced livelihoods because the
+     project closed before a planned survey could be carried out . For the same reason, the ICR did not report on
+     sustained community maintenance of green sub -projects.
+
+5. Efficiency:
+   Modest .
+    The sub-projects were small and had low unit costs and low cost per beneficiary (the ICR calculation of the latter
+    is in error by a factor of thousand ). But these low unit costs have almost no information value given that the ICR
+    does not offer any indication of the size and scope of sub -projects and the size of benefits flowing from them
+    (with the exception of the electricity generation sub -projects). It is not, for example, particularly useful to know
+    that a tree planting project cost, say, $ 4,000 if one does not know how many trees were planted, how many will
+    survive, and what benefits can be expected to flow from those trees . The ICR is silent on all of these.
+    The ICR economic and financial calculation is weak . The summary in Annex 3 focuses only on a sample of
+    micro hydro power sub-projects and omits to mention the estimated rate of return that apparently was calculated
+    in the underlying study. It states that micro hydro power (MHP) sub-projects are "economically feasible" because
+    of fuel savings but does not say what those fuel savings are or whether people would be using any fossil fuels in
+    the absence of the project . A meaningful rate of return cannot be estimated without an indication of the
+    economic benefits and the counterfactual . Further, the ICR (Annex 3) stated that all surveyed MHP plants
+    recorded operating profits but this calculation means little in terms of economic efficiency given that capital costs
+    were heavily subsidized and new plants require low maintenance costs .
+    Facilitation costs were quite high, at 21.5%. (percentages are incorrectly stated in the right hand size column of
+    Annex 1, Table a of the ICR). There is little evidence that facilitation in itself led to sustainable benefits (over and
+    above investments in local assets ) that could justify its costs . The ICR and the results framework for this project
+    did not demonstrate the achievement of other derived benefits from facilitation frequently encountered in other
+    community-driven development and PNMP projects such as empowerment, improved social capital, and
+    changes in attitudes and behaviors . In the absence of demonstrated benefits from facilitation, its costs appear to
+    be transaction costs.
+    The ICR provided some information on the efficiency of the project's internal allocation mechanism, indicating
+    that it led to delays in disbursing to villages and a consequent rush to complete sub -projects before fiscal year
+    cut-offs, sometimes resulting in works having to be done in a less than optimal season .
+    The economic study summarized in Annex 3 of the ICR is not available in the project files .
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                 Rate Available?                             Point Value                         Coverage/Scope*
+
+    Appraisal                         No
+    ICR estimate                      No
+                                           * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+ 6. Outcome:
+      The project's relevance of objectives was rated as high because of its close links to two of the engagement
+areas in the Country Partnership Strategy and its relevance of design as substantial because of reasonably logical
+links from outputs to outcomes . Efficacy of the single objective is rated as modest because of lack of evidence of
+achievement of outcomes such as more sustainable Natural Resource Management practices beyond the
+construction of sub-projects. Efficiency is rated as modest because of deficiencies in the calculation of the rate of
+return and the relatively high facilitation costs without clear evidence of benefits beyond the near -term facilitation of
+project transactions. Overall, outcome is rated moderately unsatisfactory .
+
+ a. Outcome Rating : Moderately Unsatisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+   Risk to development outcome is considered moderate based in part on information provided by the region and not
+contained in the ICR.
+
+According to the Global Practice, O&M practices for subprojects have been introduced by CDD projects in villages
+throughout Indonesia, and institutions and practices are well -established. These will be further cemented by the
+inclusion of PNPM Green subprojects in Village Development Plans . A technical assessment found that 82% of
+sub-projects were in well-maintained, good quality condition five years after handover to communities .
+
+In IEG’s view, more attention to maintenance is warranted and should include attention to how funds, labor, and
+beneficiaries' engagement and participation in maintenance of assets will be mobilized . It is unclear to what extent
+community members are able to operate and maintain assets independently, without the help of facilitators .
+
+The ICR assumes that sub-projects that generate income or save costs will be sustained; it is unclear on what basis
+it arrives at this assumption. The completion of sub-projects and the initial extension of electricity and other energy
+benefits to households do not in themselves provide evidence of achieving sustainable outcomes . The mechanisms
+for ensuring cost recovery and sustainability of renewable energy sub -projects are not clear, given that : (i) the
+literature on household energy has repeatedly found instances where new energy sources and "improved" stoves
+suffer from lack of maintenance and /or fall into disuse after some time; (ii) the ICR (p. 25) describes instances of
+incorrect technical design and absence of regular maintenance of some micro hydro power plants; and (iii) grid
+extension can undermine the viability of off -grid electricity projects in situations where off -grid plants were not
+designed to be grid-compatible (this risk would only materialize if the grid arrives in project villages within the life
+span of the off-grid plants).
+
+Project support of consultants may not have reinforced local government capacity sufficiently . The summary of the
+Borrower’s ICR (ICR, Annex 7) indicates weak government ownership of parts of the model .
+
+The tree-planting sub-projects are at risk from weather hazards and it is unclear how such risks would be mitigated .
+   a. Risk to Development Outcome Rating : Moderate
+
+8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+       The project builds on the established PNPM platform rooted in experiences with community -driven
+development (CDD) projects in Indonesia and many other countries . The project aims to introduce an innovation
+to the CDD model in the form of green sub -projects and in so doing, builds on earlier trust funded pilots .
+
+The design was characterized by complex financing and implementation arrangements . Some technical
+assistance was provided outside the project and financed from separate trust funds with varying closing dates
+and executing agencies.
+
+The absence of an M&E framework during the first three years of the project and the lack of a baseline against
+which to monitor progress toward achieving the PDO is a serious design weakness for a pilot project .
+
+There was a lack of documentation of preparation and appraisal . Arrangements for safeguards and fiduciary
+compliance appear to have been adequate .
+
+            at -Entry Rating :
+   Quality -at-                                    Moderately Unsatisfactory
+
+ b. Quality of supervision:
+    Supervision did not give adequate attention to the technical issues . The implementing agency notes that Bank
+supervision could have been stronger on renewable energy and natural resource management issues . Several
+changes in the Bank's Task Team Leader (TTL) during implementation resulted in a lack of strategic focus . This
+lack of strategic leadership had a particularly negative impact given the pilot nature of the operation . Only one
+TTL had experience in natural resource management .
+
+No Implementation Status Reports were filed between Board Approval on October 15, 2008, and June 30, 2010.
+Three Reports were filed thereafter . The Reports rated Implementation Progress as moderately satisfactory
+throughout, and progress towards achievement of Development Objectives as moderately satisfactory in the first
+two instances and fully satisfactory in the last . This latter is difficult to reconcile with the absence of evidence of
+achievement of the objectives as written .
+
+No attempt was made during implementation to address the inadequacies related to M&E design (see Section 10
+below).
+
+Safeguards compliance was generally adequate . However, although Directorate for Community and Village
+Empowerment (PMD) displayed the same weaknesses in financial management and procurement as in other
+PNPM Rural operations, efforts to address these on the part of supervision missions appears to have had limited
+results (see Section 11 below).
+
+
+   Quality of Supervision Rating :                 Unsatisfactory
+
+   Overall Bank Performance Rating :               Unsatisfactory
+
+
+9. Assessment of Borrower Performance:
+
+ a. Government Performance:
+    The Government showed strong commitment to the overall PNPM program . Some implementation and
+coordination issues arose as a consequence of assigning responsibility for project implementation to a different
+unit with less experience (albeit within the same Directorate General responsible for implementing the PNPM
+rural). There were lengthy negotiations about processing a no -cost extension of the project which resulted in the
+extension ultimately not occurring; US$ 3.3 million in remaining undisbursed funds could hence not be
+programmed and reverted to the trust fund for the PNPM support facility . As a result, some planned activities,
+including studies of project achievements, could not be carried out and facilitators were demobilized before all
+works were completed. Avoidable delays in disbursement of block grants, a characteristic of other PNPM
+operations, persisted.
+
+   Government Performance Rating                               Moderately Unsatisfactory
+
+ b. Implementing Agency Performance:
+    The implementing agency for the project was the Directorate for Community and Village Empowerment
+(PMD). Its performance was adversely affected by the context of complex financing arrangements and
+fragmented technical assistance from various external donors to different parts of the project . There were delays
+in reporting and disbursement, weaknesses in procurement procedures and oversight, and limited coordination
+between PNPM Green and PNPM Rural
+
+   Implementing Agency Performance Rating :                    Moderately Unsatisfactory
+
+   Overall Borrower Performance Rating :                       Moderately Unsatisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+a. M&E Design:
+  The project M&E was the responsibility of the implementing agency, the Directorate for Community and Village
+Empowerment. M&E design suffered from the following significant weaknesses :
+    The excessively ambitious project development objective (PDO).
+    The indicators did not reflect the PDO . One PDO indicator--number of subprojects--is essentially an output
+    indicator and does not inform on achievement of the PDO . The other PDO-level indicator--households with
+    energy from renewable sources --reflects only a subset of the PDO and the project activities .
+    Several of the intermediate indicators appear marginally relevant or with unclear links to the PDO, especially
+    some of the intermediate indicators in part 2 ("capacity of local governments and community representatives ").
+    Indicator 2a for example (consultants/facilitators) is really an input indicator.
+    The indicators reported in the ICR do not pay attention to gender, poverty, and income distribution, even though
+    gender was in fact monitored closely by the project team according to information provided by the team in an
+    exchange with IEG.
+    The results framework at inception was weak and unclear and was subsequently changed .
+    The completion of sub-projects and the initial extension of electricity and other energy benefits to households
+    does not in itself provide evidence of achieving sustainable outcomes .
+    No baseline data were collected during the preparation stage .
+
+b. M&E Implementation:
+
+    There was an attempt to address weak design of the M&E framework during the restructuring when the
+    indicators were revised. However, two planned studies could not be completed because of the delays in
+    securing an extension.
+    There is little evidence that beneficiaries were involved in defining indicators or in the design, implementation, or
+    use of M&E which would have been appropriate given that this is a Community -Driven Development operation
+    and of a pilot nature.
+     A planned baseline study was conducted but was deemed unreliable and could not be used to assess the
+    project’s impact. A baseline would have been relevant to assess communities' current renewable energy and
+    natural resource management practices and to establish how those practices were affected by sub -projects.
+    Some small studies were carried out, for example of community satisfaction, of spillover effects to
+    non-beneficiaries, and of "results evaluation of PNPM Green sub -projects". On the whole, these studies do not
+    support robust attribution of results to the project .
+    The lack of evidence related to the project development outcomes (see Section 4 above) reflects M&E
+    weaknesses.
+    As this was a pilot project--supported by technical assistance from donors --these M&E deficiencies are
+    particularly serious. “The absence of an impact evaluation is particularly problematic for a pilot project whose
+    continuation would be judged on impact and whose design should be corrected based on evaluation findings �?
+    (ICR, page 10).
+
+c. M&E Utilization:
+    There is no evidence to suggest that M&E findings informed strategy or implementation or would inform any
+follow-on operation. On the contrary, the ICR reports that the Government made limited use of the data generated by
+the MIS and its progress reports contained no analysis of it . Reports did not contain analysis or explanation of the
+data generated by the system . Both the Government and the Bank had to rely on supervision reports, surveys and
+studies to monitor and evaluate project progress .
+
+    M&E Quality Rating : Negligible
+
+
+
+
+    11. Other Issues
+
+ a. Safeguards:
+This was a category "B" project that triggered safeguards related to environmental assessment (OP 4.01) and
+indigenous peoples (OP 4.10). According to the ICR (p. 10), supervision missions did not find adverse social or
+environmental impacts caused by the project, which did not finance land acquisition . Sub-projects were small and
+were a priori not expected to cause adverse social or environmental impacts; in fact they had beneficial effects . The
+ICR reports that "facilitators struggled to fill in safeguards forms correctly and showed low ownership of safeguards
+provisions; however no evidence was found that this had any negative environmental impact ." Overall, “safeguards
+compliance was largely satisfactory .�?
+
+ b. Fiduciary Compliance:
+The project had issues with financial management and procurement, mostly stemming from continued lack of
+understanding of Bank procedures among implementing agency staff and from the pressure to disburse block grants
+within fiscal years. The project received an unqualified audit from the external government auditor, and Bank
+supervision missions rated the project's financial management and its procurement as "moderately satisfactory"
+throughout implementation.
+Procurement was governed by Bank rules, with which officials appeared to have little familiarity (despite extensive
+Bank support for the wider PNPM program, essentially involving the same implementing agency ), resulting in slow
+recruitment of facilitators. “The Bank’s ex post review of selected contracts for goods revealed procedural gaps, the
+most important being the use by PMD of the bidding documents for non -consulting services for procurement of goods
+causing considerable delay and problems in evaluation of bids . Findings of the Bank’s supervision missions also
+revealed that some of the community procurements were made at prices higher than prevailing market rates �? (ICR,
+page 11). Community procurement was also slow and suffered from procedural errors .
+
+
+c. Unintended Impacts (positive or negative):
+None recorded
+
+    d. Other:
+.
+
+
+    12.
+    12. Ratings :                         ICR                IEG Review                     Reason for
+                                                                                     Disagreement /Comments
+                       Outcome : Moderately             Moderately             Overall, the project had significant
+                                 Satisfactory           Unsatisfactory         shortcomings stemming from
+                                                                               excessively ambitious statement of
+                                                                               objectives, weak M&E, failure to
+                                                                               provide satisfactory evidence on results
+                                                                               attributable to the project, in particular,
+                                                                               the achievement of more sustainable
+                                                                               natural resource management
+                                                                               practices beyond the construction of
+                                                                               sub-projects, and relatively high
+                                                                               facilitation costs.
+            Risk to Development Moderate                Moderate               O&M practices for subprojects have
+                       Outcome :                                               been introduced by CDD projects in
+                                                                               villages throughout Indonesia, and
+                                                                               institutions and practices are
+                                                                               well-established. These will be further
+                                                                               cemented by the inclusion of PNPM
+                                                                              Green subprojects in Village
+                                                                              Development Plans. A technical
+                                                                              assessment found that 82% of
+                                                                              sub-projects were in well-maintained,
+                                                                              good quality condition five years after
+                                                                              handover to communities .
+
+           Bank Performance : Moderately                    Unsatisfactory    Supervision did not give adequate
+                              Unsatisfactory                                  attention to technical issues, to M&E,
+                                                                              and to filing of Implementation Status
+                                                                              Reports resulting in shortcomings of
+                                                                              particular importance given the pilot
+                                                                              nature of the operation.
+       Borrower Performance : Moderately                    Moderately        There were avoidable delays in
+                              Satisfactory                  Unsatisfactory    reporting and disbursement,
+                                                                              weaknesses in procurement
+                                                                              procedures and oversight, and limited
+                                                                              coordination between PNPM Green
+                                                                              and PNPM Rural.
+                Quality of ICR :                            Satisfactory
+
+NOTES
+NOTES:
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+ 13. Lessons:
+  The following lessons are taken from the ICR with some adaptation of language :
+     The blending of many trust funds can cause fragmentation in implementation . This project used trust funds
+     primarily to complement other resources to extend finance to sub -projects in more villages than would
+     otherwise be feasible. It did not use trust funds in a strategic fashion to pilot, innovate, take risks, and
+     learn--for example, via impact evaluation .
+     Building on an established platform such as PNMP does not ensure smooth implementation . For example,
+     there were avoidable delays in disbursement of funds that forced communities to undertake activities within
+     very short time periods. As stated in the ICR (p. 35), "The annual block grant cycle is often incompatible with
+     the financing requirements of biological [natural resource management] projects". Multi-year financing should
+     be considered.
+     Communities tend to prefer green subprojects that generate income or save costs for them (for example tree
+     planting on private lands). Such subprojects are often more sustainable but are usually placed on private
+     lands and result in benefits to only a subset of community members . Design of benefit sharing mechanisms is
+     complicated since it is hard to ensure accurate recording of costs and revenues . The result may be
+     inequitable distribution of the benefits from subprojects . Other CDD projects promoting green or climate
+     change related activities are likely to encounter similar issues .
+IEG adds the following lesson:
+     A well designed and implemented M&E framework is of particular importance to a pilot operation . In this case,
+     a weak M&E framework and poor M&E implementation made it difficult to evaluate the outcomes of the project
+     and to draw lessons for future initiatives of a similar nature in Indonesia and elsewhere .
+
+
+14. Assessment Recommended?                  Yes      No
+
+Why? Yes. This project would be included in a combined Project Performance Assessment of all operations
+supporting PNPM Rural, which has been recommended elsewhere .
+
+
+
+
+15. Comments on Quality of ICR:
+The ICR is commendably candid. It clearly discusses weaknesses in project design such as complex financing and
+inadequate M&E and in Bank performance . It is also succinct.
+The first section on context, PDO and design could have been clearer . By way of context, the relationship to PNMP
+Rural and to PNMP Green could have been better explained and the rationale for adopting a PDO that is different
+from theirs could have been discussed . The remainder of the ICR is far clearer, relevant lessons are noted, although
+some of the tables contain numerical errors, for example in calculation of percentages .
+The ICR is relatively weak on the project's outcomes, though this reflects deficiencies in the M&E framework . What
+did the sub-projects achieve? Did they make natural resource use more sustainable and ensure long -term economic
+improvements for the target populations? The ICR (section 3.2) has more detail on micro hydro power than on natural
+resource management, but much of what is there is speculative and does not support assertions of displacing fossil
+fuels: the literature on household energy and fuel use has established that additional energy sources often
+complement rather than displace existing fuels .. For this and other reasons discussed in this Review, the completion
+of sub-projects and the initial extension of electricity and other energy benefits to households does not in itself
+constitute evidence of sustainable outcomes .
+The ICR also has little information on citizen engagement .
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000012394-20150109150905.txt

@@ -0,0 +1,456 @@
+                                                                                                              ICRR 14498
+                                                                                              Report Number : ICRR14498
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                      Date Posted : 12/30/2014
+
+               Country : South Africa
+             Project ID : P073322                                                 Appraisal                Actual
+        Project Name : Renewable Energy                           US$M ):
+                                                   Project Costs (US$M):                      17.30                 8.32
+                          Market
+                          Transformation
+  L/C Number :                                       Loan/         US$M):
+                                                     Loan /Credit (US$M):                      6.00               4.65
+      Sector Board :      Energy and Mining          Cofinancing (US$M):
+                                                                   US$M ):                     9.00 1.37 Private Direct
+
+           Cofinanciers : Private Sector             Board Approval Date :                                 06/28/2007
+                                                               Closing Date :          09/30/2011          09/30/2013
+          Sector (s):     Renewable energy (49%); Central government administration (48%); General finance sector
+                          (3%)
+          Theme (s):      Environmental policies and institutions (33% - P); Climate change (33% - P); Micro; Small
+                          and Medium Enterprise support (17% - S); Regulation and competition policy (17% - S)
+
+Prepared by :             Reviewed by :          ICR Review                  Group :
+                                                 Coordinator :
+Mamundi G. Sri-Ram        Victoria Alexeeva      Christopher David           IEGPS1
+Aiyer                                            Nelson
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+  The project development objective is "to support the Recipient’s efforts to establish policy and regulatory
+frameworks, and build institutional capacity for renewable energy development, leading to mitigation of greenhouse
+gas emissions, and removal of barriers to renewable energy technologies " (Global Environmental Facility Trust Fund
+Grant Agreement, p.5).
+
+The statement of project development objectives in the Project Appraisal Document (p. 9) is "to establish policy and
+regulatory frameworks and build institutional capacity for renewable energy development in South Africa ". The PAD
+(p.10) further lists the global environmental objective, in line with Global Environmental Facility (GEF) Operational
+Program No. 6, that is “to remove barriers to renewable energy technologies to help mitigate greenhouse gas
+emissions".
+
+This ICR Review is based on the assessment of objectives as stated in the Grant Agreement .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components:
+  Component 1. Renewable Energy Power Generation (appraisal estimate US$ 5.75 million, with US$4.05 million of
+GEF grant, and Government funds of US$ 1.7 million) included technical assistance (TA) and capacity building to
+eliminate barriers to renewable energy (RE) based power generation in South Africa . It was to support the
+development of policy and regulatory frameworks for grid -connected RE generation, and conduct capacity building
+activities to strengthen public and private sector institutions to enable them to meet the RE generation target under
+the country's Renewable Energy White Paper (REWP). The TA was to help facilitate RE investments by providing
+Matching Grants (MG) for project developers to conduct feasibility studies .
+
+Component 2. Commercial Solar Water Heating (CSWH) (appraisal estimate US$ 10.70 million, with US$1.4 million
+of GEF grant, US$0.3 million of Government funds, and US$9 million of private funds, which represent the estimated
+cost of equipment to be installed by the CSWH companies ) included technical assistance and capacity building
+measures to address market and business barriers to developing a market for large scale commercial solar water
+heating in South Africa. The TA activities were to support the development of the solar water heating (SWH) industry
+by assisting in developing standards and codes, promotion campaigns, and training . Also, it was to provide business
+development support for small and medium private enterprises and demonstrate best practice for improved design,
+testing and installation through Matching Grants (MG) and Performance Grants (PG).
+
+Implementation support (appraisal estimate US$ 0.85 million, with US$0.55 million of GEF grant and US$0.3 million
+of Government funds).
+
+During project restructuring in December 2009, under the first project component ’s Matching Grants window, the
+activities for renewable energy investments were re -defined as ‘pre-investment activities’; the eligible beneficiaries
+were also expanded to include entities outside the private sector (e.g., municipalities and state owned enterprises ).
+Under the Commercial Solar Water Heating component, which was supposed to focus only on the commercial
+segment, the support was expanded to include all solar water heating systems, in addition to commercial . A new
+category to cover operational costs was added for Implementation Support .
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ Project Cost : The total project cost at appraisal was estimated at US$ 17.30 million. The ICR's final project cost of
+US$4.08 million does not seem to be correct as only the GEF grant disbursed at US$ 4.65 million at completion.
+Overall, the final cost was lower than estimated due to changes in activities on solar water heating, which was taken
+up by the Government.
+
+Financing and Borrower Contribution : Of the original GEF grant of US$ 6.0 million, US$ 4.65 million were used. The
+Recipient's contribution was expected at appraisal to be US$ 2.30 million, and the ICR p.22 reports that the
+Government complied with transfer of co -funding resources. Private sector financing of US$ 9.0 million was expected
+at appraisal to be spent on equipment installed by the solar water heating companies, whereas at completion the
+amount was US$1.37 million contributed under the matching grants program . The ICR also listed the amount of
+US$148 million that represented indirect private investment in solar water heater installations .
+
+Dates:
+Dates The project closing date was extended by a total of two years . The first extension, in September 2011 was for
+15 months to December 31, 2012 as a result of the slow pace of implementation, in particular under the performance
+and matching grants programs (Project restructuring paper 2011). In December 2012, the project was extended by
+another 9 months to September 30, 2013 to enable completion of project activities, While the target values were not
+changed during project restructuring, the indicators related to commercial solar water heating systems were
+amended to include all solar water heating systems, i .e., “residential, commercial, institutional, and industrial
+applications�? (Amendment to GEF Trust Fund Grant Agreement ).
+
+3. Relevance of Objectives & Design:
+
+ a. Relevance of Objectives:
+Substantial .
+At the time of entry, South Africa was experiencing power shortages and load shedding, as generation capacity had
+not increased over the preceding ten years despite steady growth in demand for electricity . The power sector relied
+on coal for 92% of its output. As the world's sixth largest coal producer, 90% of which was used for electricity
+generation and synthetic fuel, South Africa was the largest green house gas (GHG) emitter in Africa. The
+Government's White Paper on Renewable Energy (2003) prepared with Bank assistance, set a target of 10,000 GWh
+of renewable energy by 2013, to meet some 4% of electricity demand by 2013. The Bank was assisting the country
+implement the White Paper. The project development objective was relevant to the Bank ’s 2008-2012 Country
+Partnership Strategy, which emphasized support to the national renewable energy program as part of the climate
+change portfolio, and the Bank ’s mandate from the G8 Summit at Gleneagles, Scotland to undertake a Climate
+Change Initiative in F+5 countries. The rationale for GEF support was to mitigate barriers to RE development, and its
+key role was to provide grant co -financing to jump- start the move towards the 10,000 GWh target by removing the
+main barriers.
+
+b. Relevance of Design:
+Substantial .
+The project was designed to provide technical assistance and capacity building for (i) renewables-based power
+generation, and (ii) commercial solar water heating. The inputs under the first component were to support the
+development of policy and regulatory frameworks for grid - connected RE generation, and for capacity building
+activities to strengthen relevant public and private sector institutions to meet the RE generation target . The output
+expected was 100 -135 MW of RE generation capacity with GEF support . The TA activities under the second
+component were to support the commercial solar water heating industry to international best practice by assisting
+with development of standards and codes, promotion campaigns and training . They were also to provide business
+development support for small and medium private enterprises and demonstrate best practice for improved design,
+testing and installation The activities were expected to lead to the establishment of the RE policy and regulatory
+frameworks, and an established commercial solar water heating industry .
+
+The original project focus was on the commercial segment of solar water heating, which complemented an
+UNDP-GEF project focusing on the residential segment As originally conceived, the project aimed to create “a
+participating CSWH company program" receiving performance-based grants for demonstrative sub -projects (PAD,
+p.11). According to the PAD (p.13) since solar water heating transactions were not linked to transmitting power over
+the main grid, ‘there was no need to involve the grid operator (Eskom) in promoting this resource�?. As a result of the
+Government policy changes during implementation (Eskom was designated to procure and install SWH ), the design
+had to be amended to remain relevant to changes in policy environment . In particular, the definition of the
+commercial solar water heating (CSWH) component was expanded to include all solar water heaters (SWH) and
+beneficiaries were expanded to include entities outside the private sector .
+
+4. Achievement of Objectives (Efficacy):
+   To support the Recipient ’s efforts to establish policy and regulatory frameworks, and build institutional capacity
+for renewable energy development, leading to mitigation of greenhouse gas emissions, and removal of barriers to
+renewable energy technologies . Substantial .
+
+Outputs
+
+    The project procured the services of a specialist energy project finance law firm to review the draft standardized
+    power purchase agreement under the Renewable Energy Feed -In Tariff (REFIT) framework. The power planning
+    process incorporated the review ’s key inputs and finalized in March 2011 with large allocations for RE.
+    Regulations for the procurement of RE were announced in May 2011, setting the stage for large-scale
+    implementation of the South Africa’s flagship program for RE, the Renewable Energy Independent Power
+    Producer Procurement Program (REIPPPP) announced in August 2011.
+    A review was prepared for the 2003 Renewable Energy White Paper with a focus on modelling RE technology
+    learning curves. The Department of Energy incorporated the approach in its Integrated Resource Plan to plan
+    the introduction of new generation capacity through a cost -optimized model that allocated greater capacity for
+    RE.
+    A renewable energy (RE) resource database was developed and made available to private developers . The
+    website included maps with high-level information on solar, wind and biomass resources . It also provided a link
+    to the wind resource database developed by the South African Wind Energy Program supported by UNDP .
+    33 pre-feasibility/pre-investment studies were carried out for RE projects under the Matching Grant program to
+    help 14 RE firms develop projects with a combined generation capacity of 275 MW. At least 5 of these projects
+    with a capacity of 85 MW were selected as preferred bidders and accepted for implementation under the
+    government's Renewable Energy Independent Power Producer Procurement Program, with 1 having been
+    commissioned as of December 2013, and 4 having achieved financial closure, and at an advanced stage of
+    construction. Another 6 projects with a generation capacity of 190 MW were on the government’s reserve list for
+    financial allocation.
+    A concentrated solar power (CSP) workshop was held in 2009 that led to the formation of the Southern Africa
+    Solar Thermal and Electricity Association (SASTELA), which assumed the leading role in the development of the
+    CSP industry in South Africa by making inputs to the Integrated Resource Plan and positioning CSP as a viable
+    peaking-power option.
+    The project procured a consultant to provide specialized ‘real time’ support to the Department of Energy, thus
+    facilitating a review of the draft Independent System and Market Operator (ISMO) Bill that was undergoing
+    processing by the South African parliament at project closure .
+     The project support to the solar water heating (SWH) program was scaled back due to the successful
+    implementation of the SWH installations by Eskom . The limited support included a training program to accredit
+    solar water heating (SWH) installers (to receive the Eskom- administered electricity tariff-based rebates,
+    installers had to be certified under SWH industry standards and codes that were developed by the South African
+    Bureau of Standards in 2009), testing SWH systems on a pass /fail basis, and development and patenting of an
+    innovative ladder design for SWH installation .
+    The solar water heating (SWH) workshop, conference, and launch event were hosted by the project to allow
+    multiple stakeholders to engage in the roll -out of solar water heating systems . The National Solar Water Heating
+    Framework (NSWHF) evolved from this engagement providing more information on different market segments,
+    in particular expanding the SWH roll -out program to low-income households. The project supported the
+    development of an SWH Business Plan for the Free State province of South Africa in 2010.
+
+Outcome
+The outcome indicators of avoided fossil fuel -based power generation (estimated at 422 GWh) and resulting avoided
+CO2 emissions (estimated 0.75 million tons) are based on the installation of 312,000 residential solar water heating
+systems carried out by Eskom . The achieved outcome targets represent the country ’s achievement in the renewable
+energy sector during the period of project implementation 2007-2013, with support of other stakeholders and
+development partners. The project’s TA and capacity building activities made their contribution to achieving the
+targets, although the attribution of the project to these outcomes is weak, in particular considering the project ’s
+limited scope in support of solar water heating .
+
+ 5. Efficiency:
+  This was a technical assistance project that did not finance investments . The ex-ante economic rates of return
+(ERRs) were estimated for a number of potential projects to be financed by the private sector under the first
+component for each renewable energy technology, i .e., small hydro, sugar bagasse, wind, pulp and paper industry,
+and landfill gas, and a small number of demonstration commercial solar water heating systems . At project closure,
+the ex-post internal rate of return (IRR) was estimated for all solar water heating installations carried out by the
+Government in its roll-out program. The benefits calculated were the electricity savings (based on residential
+electricity tariff in comparison to the ex -ante analysis that used tariffs for commercial and industrial consumers, as the
+project was designed to focus on the commercial segment ) as well as carbon emission reductions . The ICR
+estimates the IRR at 16% including CO2 reductions for the national SWH roll -out program.
+
+The final grant amount was reduced by about 20% and the implementation period was two years longer than
+anticipated at appraisal. Non-utilization of the remaining grant funds resulted from the limited human resource
+capacity of the ISU during final years of implementation (ICR, p.24). There were some administrative and operational
+inefficiencies with regard to carrying out technical assistance and capacity building activities under the project . In
+particular, the project effectiveness date was delayed by more than a year, partly due to delays in appointment of a
+project coordinator. Procurement issues (that could have been identified and addressed at appraisal ) also resulted in
+early implementation delays. In addition, according to the mid -term review’s aide-memoire of May 2011 (the ICR
+does not mention this issue), a significant amount of administrative resources was consumed to resolve procurement
+and financial monitoring issues . In March 2011, the total project expenditure was US$ 1.1 million, with 47% spent
+towards the Implementation Support Unit ’s operational expenses.
+
+Efficiency is assessed as Modest .
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                 Rate Available?                             Point Value                         Coverage/Scope*
+
+    Appraisal                         No
+    ICR estimate                      No
+                                           * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+  Relevance of objectives and design is substantial . Efficacy is rated substantial, while efficiency is assessed as
+modest. The overall outcome is therefore Moderately Satisfactory .
+ a. Outcome Rating : Moderately Satisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+    Government Commitment: The government support through co -financing and participation in oversight functions
+shows a high level of ownership . It focused on ensuring that the appropriate institutional arrangements were in place
+to support the SWH roll-out program along with a substantial fiscal commitment equivalent to $ 470 million.
+
+Implementation Capacity: Shortage of trained SWH installers across the country presents a moderate risk to the
+national SWH roll-out program, pointing to the need to develop training and certification programs coupled with
+targeted market awareness campaigns to attract younger persons to serve them .
+   a. Risk to Development Outcome Rating : Moderate
+
+8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+    The project design was strategic as the renewable energy (RE) sector was almost non-existent at entry. The
+project drew upon the sound fiscal and monetary policy base, including a strong financial sector to attract RE
+investments provided the legal, policy and regulatory frameworks in place . The assessment was made that
+without appropriate support mechanisms, development of RE power generation would be limited, given that
+electricity prices at the time were substantially lower than costs of long run marginal capacity expansion,
+particularly compared with coal- based generation. The Development Bank of South Africa (DBSA) the premier
+development finance institution, was selected as the project implementing agency due to its expertise in both
+financing and managing development projects; the lack of in -house capacity on renewable energy was to be
+addressed through setting a separate ISU with consultants to implement the project (PAD, p.57). The adequacy
+of arrangements to address implementation risks and provision of adequate human resources were not
+addressed until implementation was underway and restructuring was needed to ensure continued progress . An
+issue not fully considered at appraisal related to procurement processes . The government's consideration of
+black economic empowerment (BEE) as an evaluation criterion in procurement differed from the Bank's
+requirement for selection, which are based on technical and financial bases only . As a result of these
+shortcomings, it took a while before the matter was resolved, resulting in early implementation delays .
+
+            at -Entry Rating :
+   Quality -at-                                  Moderately Satisfactory
+
+ b. Quality of supervision:
+    The Bank team focused closely on the project's development impact throughout the implementation period,
+despite having limited resources for implementation support of stand alone GEF projects, and the hands -on role
+required to support TA activities . The team regularly engaged with government on priorities, fostered resilience in
+a rapidly changing policy environment, for example by reallocating the budget to provide more support for
+Matching Grant beneficiaries, and providing specialist support to the Department of Energy .
+The Bank fielded implementation support missions twice a year besides visits from the fiduciary staff,
+summarized issues in detailed aide memoires, issued no objection certification which were credited with short
+turn around times, provided post procurement reviews and financial management oversight . The team focused on
+the project's relevance throughout implementation, and assisted with restructuring with the rapidly evolving sector
+policies. Bank team members also participated in other engagements in related areas in the country, such as
+sector investment projects, Energy Sector Management Program (ESMAP)-supported Low Carbon Growth
+Strategy study, TA for the South African Cities Network on Renewable Energy Efficiency, carbon finance
+cooperation with DBSA, as well as had regular interactions with other agencies including the state owned utility
+Eskom and private companies.
+
+
+   Quality of Supervision Rating :               Satisfactory
+
+   Overall Bank Performance Rating :             Moderately Satisfactory
+
+
+9. Assessment of Borrower Performance:
+
+ a. Government Performance:
+    The Government, represented by the Department of Energy (DOE) and the Project Steering Committee
+(PSC), was engaged and proactive . The Department's Clean Energy Chief Directorate, and the New and
+Renewable Energy Directorate were the key players in implementation . DOE officials visited sites, and were
+involved in evaluations, policy and regulatory framework development, Renewable Energy White Paper review,
+and socio economic assessment of the Integrated Resource Plan, and routine communication of priorities and
+exchanges with the Bank as policies changed . The proactive engagement enabled it to receive first -hand
+information on progress and to provide guidance and inputs to the overall policy and regulatory process . All this
+opened many opportunities for value addition at different stages, including the SWH roll -out program. The
+commitment was illustrated by the commitment of Government fiscal funds, as projected (ICR, p.22).
+
+The Project Steering Committee (PSC), chaired by the DOE was the platform for stakeholders' participation in
+oversight functions. The PSC and its Chair were privy to project implementation progress, including potential
+bottlenecks, and actively participated in the mid term review, that allowed for accelerated implementation of the
+Matching Grant program. DOE participated in workshops, supported outreach activities making its web site
+available as an additional channel for dissemination of project related information, facilitated linkages with
+regional investment promotion agencies for workshops to help raise the quantity and quality of Matching Grant
+Applications. It also helped remove hurdles to implementation and made transition arrangements at closing . It
+was actively involved in addressing human resource issues at the Implementation Support Unit through DBSA's
+senior management.
+
+   Government Performance Rating                                Highly Satisfactory
+
+ b. Implementing Agency Performance:
+     The Implementation Support Unit (ISU) in the Development Bank of South Africa (DBSA)—designated as the
+implementing agency to allow the project to benefit from DBSA ’s infrastructure focus and its financial
+management and procurement systems --coordinated with external stakeholders and partners, hosted
+conferences and workshops, generated reports and disseminated information . It held regular discussions with
+official stakeholders and partners including the United Nations Environment Programme (UNEP), the state owned
+utility Eskom, Danish International Development Agency and others to coordinate activities related to the RE
+power generation and SWH programs in planning or implementation stages, and in the project mid term review .
+Developers were able to access pre investment resources in a timely manner to prepare Renewable Energy
+Independent Power Producer Procurement Program applications .
+
+Implementation challenges included delays in recruitment and departure of ISU team members at critical stages,
+including the first and final years of implementation . When new members were appointed they did their best to
+put matters back on track, and the Bank and DOE worked with DBSA towards a resolution . Nonetheless, the
+delay in reappointing, and subsequent departure of the ISU coordinator in the last year affected full disbursement
+and the Matching Grant program.
+
+   Implementing Agency Performance Rating :                     Moderately Satisfactory
+
+   Overall Borrower Performance Rating :                        Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+ a. M&E Design:
+   The PAD (p 37-40) listed adequate indicators to measure progress towards the PDO, with overall responsibility for
+M&E with the then Department of Minerals and Energy, and day to day responsibility with the ISU overseen by
+DBSA. Additional consultants were to be hired by DBSA if needed . During restructuring, the target values within the
+results framework were not changed, while support was expanded, for example, to incorporate residential solar water
+heating systems (the initial focus was only on commercial SWH ). The CO2 emissions avoided had calculation errors .
+The results framework for the TA operation included several indicators that were outside the direct scope of the
+project -- e.g., the design anticipated the potential leverage of external resources including those from private
+sources,
+
+b. M&E Implementation:
+  The M&E system was implemented by DOE and the ISU in DBSA as planned on TA activities, CSWH companies,
+RE power generation. Regular reports enabled ongoing monitoring .
+
+ c. M&E Utilization:
+   Project data were used for reallocation of resources through restructuring and revised procurement plans . Data on
+the low percentage of successful applications in the first round of the Matching Grant program led to improving the
+quality of subsequent applications and support for them, on an iterative basis, resulting in significant increases in the
+quantity and quality of applications from project developers . Market feedback was used to reduce the allocation for
+SWH grants following the 2011 mid-term review, leading to focus on different market segments, including low income
+households.
+
+M&E Quality Rating : Substantial
+11. Other Issues
+
+ a. Safeguards:
+The project was rated as Category C (no environmental or social safeguard impact ) under the Bank’s safeguard
+policies. According to the PAD p.28, it was not expected to present any environmental or social risk . Solar water
+heating is not a “listed activity�? with respect to South African environmental requirements, and therefore would not be
+subject to the environmental screening or environmental assessment process . No land acquisition was planned, as
+the construction was to be within the perimeter of existing institutional, commercial, or industrial establishments
+(mostly on rooftops). The ICR does not report any information with regard to safeguards .
+
+ b. Fiduciary Compliance:
+Procurement: As mentioned earlier under Bank Performance, an issue not fully considered at appraisal related to
+local procurement processes --the government's consideration of black economic empowerment (BEE) as an
+evaluation criterion in procurement differed from the Bank's requirement for selection which take into account only
+technical and financial bases . As a result it took a while before the matter was resolved, resulting in early
+implementation delays. The ISU developed an Operations Manual to clarify interfaces between the project (Bank)
+procurement procedures and those of DBSA . The Bank team scheduled procurement training sessions on applicable
+World Bank guidelines and procedures, and input from the Post Procurement Review helped strengthen ISU's
+capacity. DBSA also made available a procurement specialist who provided support to ISU .
+
+Financial Management: DBSA staff were familiar with regular financial management practices, procedures and
+reporting. The Bank provided support to the ISU and DBSA's Financial Management Unit and the ISU addressed
+early gaps during the process of preparing the project's first external audit . The adjustments were made in time for
+the start of the Matching Grant program in 2010, and following the mid-term review, as the volume and value of
+transactions rose.
+
+c. Unintended Impacts (positive or negative):
+
+
+d. Other:
+
+
+
+12.
+12. Ratings :                              ICR                   IEG Review                 Reason for
+                                                                                     Disagreement /Comments
+                     Outcome : Satisfactory                 Moderately         Although other elements are rated as
+                                                            Satisfactory       Substantial, Efficiency is rated Modest,
+                                                                               thus leading to an overall outcome
+                                                                               rating of Moderately Satisfactory .
+         Risk to Development Moderate                       Moderate
+                    Outcome :
+
+            Bank Performance : Satisfactory                 Moderately         IEG agrees with the ICR’s individual
+                                                            Satisfactory       ratings. In line with the IEG/OPCS
+                                                                               harmonized guidelines, the overall
+                                                                               rating becomes MS as the quality at
+                                                                               entry is MS.
+
+       Borrower Performance : Satisfactory                  Satisfactory
+
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+13. Lessons:
+   IEG has selected the following lesson from the ICR, with some adaptation :
+
+    Technical assistance activities could help support the overall development of RE market and enabling
+    environment . Rather than prescribing financing of a particular type of RE technology, the project focused on
+    removal of legal policy, regulatory, and information barriers to scale up RE .
+
+14. Assessment Recommended?                Yes      No
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is well written with considerable information on events and changes on the ground as the project
+progressed, with necessary details . The approach is analytical and based on main implementation activities . The
+ICR, however, has errors in values, and has inconsistent numbers . It is not clear on the actual project costs, i .e.,
+while saying the Government committed its funds as planned, the actual amount is less than half as per Annex 1;
+GEF actual costs in Annex 1 differ from the one on p.5. The project team was requested to inform IEG if during
+verification of final financial data in the ICR's Annex 1, there were any substantial changes . The ICR would have
+benefitted from proof-reading, as for example on p. 8 the estimated investment was not inserted and indicated “XYZ�?.
+The ICR lacks any information related to safeguards .
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000020051-20140604053957.txt

@@ -0,0 +1,170 @@
+                                                                                                              ICRR 11123
+                                                                                              Report Number : ICRR11123
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                            Date Posted : 11/11/2001
+            PROJ ID : P035544                                                   Appraisal                 Actual
+       Project Name : Solar Home Systems                    Project Costs 118.1                   3.4
+                                                                   US$M )
+                                                                  (US$M)
+             Country : Indonesia                     Loan/         US$M ) 20
+                                                     Loan /Credit (US$M)                          0.1
+            Sector (s): Board: EMT - Renewable               Cofinancing 24.3                     2.3
+                        energy (100%)                              US$M )
+                                                                  (US$M)
+         L/C Number : L4132
+                                                          Board Approval                          97
+                                                                     FY )
+                                                                    (FY)
+Partners involved :    GEF                                  Closing Date 04/30/2002               01/31/2001
+
+Prepared by :             Reviewed by :                 Group Manager :       Group :
+ Simone Lawaetz           Laurie Effron                 Alain A. Barbu         OEDST
+2. Project Objectives and Components
+ a. Objectives
+ The project's objectives are to :
+(1) Provide the modern energy form of electricity to rural customers who cannot be served economically or in a timely
+manner by conventional rural electrification;
+(2) Facilitate participation by the private sector in advancing renewable energy commercialization;
+(3) Promote environmentally sound energy resource development in Indonesia and reduce the energy sector's
+dependence on fossil fuels;
+(4) Strengthen Indonesia's institutional capacity to support and sustain decentralized rural electrification using solar
+photovoltaics (PVs); and
+(5) Mitigate emissions of C02 in Indonesia.
+Project objectives were not revised during project implementation .
+ b. Components
+ Original components :
+(1) Provision of credit through participating local commercial banks (PBs) to private Solar Homes Systems (SHS)
+dealers for the sale and installation of 200,000 solar PV systems for homes and commercial establishments such as
+small shops. This would give access to electricity to about 1 million rural people in three provinces . The GEF grant
+would be provided to the SHS dealers on a per SHS unit basis, after a unit had been sold and installed .
+(2) Technical assistance (TA) to (i) establish a Project Support Group (PSG) to provide assistance to SHS dealers
+and end-users, to monitor and evaluate project progress, and to conduct limited SHS related training to government
+officials and private sector organizations; (ii) prepare a Decentralized Rural Electrification Strategy Study and SHS
+Action Plan; and (iii) assist GOI in building Indonesia's institutional capabilities for the dissemination of solar PV
+technology.
+
+Revised components : In response to the severe financial crisis that hit Indonesia at the time of project effectiveness,
+the following changes were made:
+(1) Sales targets were reduced from 200,000 units of minimum 50Wp to 70,000 units of 30Wp;
+(2) The TA for a Decentralized Rural Electrification Study and the SHS Action Plan was replaced by TA for a
+Renewable Energy for Rural Transformation Study and Action Plan . This change, arising from the increasing focus in
+Indonesia and the Bank on poverty reduction, will focus the study and plan on utilizing renewable energy for social
+and economic development of rural communities .
+ c. Comments on Project Cost, Financing and Dates
+ Actual project costs were US$3.4 million, only about 3% of the original estimate at appraisal of US$ 118.1 million.
+Total actual costs consist of : US$0.1 million of the IBRD loan, US$2.3 million of GEF grant, US$0.3 million of
+GOI/BPPT contribution, US$0.1 million from participating banks, and US$ 0.6 million from dealers and end-users. The
+IBRD loan was closed on January 31, 2001, fifteen months ahead of schedule . The project was reconfigured as a
+stand-alone GEF project with the GEF grant reduced from US$ 24.3 million to US$11 million, and the project closing
+extended by two years to April 30, 2004.
+3. Achievement of Relevant Objectives:
+(1) Provide the modern energy form of electricity to rural customers who cannot be served economically or in a
+timely manner by conventional rural electrification : This objective was negligibly achieved . As of the end 2000, only
+1,349 units were installed, serving about 6,000 people compared to appraisal targets of 200,000 units serving about
+1 million people.
+(2) Facilitate participation by the private sector in advancing renewable energy commercialization          : This objective
+was modestly achieved. Only one dealer, compared to the 5-6 dealers identified at appraisal, carried out the
+installations. However, the project provided assistance and training to potential dealers on business development
+plans, direct sales, financial management, inventory controls and other good business practices . The project also
+encouraged local Indonesian firms to manufacture "balance of systems" components of SHS, had them tested on a
+grant basis at international laboratories to check whether they met the project's technical specifications, and
+arranged for technical support from interested international organizations to improve their quality .
+(3) Promote environmentally sound energy resource development in Indonesia and reduce the energy sector's
+dependence on fossil fuels : This objective was negligibly achieved . As a result of the low number of unit
+installations, only 3707 kiloliters of fossil fuel is expected to be conserved, compared to an estimate of 546,720
+kiloliters at appraisal.
+(4) Strengthen Indonesia's institutional capacity to support and sustain decentralized rural electrification using
+solar photovoltaics : This objective was substantially achieved . Strict technical criteria and procedures for testing and
+certification of SHS units were established . Domestic testing and certification capabilities were developed through
+staff training and installation of state -of-the-art facilities within the Technical Implementation Unit and Energy
+Technology Laboratory (LSDE) of the Indonesian Agency for Assessment and Application of Technology (BPPT). As
+a result, LSDE was awarded ISO 25 accreditation. Furthermore, participating banks have benefited from TA to help
+familiarize them with SHS technology and markets and how to handle loans for SHS vendors and isolated rural
+end-users. SHS dealers and suppliers were instructed on market and business development .
+(5) Mitigate emissions of CO 2 in Indonesia : This objective was negligibly achieved . Only 9,000 tons of CO2 were
+abated, compared to the appraisal target of 1.3 million tons.
+4. Significant Outcomes/Impacts:
+(1) Some of the innovative design features of the project have been utilized in other Bank /GEF projects. These
+include end-user audits, the provision of business development services to dealers, and an administrative system for
+calculating and paying GEF grants to dealers, linked to marked based sales performance and having a project scale
+that enables a clear commercial exit strategy .
+(2) The technical standards formulated for this project are now being used, with adaptations, in a number of other
+countries. They are also being used by the Photovoltaic Global Approval Program that is developing a widely
+accepted Seal and Mark of quality .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+(1) The banking sector crisis prevented two of the four PBs identified at appraisal from entering into credit
+agreements with SHS dealers. The other two imposed a credit agreement condition of a cash deposit equivalent to
+100% of the face value of the credit, which only one dealer was able to meet .
+(2) The sharp depreciation of the Rupiah led to significant increases in the retail prices of SHS units as well as
+consumer essentials, greatly reducing consumer willingness and ability to pay for units .
+
+
+6. Ratings :             ICR                        OED Review                Reason for Disagreement /Comments
+               Outcome : Unsatisfactory             Unsatisfactory
+     Institutional Dev .: High                      Substantial               The ICR rates IDI as 'high' in Section 2.
+                                                                              Principal Performance Ratings but as
+                                                                              'substantial' in the text of Section 4.5.1
+                                                                              IDI. OED has downgraded IDI to
+                                                                              'substantial' for the following reasons :
+                                                                              While the project has significantly
+                                                                              strengthened the national technical
+                                                                              capacity for testing and certification of
+                                                                              SHS units, only a very limited number of
+                                                                              dealers and participating banks have
+                                                                              benefited from the market and business
+                                                                              development services. Nonetheless, the
+                                                                              project has strong demonstration
+                                                                              potential, that is now partly being realized
+                                                                              with recent increases in the number of
+                                                                              dealers. However, for a rating of 'high,'
+                                                                              broader and deeper institutional
+                                                                              development impacts need to be
+                                                                              demonstrated.
+         Sustainability : Likely                       Non-evaluable               Project sustainability has been rated
+                                                                                   'non-evaluable' because GEF grants are
+                                                                                   still provided to the dealer for each sale of
+                                                                                   a SHS. The financial sustainability of the
+                                                                                   project cannot be evaluated until the SHS
+                                                                                   market is functioning without grant
+                                                                                   assistance.
+   Bank Performance : Highly Satisfactory              Highly Satisfactory         With only limited Bank experience in PV
+                                                                                   projects to draw on, Bank staff
+                                                                                   successfully designed a relatively
+                                                                                   innovative project that now serves as a
+                                                                                   model for other PV projects. With the
+                                                                                   onset of the Asian financial crisis, Bank
+                                                                                   staff showed flexibility in continuing to
+                                                                                   work toward the institutional and market
+                                                                                   development objectives and, once market
+                                                                                   conditions improved, restructured the
+                                                                                   project as a stand-alone GEF project.
+                                                                                   QAG rated project supervision as
+                                                                                   'Superior' in FY98 and as 'Highly
+                                                                                   Satisfactory' in FY00.
+        Borrower Perf .: Satisfactory                  Satisfactory
+        Quality of ICR :                               Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+(1) The competitiveness of SHS units may depend on the level of Government intervention in the rural energy market
+to promote access to some energy sources . In this case, nominal retail prices of SHS units rose by about 400% over
+about two years as a result of currency depreciation but continuing subsidies for kerosene and diesel softened their
+price hikes to only 12% and 58%, respectively. This significantly lowered the competitiveness of SHS .
+(2) To develop a new SHS market and encourage the participation of new dealers, significant upstream support for
+market development and business planning is needed, in part to reduce perceived commercial risks . This support
+must also be extended to participating financial organizations who also face high information and other market entry
+costs.
+(3) Market-based projects need to be flexible enough to allow for the adjustment of product lines and business
+models in response to changing market signals .
+8. Assessment Recommended?            Yes      No
+9. Comments on Quality of ICR:
+The ICR is well-written and provides a frank and comprehensive assessment of project performance . It includes a
+well-considered set of lessons learned and a thoughtful analysis of the underlying factors of project outcome .
+Nonetheless, the reason given for not calculating an IERR (that on an annual basis there were no initial negative
+cash flows) is not entirely sound.
+

DataSource/000020051-20140607142030.txt

@@ -0,0 +1,154 @@
+                                                                                                               ICRR 11196
+                                                                                               Report Number : ICRR11196
+                   ICR Review
+                   Operations Evaluation Department
+
+
+
+
+1. Project Data:                                        Date Posted : 05/22/2001
+            PROJ ID : P001662                                               Appraisal                       Actual
+       Project Name : Power V                           Project Costs 231.28                       139.87
+                                                               US$M )
+                                                              (US$M)
+             Country : Malawi                    Loan /Credit (US$M)
+                                                 Loan/         US$M ) 55.00                        53.53
+           Sector (s): Board: EMT - Power (98%),         Cofinancing 112.49                        68.2
+                       Renewable energy (2%)                   US$M )
+                                                              (US$M)
+        L/C Number : C2386
+                                                     Board Approval                                92
+                                                                  FY )
+                                                                 (FY)
+Partners involved :    EIB; KfW; CDC; FMO               Closing Date 06/30/1998                    06/30/2000
+
+Prepared by :         Reviewed by :                   Group Manager :       Group :
+Simone Lawaetz        Alice C. Galenson               Alain A. Barbu        OEDST
+2. Project Objectives and Components
+a. Objectives
+Original objectives :
+The overall objective of the project was to implement the power component of the least cost energy strategy adopted
+by the Government of Malawi.
+The specific objectives were to :
+(i) meet the growth in demand for power in a least cost manner through the construction of the Kapichira
+hydroelectric scheme and the rehabilitation of the hydro, standby gas, and diesel power plants;
+(ii) improve the quality of power supply through reinforcing the transmission and distribution systems to minimize
+outages and reduce losses;
+(iii) strengthen the capacity of energy sector institutions to plan, manage, and operate the energy sector facilities and
+institutions; and
+(iv) assist in rationalizing sector -wide energy pricing policy.
+Revised objectives :
+Due to lack of co-financing, the objective of improving the quality of power supply through reinforcing the
+transmission and distribution system was dropped during project restructuring in June 1998.
+ b. Components
+ Power components : Kapichira Hydroelectric Scheme: (i) construction of a dam (originally 800m long but later
+reduced), two steel penstocks, a power house, a tailrace and a switchyard; (ii) installation of two Francis turbines
+coupled to two 25 MW generators; (iii) switchgear and control equipment for Kapichira Switchyard and extension of
+substations at Tedzani and Blantyre West; (iv) construction of about 58 km 132 kV single circuit transmission line; (v)
+extension of the System Control and Data Acquisition (SCADA) system to include Kapichira and upgrading the
+existing generation control microcomputer center at Nkula B power station and interface of the telemetry software
+with the existing system; (vi) establishment of single channel PLC and telephone links to Kapichira; and (vii)
+associated engineering services for the hydroelectric scheme . An intake canal was cancelled after a redesign of the
+Kapichira power house, in response to recommendations by the Environmental Assessment . Generation
+Rehabilitation: improvement of the availability of the existing power plants through the reconditioning or replacement
+of the runners, guide vans, and cooling systems; provision of essential spares and rehabilitation of the intake
+structure for the hydro power stations; and acquisition of spares for the gas turbines and diesel power plants .
+Dredging of the Nkula reservoir and installation of four Kapichira generators were added after appraisal .
+Transmission and distribution reinforcement components to improve the reliability of the distribution system and the
+transmission system to the Northern Region were cancelled after project restructuring in June 1998. Institutional
+Strengthening of ESCOM: consultancy services for studies to determine the least cost option for power supply after
+Kapichira and provision of expert services; establishing a strategy for computerizing ESCOM's financial and technical
+operations, provision for the acquisition of one central computer system at ESCOM's headquarters and 18
+microcomputers; and provision for training of ESCOM's staff to assist in building capacity to plan, manage and
+                                            Non -Power Component : Energy Planning and Policy: a household energy
+operate ESCOM's facilities and systems . Non-
+strategy study which will establish a database for household energy supply and demand, examine the supply and
+marketing of various forms of household energy and recommend a household energy strategy; and expert services
+to advise the Government on energy -related issues. Petroleum Supply: expert services to review arrangements for
+petroleum product procurement, transportation, and bulk storage and the legal framework of the Petroleum Control
+Commission (PCC). An energy efficiency component to demonstrate energy efficient barn designs for tobacco curing
+was cancelled at project restructuring . Advisory services for the development of a Power Sector Policy was added .
+ c. Comments on Project Cost, Financing and Dates
+ Total project costs were US$139.87 million compared to the SAR estimate of US$ 231 million. The difference is
+partly due to the cancellation of a number of project components . IDA financed about US$54 million, EIB US$20
+million, KfW US$18 million, CDC US$24 million, and FMO US$5 million. About US$.49 million of the IDA credit was
+undisbursed at project closing . ESCOM contributed about US$18 million equivalent in local costs. Although it was
+agreed at negotiations that the Government would reach an agreement with AfDB for co -financing of the two
+Kapichira turbines and generators and the transmission and distribution component, AfDB was unable to meet its
+financing commitments following credit effectiveness . The transmission and distribution components canceled by the
+project are now being financed by SIDA, NDF, and NORAD .
+3. Achievement of Relevant Objectives:
+(i) Meet the growth in demand for power in a least cost manner : This objective has been achieved . The
+construction of the Kapichira hydroelectric scheme has made a significant contribution to the ESCOM's energy
+production capability. Despite creating an initial energy surplus because of lower than expected growth in electricity
+demand, it came on line when the reserve margins were near zero, increasing ESCOM's installed hydro generating
+capacity by 30 percent and its energy production capability by about 40 percent. The added capacity will allow
+ESCOM to better meet peak demands and operate more efficiently . Although demand has been lower than
+forecasted, the ERR for the project is still acceptable at 11%. Generation rehabilitation and the dredging of the
+regulating reservoir for the Nkula power plant has augmented supply . However, the low reliability of the transmission
+and distribution systems will continue to constrain the quality of service . Recent Bank efforts have resulted in the
+successful mobilization of financing for transmission and distribution reinforcement .
+  ii) Strengthen the capacity of energy sector institutions : This objective has been partially achieved . The household
+(ii)
+and biomass studies will be a valuable contribution to the National Energy Strategy under preparation . Petroleum
+sector reforms made the petroleum study irrelevant . In terms of strengthening ESCOM's operations, the preparation
+of a least cost development plan has helped identify least -cost development alternatives for the power system .
+However, a Systems Operations Model developed under the project did not become operational and the installation
+of a new billing system was delayed and experienced serious problems .
+  iii ) Assist in rationalizing sector -wide energy pricing policy : This objective has not been achieved . Electricity tariff
+(iii)
+adjustments were inadequate, severely compromising ESCOM's financial performance .
+4. Significant Outcomes/Impacts:
+(1) While sector reform was not a stated objective, the project acted as a catalyst for power sector dialogue between
+the Bank and the Government. Advisory services provided under the project assisted in the drafting of the Power
+Sector Policy paper which aims to increase private sector participation in the provision of electricity services .
+(2) This was the first project in the Africa region to be subject to a full Environmental Assessment . Implementation of
+EA recommendations was highly satisfactory with many social and environmental benefits extending beyond the
+limits of the site specific mitigation measures .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+Despite project efforts to strengthen ESCOM's operations, ESCOM was a much weaker institution both financially
+and operationally at project closing than it was at appraisal . Problems with operationalizing a new billing system and
+inadequate adjustments to electricity tariffs contributed to declining financial performance and quality of electricity
+service.
+
+
+6. Ratings :             ICR                         OED Review                 Reason for Disagreement /Comments
+               Outcome : Unsatisfactory              Moderately                 The project achieved one of its key
+                                                     Unsatisfactory             objectives of meeting growth in power
+                                                                                demand in a least cost manner.
+    Institutional Dev .: Modest                      Modest
+        Sustainability : Unlikely                    Unlikely
+   Bank Performance : Satisfactory                   Unsatisfactory             The Bank, at entry, failed to: (1) secure all
+                                                                                project financing prior to Board approval;
+                                                                                (2) undertake a rigorous update of
+                                                                                demand growth forecast during the 11/2
+                                                                                year delay in project effectiveness, given
+                                                                                that according to available data, by
+                                                                                project effectiveness, real growth
+                                                                                electricity sales were less than 1%
+                                                                                compared to the forecasted 10%; and (3)
+                                                                                adequately assess Borrower commitment
+                                                                                   to tariff adjustments. Without this
+                                                                                   commitment, the use of loan
+                                                                                   conditionalities proved to be a weak
+                                                                                   vehicle in promoting tariff reforms.
+        Borrower Perf .: Unsatisfactory                Unsatisfactory
+        Quality of ICR :                               Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+(1) Borrower commitment to institutional and tariff reform must be carefully assessed at appraisal . Without full
+ownership, the Borrower may be a weak and ineffectual partner in implementing such reforms . As evidenced by this
+project, implementation of key reforms is not ensured by their inclusion in loan conditionalities .
+(2) Initial sector reforms may not be a good indicator of Borrower commitment . For instance, the creation of an
+independent electricity regulator did not have strong political commitment, compromising its autonomy and
+subsequent impact on the economic regulation of the sector .
+(3) Lack of co-financing caused the cancellation of the transmission and distribution components, seriously impacting
+the overall quality of electricity services and project outcome . Commitments of co-financiers should be agreed upon
+as early as possible during project appraisal and negotiations, to ensure timely implementation .
+(4) Flexibility by the Bank in reallocating funds helped the project achieve some satisfactory outcomes, including
+expansion of generation capacity and advisory services for sector reforms .
+8. Assessment Recommended?                Yes     No
+9. Comments on Quality of ICR:
+The ICR is well-written and comprehensive, including information on social and environmental impacts .
+

DataSource/000020051-20140607153647.txt

@@ -0,0 +1,130 @@
+                                                                                                           ICRR 11300
+                                                                                           Report Number : ICRR11300
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                            Date Posted : 08/15/2002
+            PROJ ID : P010410                                                   Appraisal            Actual
+       Project Name : Renewable Resources                   Project Costs US$280 million       US$284 million
+                                                                   US$M )
+                                                                  (US$M)
+            Country : India                          Loan /Credit (US$M)
+                                                     Loan/         US$M ) US$190 million
+           Sector (s): Board: EMT - Renewable                Cofinancing US$26 million GEF     US$26 million GEF
+                       energy (100%)                               US$M ) US$4 million Swiss
+                                                                  (US$M)                       US$2.3 million SDC
+                                                                          Development          US$3.9 million
+                                                                          Corporation (SDC)    DANIDA
+                                                                          $US50 million        $0.4 million GON
+                                                                          DANIDA
+        L/C Number : C2449; L3544
+                                                         Board Approval                        93
+                                                                    FY )
+                                                                   (FY)
+Partners involved :   GEF, SDC, DANIDA, GON                Closing Date 12/31/1999             12/31/2001
+
+Prepared by :           Reviewed by :                  Group Manager :      Group :
+ Angela Crooks          Nalini B. Kumar                Alain A. Barbu       OEDST
+2. Project Objectives and Components
+ a. Objectives
+ (a) Promote commercialization of renewable resources technologies by strengthening the Indian Renewable Energy
+Development Agency's (IREDA) capacity to promote and finance entrepreneurial investments in alternate energy; (b)
+create marketing and financing mechanisms for the sale and delivery of alternate energy systems based on
+cost-recovery principles; (c) strengthen the institutional framework for encouraging entry of private sector
+investments in non-conventional power generation; and (d) promote environmentally sound investments to reduce
+the energy sector's dependence on fossil fuels . GEF's objectives were to demonstrate commercialization and
+catalyze wind energy and solar photovoltaic (PV) investments by strengthening IREDA's capacity to promote private
+investments in the sector. The GEF grant was used to help reduce the project cost to a level comparable to that of
+conventional alternatives.
+ b. Components
+ Investments financed through IREDA : (i) irrigation-based small hydro projects with an aggregate capacity of 100
+MW; (ii) aggregate capacity of 85 MW of wind farms; and (iii) a marketing and financing program to support the solar
+PV market and installation of 2.5 to 3.0 Megawatt Peak (MWp) of PV systems. Technical assistance to strengthen
+IREDA's capacity to promote renewable energy technologies and attract private sector interest; provide technical
+support and training for IREDA staff, investors and other stakeholders engaged in renewable energy market
+development and investment.
+ c. Comments on Project Cost, Financing and Dates
+ The original project cost (SAR) was estimated at US$450 million. However, the Tamil Nadu Newprint and Papers
+Limited (TNPL) Papermill component was completed and a separate ICR was issued for it . In the absence of the
+papermill component, the ICR reports appraisal estimates as US$ 280 million. Actual project costs were US$284
+million. The IDA Credit (US$115 million, equivalent) and GEF Grant (US$26 million, equivalent) were both fully
+utilized. Financing from DANIDA was reduced from US$ 50 million to US$3.9 million, SDC funding was reduced from
+US$4 to US$2.3 million equivalent. These shortfalls were made up by additional funding of US$ 0.4 million from the
+Government of the Netherlands (GON), and IREDA (US$40.7 million vs. US$17 million at appraisal),
+promoter/consumer contributions (US$87.7 million vs. US$68 million) and other loans (US$12.5 million).
+3. Achievement of Relevant Objectives:
+The objectives were fully achieved . Although the project appraisal costs were exceeded, this resulted in 207 MW of
+additional capacity (compared to 188 MW expected at appraisal).
+
+4. Significant Outcomes/Impacts:
+
+    Commercialization has been fully achieved in the small hydro sector with installed capacity rising to over 1,423
+    MW over the past 10 years with the vast majority of new installations being owned and operated by private
+     sector companies for sales of power to the grid, captive generation or third party sale .
+     Over 90% of installed capacity in the wind power sector is private (1,507 MW) compared to 40 MW of
+     state-owned facilities in 1992. Commercial market development in solar PV is evidenced by : (i) the large private
+     sector-led manufacturing base; (ii) a competitive market place where product costs are now among the lowest in
+     the world; (iii) established retail sales and service networks; and (iv) emerging participation of financial
+     intermediaries. Installed PV capacity in 2000 was 82 MWp.
+     About half of the 3400 MW in renewable power systems built since 1992 were funded by loans from IREDA.
+     IREDA is now a mature financing institution specializing in lending for renewable energy and energy efficiency .
+     IREDA's role has encouraged other lenders to support renewable energy projects, including a range of bank and
+     non-bank institutions -- in 1993, there was no funding for this type of project .
+     The project has identified innovative ways to address rural credit risks .
+     The government has changed its approach to renewable energy development from state -administered to
+     market-driven.
+     India is now exporting wind and PV technology .
+     Carbon emissions avoided as a direct result of the project are 6.6 million tons.
+     International joint ventures have been fostered by the project requirement for competition in procurement .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+
+     Staff retention has been difficult for IREDA due to its below market rate salary structure (specified by the
+     government).
+     Regulatory and policy risks with respect to wind and small hydro were underestimated .
+
+
+
+6. Ratings :               ICR                         OED Review                  Reason for Disagreement /Comments
+               Outcome : Satisfactory                  Satisfactory                The significant increase in the use of
+                                                                                   renewable energy technologies is largely
+                                                                                   due to the catalytic influence of IREDA,
+                                                                                   which was assisted by this program .
+                                                                                   Given that financial returns on renewable
+                                                                                   energy investments are rather modest,
+                                                                                   this is a significant achievement .
+    Institutional Dev .:   Substantial                 Substantial
+        Sustainability :   Likely                      Likely
+   Bank Performance :      Satisfactory                Satisfactory
+      Borrower Perf .:     Highly Satisfactory         Highly Satisfactory
+       Quality of ICR :                                Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+The ICR identifies some useful lessons . Ten lessons from the ICR are reproduced below .
+     Adequate time must be allowed to develop innovative projects and the market for renewable energy .
+     A specialized financial institution such as IREDA was essential at the beginning as new technologies were
+     commercialized, but if market growth is to expand, broader participation by the financial sector is essential .
+     Similar to rural electrification the world over, affordable financing accessible to rural consumers is essential for
+     selling PV products in rural areas .
+     Delivering rural PV services needs a partnership between key actors : rural financing institutions,
+     product/service suppliers and preferably organized consumer groups .
+     Assessment of land acquisition as well as payment of compensation should be completed prior to
+     commencement of civil works to avoid delays in project implementation .
+     The renewable energy program should be consistent with and embedded into the plan for power sector reform
+     and restructuring.
+     Supportive and predictable policies and regulatory framework are essential for market development .
+     Tariffs and power sales rules should be fair to all parties for sustainable development of the sector .
+     Careful attention should be paid to maximizing energy output rather than installed capacity .
+     Regular review and rationalization of subsidy policy is necessary .
+8. Assessment Recommended?                Yes     No
+          Why? Significant lessons can be learned through this pioneering renewable energy projects financed by
+the Bank, GEF and other donors .
+9. Comments on Quality of ICR:
+The ICR was clearly written and well-organized. It provided detailed annexes, including performance ratings
+throughout the supervision process . A separate ICR was issued earlier on May 1996 for the TNPL Papermill
+component, which confirmed that commercialization prospects for bagasse -based newsprint technology are
+favorable and suitable for IFC financing, rather than the Bank .
+

DataSource/000020051-20140607161004.txt

@@ -0,0 +1,136 @@
+                                                                                                           ICRR 11345
+                                                                                           Report Number : ICRR11345
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                        Date Posted : 05/22/2003
+            PROJ ID : P002929                                               Appraisal                  Actual
+       Project Name : Ug Power Iii                      Project Costs 335.0                    320.5
+                                                               US$M )
+                                                              (US$M)
+             Country : Uganda                    Loan/         US$M ) 125
+                                                 Loan /Credit (US$M)                           153
+           Sector (s): Board: EMT - Power (50%),         Cofinancing 168.3                     153.0
+                       Renewable energy (50%)                  US$M )
+                                                              (US$M)
+        L/C Number : C2268
+                                                     Board Approval                            92
+                                                                  FY )
+                                                                 (FY)
+Partners involved :    AfDB, DANIDA, EIB, NDF,          Closing Date 12/31/1996                12/31/2001
+                       NORAD, NTC
+
+Prepared by :           Reviewed by :                 Group Manager :      Group :
+Robert C. Varley         Fernando Manibog              Alain A. Barbu       OEDST
+2. Project Objectives and Components
+ a. Objectives
+The project supported a major part of the sectoral development program implemented by the Uganda Electricity
+Board (UEB), the physical component being specific to Extension of the Owen Falls Dam (OFE) and associated
+generation and transmission facilities . The objectives according to the SAR were : -
+1. To provide least-cost capacity additions to Uganda's power generation and prevent power supply bottlenecks
+     which would otherwise hinder economic development .
+2. Increase the safety of the Owen Falls Dam .
+3. Enhance the Utility's operating and management capability and improve its financial performance through policy
+     reforms and institutional strengthening, including establishment of realistic tariffs and agreement on a sector
+     investment program.
+ b. Components
+ At closure the total costs of $ 320.5 million comprised:
+1. OFE (70.3% ) - civil works and spillway, electrical and mechanical equipment and engineering supervision .
+2. Technical Assistance (3.0%) - to UEB and Ministry of Energy and Mineral Development (MEMD.)
+3. Next major site study and repayment of project preparation facility (.6%.)
+4. Dam Remedial Works (3.1%.)
+5. Transmission and Distribution (21.9%.)
+6. Power Sector Reform (1.1%.)
+ c. Comments on Project Cost, Financing and Dates
+ Based on economic optimization the project design was altered, substituting installation of 3 x 34MW generation
+units for 2 x 40 MW. This apparent reduction in design capacity was however to be supplemented by the addition of
+3 further 40MW units to be housed in the enlarged power house for a total capacity of 200 MW. The first of these
+was financed by Norway and Sweden and installed in May 2002, and the remaining two will be financed under a
+Bank follow-on Power IV Project Credit. During the period 1992-2001 the Ugandan currency declined from $ 1=670 to
+1790 Shillings . However there were periods of appreciation and since the tariff agreements were expressed in US$
+equivalents, this was one factor explaining why there were no changes of retail tariff from January 1993 (raised from
+$.048 to $.073/kWh) until 2001 (raised to $.056/ kWh.)
+3. Achievement of Relevant Objectives:
+1. The spillway canal and powerhouse were completed, and the expansion of capacity achieved with
+     considerable delay (10 years to bring the capacity online as against 5 years at appraisal.) At closing the
+     generating plants operated at full capacity and the volume of energy delivered was 22.4% above appraisal
+     estimates. But overall demand for electricity has continued to outstrip supply - 88 GWh of load was shed
+     nationally in 2001. The ICR revised the EIRR from 16.5% to 13.7% but this mades no allowance for the
+     economic effects of unanticipated load shedding or social / environmental costs. The financial covenant of 8%
+     ROR on revalued assets was not complied with during the implementation period . The outcome is considered
+     moderately unsatisfactory .
+2. The outcome of rehabilitation work was satisfactory as the dam now meets international safety standards .
+3.   The project and other donor assistance have expanded power facilities but failed to improve power sector
+     efficiency and performance. The reform strategy was a failure and recognizing this in 1999, Government then
+     modified the policy framework and switched to a strategy of private sector management and unbundling UEB
+     into generation, transmission and distribution companies . The progress that has been made in implementing
+     reform has been facilitated by follow -on IDA credits for power, but is threatened by the political fall -out from
+     unresolved controversies over the upstream Bank -supported Bujagali Dam. Achievement of this objective was
+     unsatisfactory .
+4. Significant Outcomes/Impacts:
+1. The OFE construction and dam safety remedial work at Owen Falls were successfully completed and the new
+     generating units are operating at full capacity .
+2. The power sector reform program is continuing under subsequent IDA credits .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+1. An Inspection Panel, investigated complaints about the proposed Bujagali Dam and active Power III and IV
+     projects, reported in October 2001. The Panel concluded that: - (a) supervision was inadequate; (b) failure to
+     conduct a Sectoral Environmental Assessment was a violation of terms and conditions under which the Board
+     approved the credit ("this violation has led directly to many of the concerns related to the Bujagali Project "); (c)
+     design changes early in the project; were not appraised adequately - even management has acknowledged that
+     "there was not full and frank disclosure of this situation"; (d) "economic appraisal of externalities was not carried
+     out as it should have been "; and (e) there was inadequate attention in the economic analyses of all three
+     projects to sensitivity analysis and consideration of alternative to hydropower (including electricity imports.)
+2. Social effects from the loss of income by the tourist industry were neglected in violation of safeguard policies .
+3. Both the Bank and Borrower failed to ensure that the prime contractor had adequate qualifications and
+     international experience, leading to a two year delay after the termination of the original civil works contract .
+4. The increase in $-equivalent retail tariff only reached 17% while at least 90% had been covenanted.
+5. UEB's financial performance was further aggravated by poor collection rates and high system losses .
+     Government, as the UEG owner, failed to take adequate actions in a timely manner and in other cases interfered
+     in day-to-day operations. Failure by government agencies to pay their bills further contributed to UEB's financial
+     difficulties.
+
+
+6. Ratings :                ICR                        OED Review                  Reason for Disagreement /Comments
+               Outcome : Satisfactory                  Moderately                  Only one objective was achieved fully
+                                                       Unsatisfactory              (safety), the other two were moderately
+                                                                                   unsatisfactory (physical and economic)
+                                                                                   and unsatisfactory (institutional and policy
+                                                                                   reform.) Improvements in UEB's
+                                                                                   performance did not materialize.
+      Institutional Dev .: Modest                      Negligible                  Any progress can be attributed to the
+                                                                                   failure of the institutional and policy
+                                                                                   component and it being taken up in
+                                                                                   subsequent power sector loans .
+          Sustainability : Likely                      Unlikely                    The rating would be highly unlikely were it
+                                                                                   not for the strong commitment of the Bank
+                                                                                   and other donors to sustaining the reform
+                                                                                   process in Uganda. Any grounds for
+                                                                                   optimism about sustainability have little to
+                                                                                   do with what was achieved under the
+                                                                                   Power III Project.
+     Bank Performance : Satisfactory                   Unsatisfactory              The assessment is not based on the ICR
+                                                                                   but the much more thorough evaluation by
+                                                                                   the Inspection Panel.
+         Borrower Perf .: Satisfactory                 Unsatisfactory              The government did not implement its
+                                                                                   covenants on tariff policy and the reform
+                                                                                   of UEB.
+         Quality of ICR :                              Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+The lessons from this project are similar to those learnt from other Bank supported projects : -
+1. Improvements in institutional and financial performance should be achieved before major new investments are
+     made.
+2. Procurement capacity should be built prior to commencement of implementation . Such capacity need not be
+     developed in-house.
+3.   Dispute Review Boards are of limited use if their findings are not binding, and may even delay the resolution of
+     disputes.
+8. Assessment Recommended?           Yes       No
+         Why? To help resolve outstanding issues about participation, social and environmental impacts . This
+may enable the program to continue but it is currently hostage to the Bujagali Dam controversy .
+9. Comments on Quality of ICR:
+Satisfactory
+

DataSource/000020051-20140612065957.txt

@@ -0,0 +1,213 @@
+                                                                                                              ICRR 11529
+                                                                                              Report Number : ICRR11529
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                            Date Posted : 06/24/2003
+            PROJ ID : P010498                                                    Appraisal                Actual
+       Project Name : Energy Services Delivery              Project Costs 55.3                    44.6
+                                                                   US$M )
+                                                                  (US$M)
+             Country : Sri Lanka                     Loan/         US$M ) 24.2
+                                                     Loan /Credit (US$M)                          22.1
+            Sector (s): Board: EMT - Renewable               Cofinancing GEF: 5.9                 GEF: 5.7
+                        energy (96%), Power (4%)                   US$M ) Participating Credit
+                                                                  (US$M)                          Participating Credit
+                                                                          Institutions: 13.7      Institutions: 4.8
+                                                                          Entrepreneurs: 9.6      Entrepreneurs:10.7
+                                                                          CEB/GOSL: 1.9           CEB/GOSL: 1.3
+         L/C Number : C2938; CP949
+                                                          Board Approval                          97
+                                                                     FY )
+                                                                    (FY)
+Partners involved :                                         Closing Date 12/31/2002               12/31/2002
+
+Prepared by :             Reviewed by :                 Group Manager :         Group :
+ Hakon Nordang             George T. K. Pitman          Alain A. Barbu          OEDST
+2. Project Objectives and Components
+ a. Objectives
+ The project had four objectives, including a global environment objective :
+1. Promote the provision by the private sector, NGOs, and cooperatives of grid -connected and off-grid connected
+energy services using environmentally sustainable renewable energy technologies;
+2. Strengthen the environment for demand -side management (DSM) implementation;
+3. Improve public and private sector performance to deliver energy services through renewable energy and DSM;
+and
+4. Global Development Objective: to mitigate the impact of Green House Gas (GHG) emissions by overcoming
+barriers to renewable energy and energy efficiency market development .
+ b. Components
+ The project had three components :
+1. An Energy Services Delivery (ESD) ESD ) Credit Line Component (US$ 38.                    86 % of total actual project
+                                                                            38 .4 million or 86%
+costs ), onlent through eligible Participating Credit Institutions (PCIs), to provide support for medium and long -term
+financing to private sector firms, NGOs and cooperatives for solar home systems (SHS; US$ 9.2 million), off-grid
+village hydro (OGVH; US$ 0.8 million) projects, grid-connected mini-hydro (GCMH; US$ 26.7 million) projects, and
+other renewable energy investments (primarily, technical assistance for 'business development' and 'off -grid project
+support'; US$ 1.7 million). The Global Environment Facility (GEF) grant co-financing would be available through PCIs
+to developers of SHS and OGVH subprojects to cover feasibility or business planning costs as well as for a one -time
+capital cost buydown. GEF grant funds were also available to the Administrative Unit (AU) (responsible for
+administering the Credit Line Component ) for off-grid promotional efforts, verification and consumer protection
+activities.
+2. A Pilot Grid -Connected Wind Farm Component (US$ 3.8 million or 9% of total actual project costs ), intended to
+pilot the feasibility of small-scale wind power generation projects in Sri Lanka from a technical and commercial
+standpoint. The component would finance a grid -connected 3-MW pilot wind farm project executed by the Ceylon
+Electricity Board (CEB) on an Engineering, Procurement, and Construction (EPC) contract basis, subject to standard
+IDA procurement procedures. CEB, however, would be responsible for facility monitoring, operation, and
+maintenance, including all potential operation and /or service contracts.
+3. A Capacity Building Component (US$ 2.3 million or 5% of total actual project costs ), which provided training and
+technical support in the area of renewable energy and energy efficiency for the different stakeholders and
+implementing entities in the public and private sector . CEB's DSM Cell and Pre-Electrification Units (PEU) would
+implement the capacity building component .
+
+Revised Components :
+Project components were not revised . However, the target underlying the SHS sub -component was revised at
+mid-term, from serving 32,000 off-grid households to serving 15,000 households, due to the slow market
+development in the initial stages of the project .
+ c. Comments on Project Cost, Financing and Dates
+ Total project cost was US$ 44.6 million compared to the appraisal estimate of US$ 55.3 million.
+     Contributions from PCIs were US$4.8 million compared to the appraisal estimate of US$ 13.7 million, as a result
+     of three factors: (1) the increase in the amount of IDA refinance from 60% to 80%, (2) the lower than expected
+     US$ per kW investment costs for both GCMH and OGVH projects, and (3) PCIs adopting more conservative
+     gearing ratios than estimated at appraisal (of about 65:35 versus the 80:20 originally planned) to minimize the
+     financial risk of investment projects . Partly in response to these factors, contributions from entrepreneurs
+     exceeded the US$ 9.6 million estimated at appraisal by US$ 1.1 million.
+     The project closed on the original date, 12/31/2002.
+3. Achievement of Relevant Objectives:
+1. Promote the provision by the private sector, NGOs, and cooperatives of grid -connected and off -grid connected
+energy services using environmentally sustainable renewable energy technologies : This objective was
+substantially achieved.The project assisted in the development of a growing private sector renewable energy industry
+of suppliers, developers, consultants and trainers . Through flexible, consultative and iterative project design and
+implementation, it employed a range and mix of different methods and approaches that seemed to learn from the
+positive and negative experiences of similar projects elsewhere (e.g. India and Indonesia) and which seemed
+suitable to both grid-based and off-grid energy service delivery : a direct on-lending approach to financing, including
+both commercial banks and MFIs, as well as output -focused co-financing grant programs, suitable to both grid -based
+and off-grid service delivery; as well as a mix of public /Engineer, Procure and Construct (Wind Farms),
+private/retail-driven (GCMH/SHS), and community-driven (OGVH) approaches.
+
+In terms of capacity outputs, the project did well on average . Both the GCMH and OGVH subcomponents exceeded
+their respective capacity targets, although a lower number of households were served by the OGVH subcomponents
+than anticipated at appraisal (1,732 households compared with the 2,000 estimated by the PAD) due to possible
+underestimation of household demand . Due to the slow market development of the SHS subcomponent in the initial
+stages of the project, the project failed to meet its original target of serving 32,000 households though it ultimately
+ended up exceeding the revised target of 15,000 SHS installations (revised at mid-term) by almost 6,000. The Wind
+Farm component achieved its physical capacity target of 3 MW, although the EIRR achieved was significantly below
+that estimated at appraisal (3.9%, incl. GEF, as compared with 14% at appraisal) due to substantiantially lower than
+anticipated capacity factors, putting into question the future commercialization of wind -generated energy in Sri
+Lanka.
+
+2. Strengthen the environment for demand -side management (DSM)   DSM ) implementation : This objective was partially
+achieved.During the course of the project, the main output target - the preparation and issuance of energy efficiency
+building codes for voluntary adoption by architects, builders and property developers - was fully achieved. Above and
+beyond references to these outputs , the ICR provided little evidence on the outcome of the project in terms of
+increased energy efficiency .
+
+3. Improve public and private sector performance to deliver energy services through renewable energy and
+DSM This objective was substantially achieved .The project was highly instrumental in reducing the financial
+DSM.
+bottleneck for renewable energy investments, and the capacity -building elements of the project helped develop local
+- both public and private sector - expertise and capacity in DSM and renewable energy technologies and service
+provision.
+
+4. Global Development Objective : to mitigate the impact of Green House Gas (GHG)       GHG ) emissions by overcoming
+barriers to renewable energy and energy efficiency market development . This objective was fully achieved . The
+global environmental impact of the project was beneficial (carbon emissions were reduced by some 514,000 tons).
+4. Significant Outcomes/Impacts:
+     The project was relatively successful in levelling the playing field (through SHS import-tariff rationalization) and
+     in reducing regulatory uncertainty (through standardizing "Small Power Purchase Agreements") for renewable
+     energy investments. High quality at entry by the Bank as well as significant government ownership and
+     commitment to the project promoted an enabling environment for renewable energy investments .
+     The economic rates of return for GCMH, OGVH, and SHS (though not for Wind Farms) exceeded those
+     estimated by the PAD, even, in most cases, when excluding GEF financing .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+     The lagging nature of broader sector reform is a continuing obstacle to providing an enabling environment for
+     DSM and energy efficiency as well as for improved public and private sector performance more generally (incl.
+     corporatization, commercialization, tariff rationalization, and establishment of an independent regulatory body ),
+     which should have been addressed more explicitly by the project . The absence of such a policy and regulatory
+     framework conducive to DSM, renewable energy and off -grid provision continues to put the future viability of the
+     project and the associated investments at risk .
+     The project also did not live up to its potential in terms of promoting off -grid access and, hence, helping the poor
+     directly. Whilst it is an improvement in this regard compared with similar projects elsewhere (eg. India), the main
+     focus of the project, in terms of project costs, was on increasing generating capacity of grid -based service
+     provision to the relative neglect of SHS and OGVH . Moreover the project fell short of its original targets for SHS
+     installations. Furthermore, given that access to electricity through SHS and OGVH was based primarily on a
+     willingness and ability to pay, it benefited mostly middle to upper income rural households to the relative neglect
+     of the poorer segments of society . A more 'holistic' approach to servicing the energy and economic development
+     needs of rural populations is needed which better ties energy services to local capacity -building, income
+     generating activities, as well as to the provision of basic services such as health and education .
+     As regards the Global Development Objective, it was difficult to assess the actual outcome, as the assumptions
+     underlying the estimations used by the ICR did not correspond with those of the PAD; in the former, calculations
+     included the GHG emissions displaced by the small -hydro sub-components, whilst in the latter, calculations
+     excluded the GHG emissions displaced by the small -hydro sub-components as these did not receive GEF grant
+     co-financing. The ICR did not devote sufficient attention to this objective, or to providing the underlying evidence
+     supposed to sustain its ratings .
+     To the credit of the project team, however, some of these shortcomings - the lack of both a sector- and
+     poverty-oriented focus - have been addressed more explicitly in the follow -on project - Renewable Energy for
+     Rural Economic Development (RERED).
+
+
+6. Ratings :              ICR                          OED Review                  Reason for Disagreement /Comments
+               Outcome : Satisfactory                  Satisfactory                As noted earlier, whilst the renewable
+                                                                                   energy components of the project were
+                                                                                   quite successful, the end -use energy
+                                                                                   efficiency and DSM components were
+                                                                                   found to be lacking.
+     Institutional Dev .: High                         High                        The ICR failed to discuss the potential
+                                                                                   conflicts of interests (as well as the
+                                                                                   potential measures put in place to reduce
+                                                                                   them) of having a PCI (the DFCC) also
+                                                                                   house the Administrative Unit of the
+                                                                                   Credit-line Program.
+         Sustainability : Likely                       Likely                      It should be noted, however, that as many
+                                                                                   of the investments are relatively recent, it
+                                                                                   may be too early to adequately assess the
+                                                                                   sustainability of the project. Also, the
+                                                                                   AU/PCI conflict of interest noted under
+                                                                                   "Institutional Development Impact" could
+                                                                                   undermine future benefits unless
+                                                                                   resolved. Lagging power sector reforms,
+                                                                                   as noted earlier, pose additional risks .
+   Bank Performance : Satisfactory                     Satisfactory                The Borrower recommends that the rating
+                                                                                   of Bank performance be upgraded to
+                                                                                   "Highly Satisfactory", as the "participatory
+                                                                                   and proactive role" of the Bank paved "the
+                                                                                   way for the rapid market take-off" for
+                                                                                   off-grid systems.
+        Borrower Perf .: Highly Satisfactory           Highly Satisfactory
+        Quality of ICR :                               Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+1. Overcoming the barriers to access to finance is crucial for renewable energy investments in general, but
+specifically those targeted at rural, remote and off -grid areas. For private entrepreneurs the need is often for longer
+term loans that better fit their respective risk profiles as well as the cash flow requirements of renewable energy
+investments (high initial costs, relatively long repayment periods ). For rural households and villages, the need is for
+loans that make (renewable) energy systems more affordable .
+2. A conducive and credible policy and regulatory framework is paramount for the success and future
+commercialization of renewable energy investments, as well as off -grid and poverty-oriented energy service delivery
+systems more generally.
+3. Allowing for flexibility, innovation and participation in project design and implementation (i.e. a consultative and
+iterative 'continuum of options' approach ) is of great importance when attempting to overcome the range of problems
+associated with renewable energy and off -grid developments (access to finance, market development issues,
+servicing, monitoring, etc). A willingness to pursue a range of different alternatives (i.e. public, private, NGO
+involvement, retail-driven as well as community-driven approaches, commercial banks as well as MFIs ) seems apt to
+fit the different needs and contexts of renewable energy demand in developing countries .
+8. Assessment Recommended?               Yes       No
+            Why?
+      The project provides useful insights into the changing nature of Bank approaches to renewable energy
+      promotion, encompassing both grid -based and off-grid based approaches, innovative financing models, as well
+      as retailer- and community-driven approaches. The shifting emphasis of the Bank towards more directly
+      targeting poverty reduction is also evident in this project, making it, overall, a suitable candidate for an audit from
+      which broader lessons learned can be derived .
+      Many lessons may also be learned from the Bank's role in this project, which the borrower considers as highly
+      satisfactory, that could inform the implementation of the Bank's renewed support for infrastructure .
+      Possibly an audit could be clustered with the completed Power Distribution and Transmission Project (2), where
+      issues of access and energy efficiency are of import .
+9. Comments on Quality of ICR:
+The quality of the ICR was satisfactory . It is internally consistent, and the content provided is generally of a very high
+quality, though a range of presentational errors undermine the overall impression . More information should have
+been included on the state of power sector reforms in Sri Lanka more generally . The ICR also would have benefited
+from additional information on GHG emissions, as well as from improved FIRR estimates which could better assist
+private investors in accurately assessing financial risks .
+

DataSource/000020051-20140612144258.txt

@@ -0,0 +1,164 @@
+                                                                                                             ICRR 11899
+                                                                                             Report Number : ICRR11899
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                            Date Posted : 08/12/2004
+            PROJ ID : P003700                                                   Appraisal                Actual
+       Project Name : Solar Home Systems                    Project Costs 118.1                  8.95
+                                                                   US$M )
+                                                                  (US$M)
+             Country : Indonesia                     Loan /Credit (US$M)
+                                                     Loan/         US$M ) 20.0                  0.08
+            Sector (s): Board: EMT - Renewable               Cofinancing GEF 24.3               GEF 4.52
+                        energy (95%), Central                      US$M ) GOI 1.5
+                                                                  (US$M)                        GOI/BPPT 0.59
+                        government administration                         Banks 5.0             Banks 0.06
+                        (5%)                                              Subborrowers 67.3     Subborrowers 3.70
+
+        L/C Number :
+                                                         Board Approval                          97
+                                                                    FY )
+                                                                   (FY)
+Partners involved :                                        Closing Date 04/30/2002               12/31/2003
+
+Prepared by :           Reviewed by :                   Group Manager :         Group :
+ Trond H. Augdal         Fernando Manibog               Alain A. Barbu          OEDST
+2. Project Objectives and Components
+ a. Objectives
+ According to the Memorandum of the President (MOP), the Staff Appraisal Report (SAR), and the legal documents,
+the project had four national objectives and one global objective, while the Implementation Completion Report (ICR)
+includes an additional global objective (the wording of the objectives varies slightly among the documents ). The
+national objectives were:
+a) to provide the modern energy form of electricity to rural customers who cannot be served economically or in a
+timely manner by conventional rural electrification; b ) facilitate participation by the private sector in advancing
+renewable energy commercialization; c ) promote environmentally sound energy resource development in Indonesia
+and reduce the energy sector's dependence on fossil fuels; and d ) strengthen Indonesia's institutional capacity to
+support and sustain decentralized rural electrification using solar photovoltaics (PV). The global objective was e) to
+mitigate emissions of carbon dioxide (CO2) by replacing the use of kerosene for lighting or diesel -based power
+generation by Solar Home Systems (SHS). The additional global objective mentioned in the ICR was f ) to remove
+barriers to large scale SHS market development . As this final objective is closely related to objective b ), the ICR
+Review will consider this final objective under objective b ).
+ b. Components
+ The project consisted of two main components :
+                        US$ 111.
+1. Credit Component (US$111                  94 .7% of project cost ) to enable purchase of SHS by rural households and
+                             111 .8 million /94.
+commercial establishments on an installment basis . The project aimed at providing modern energy services to about
+one million people through the sale and installation by private enterprises ("SHS dealers") of about 200,000 SHS.
+The SHS dealers would extend credit to rural households to enable them to pay for their units in regular monthly
+installments. Local banks would provide credit on commercial terms to the SHS dealers to allow the financing of this
+business line. The banks would re-finance 80 percent of the credit extended to the SHS dealers from the
+International Bank for Reconstruction and Development (IBRD) loan via lending arrangements through the Ministry of
+Finance (MOF) of the Government of Indonesia (GOI) for state-owned banks. For private banks, the MOF would
+relend to Bank Indonesia (BI) that would again relend to the private banks . The Global Environment Facility (GEF)
+grant provided a payment to the SHS dealers for each SHS unit sold and installed . The dealer had to provide
+documentation to the private bank of acceptance of installation and a duly executed hire -purchase-contract with the
+buyer (this had to be independently verified ). The private bank then had to forward the grant request to MOF, who
+would instruct the BI to transfer the grant to the private bank who would deposit the grant into the account of the SHS
+dealer.
+2. Technical Assistance Component (US$6   US$ 6.3 million /5.3% of project cost ) for: a) implementation support to (i)
+establish a Project Support Group (PSG) to provide assistance to SHS dealers and end -users; (ii) monitor and
+evaluate project progress; and (iii) conduct limited SHS related training to government officials and private sector
+organizations; b) policy support to carry out and prepare a Decentralized Rural Electrification Study and SHS
+Implementation Plan; and c) institutional development to assist GOI in building Indonesia's institutional capabilities
+for the dissemination of solar PV technology, mainly strengthening of the Agency for the Assessment and Application
+of Technology's (BPPT) and the Technical Implementation Unit & Energy Technology Laboratory's (LSDE) capability
+to technically certify and establish national components standards for SHS .
+ c. Comments on Project Cost, Financing and Dates
+ The actual project costs were US$ 8.95 million compared to US$118.1 million at appraisal. Consequently, the GEF
+grant was reduced from US$24.3 million to US$4.52 million, and the credit was reduced from US$ 20.0 million to
+US$0.08 million. The main reason for this reduction was the Asian Financial Crisis that caused severe
+macro-economic deterioration in Indonesia, including high inflation and high interest rates that negatively affected the
+local business climate. Furthermore, the sharp devaluation of the local currency reduced local real incomes and
+increased the domestic cost of SHS . In addition, an unprecedented decline in commodity prices reduced the
+affordability of SHS in the rural areas . The financial crisis also had a severe impact on local banks that consequently
+reduced - or even completely eliminated - the availability of credit to SHS dealers . Consequently, compared to the
+original target, a very low number of SHS were installed . The financial crisis also directly delayed the project by
+forcing the realigning of the project several times .
+3. Achievement of Relevant Objectives:
+The achievement of the project's objectives was severely curtailed by the Asian Financial Crisis (see above for
+details).
+National objectives :
+a) to provide the modern energy form of electricity to rural customers who cannot be served economically or in a
+timely manner by conventional rural electrification . This objective was not achieved . The Asian Financial Crisis
+severely affected the project and only a total of 8,054 SHS were installed by the end of the project compared to an
+original 1996 appraisal target of 200,000 (and compared to a revised target of 70,000 in January 2001). These SHS
+serve about 35,000 people, while the target at appraisal was two million people (revised target in 2001 was 300,000
+people).
+b) facilitate participation by the private sector in advancing renewable energy commercialization       . This objective
+was partially achieved. The number of SHS dealers increased from one to six, and the prices of a 50 Wp SHS fell
+from the range of $550-$800 to $450-$525 (though the ICR does not specify whether this latter range is before or
+after the GEF grant). Furthermore, there were no dealers with "problem loans", and the credit repayment rates were
+above 95%. Moreover, Indonesia now has two companies that export SHS components . However, only a total of
+8,054 SHS were installed and the private sector did not achieve a major role in advancing renewable energy
+commercialization in Indonesia under the project .
+c) promote environmentally sound energy resource development in Indonesia and reduce the energy sector's
+dependence on fossil fuels . This objective was not achieved . Cumulative amount of fossil fuel conserved under the
+project amounted to only 20,441 kilo-liters compared to the original target of 546,720 kilo-liters because of the few
+total SHS installed under the project .
+d) strengthen Indonesia's institutional capacity to support and sustain decentralized rural electrification using
+solar PV . This objective was substantially achieved . Strict technical criteria and procedures for testing and
+certification of SHS were developed and they are now used in several other countries . Moreover, the PV testing
+laboratory of BPPT obtained ISO 17025 accreditation for PV components testing . The laboratory now tests and
+certifies products from the US, Indonesia, and the Netherlands, and has been accepted for use under World Bank
+projects in other countries. And finally, the PSG effectively conducted field audits and other monitoring
+responsibilities and provided capacity building and technical assistance . It trained 479 staff in the rural distribution
+networks of participating companies . However, the Decentralized Rural Electrification Study and SHS
+Implementation Plan were neither prepared nor implemented and was cancelled .
+e) to mitigate emissions of CO 2 (global objective ). This objective was not achieved . Due to the small number of
+SHS installed, the project did not produce the expected reduction in the emission of CO 2.
+4. Significant Outcomes/Impacts:
+* The project demonstrated a semi -commercial approach for SHS market development with a relatively small subsidy
+component, and a transparent and simple system to administer performance -based GEF grants to dealers within a
+commercial and competitive framework with end -user audits to verify and monitor dealer performance .
+* PV testing laboratory of BPPT obtained ISO 17025 accreditation for PV components testing .
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+* Only 8,054 SHS were installed by the end of the project compared to an original target of 200,000 (and compared to
+a revised target of 70,000 in January 2001). These SHS serve about 35,000 people, while the target at appraisal was
+two million people (revised target was 300,000 people).
+* Cumulative amount of fossil fuel conserved under the project amounted to only 20,441 kilo-liters compared to the
+original target of 546,720 kilo-liters.
+* Goal of reduction in emission of greenhouse gasses were not achieved due to the small number of SHS installed .
+
+
+6. Ratings :             ICR                      OED Review                Reason for Disagreement /Comments
+               Outcome : Unsatisfactory           Unsatisfactory
+     Institutional Dev .: Substantial                  Substantial
+         Sustainability : Likely                       Likely                      The small size of the local market raises
+                                                                                   questions about the sustainability of the
+                                                                                   SHS testing laboratory.
+   Bank Performance : Highly Satisfactory              Highly Satisfactory         The Bank performance is rated "highly
+                                                                                   satisfactory" despite the "unsatisfactory"
+                                                                                   rating of the outcome of the project
+                                                                                   because of the very good overall Bank
+                                                                                   performance. The devastating impact on
+                                                                                   the project of the Asian Financial Crisis,
+                                                                                   which led to the unsatisfactory outcome,
+                                                                                   was beyond the control of the Bank .
+        Borrower Perf .: Satisfactory                  Satisfactory
+        Quality of ICR :                               Satisfactory
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+NOTE:
+7. Lessons of Broad Applicability:
+* Market-based projects should provide broad scope for companies to adjust product lines and business models to
+meet changing market signals.
+* Front-loaded and performance-based grant support helps induce retail market entry by for -profit companies.
+* Project design should focus as much on profitability as on affordability .
+* Performance based grants for SHS sales in retail markets should scale down during implementation to facilitate
+transition of companies to commercial operations .
+* A convincing end-user audit program and transparent grant releases increase competition among companies and
+encourage them to focus their learning and marketing efforts on rural customers rather than on processing paperwork
+for grant payment.
+* Due to the high cost of information about the market and dealer performance in remote rural areas, it is necessary
+to support financial organizations to increase their knowledge of the market .
+* The household and institutional market segments should be targeted in an integrated way to achieve sustainable
+access and development impact .
+8. Assessment Recommended?              Yes      No
+9. Comments on Quality of ICR:
+The ICR provides an honest evaluation of the successes and failures of the project . It does, however, include an
+additional objective that was not included in either the MOP, SAR, or the legal documents .
+

DataSource/000020051-20140612153820.txt

@@ -0,0 +1,90 @@
+                                                                                                               ICRR 11973
+                                                                                               Report Number : ICRR11973
+                   ICR Review
+                   Operations Evaluation Department
+
+
+
+
+1. Project Data:                                             Date Posted : 11/30/2004
+            PROJ ID : P042882                                                    Appraisal                 Actual
+       Project Name : Renewable Energy Small                 Project Costs 141.0                   0
+                       Power Project                                US$M )
+                                                                   (US$M)
+             Country : Indonesia                      Loan /Credit (US$M)
+                                                      Loan/         US$M ) 66.4                    0
+           Sector (s): Board: EMT - Renewable                 Cofinancing 4.0                      0
+                       energy (96%), Central                        US$M )
+                                                                   (US$M)
+                       government administration
+                       (4%)
+        L/C Number : L4198
+                                                          Board Approval                           97
+                                                                     FY)
+                                                                    (FY)
+Partners involved :    Global Environmental                 Closing Date 10/31/2001                07/15/1998
+                       Facility
+
+Prepared by :         Reviewed by :                   Group Manager :       Group :
+Kavita Mathur         George T. K. Pitman             Alain A. Barbu        OEDSG
+2. Project Objectives and Components
+a. Objectives
+ The principal national objectives of the project were to:
+ (i) facilitate private sector led development of small renewable power projects selling electricity to a State
+Electricity Corporation (PLN) grid on a commercially sustainable basis, within the framework of a least cost rural
+electrification strategy;
+(ii) promote environmentally sound energy resource development in Indonesia and reduce the energy sector's
+dependence on fossil fuels; and
+(iii) strengthen Indonesia's institutional capacity to sustain renewable energy development.
+The global environmental objective was to mitigate emissions of CO2 in Indonesia through the development of
+renewable energy sources for power generation.
+b. Components
+ There were two components:
+Investment Component: The projects would be owned and operated by private developers, who would sell their
+electricity to PLN under the published Small Power Purchase Tariff (PSKSK), and standardized power purchase
+contract. The private sector developers would finance their investments with a combination of equity and credit from
+commercial banks of their choosing – the Participating Banks (PBs) – for up to 15 years. The loans from the PBs to
+the developers would be at the prevailing interest rates for similar transactions, with the PBs taking responsibility for
+appraising developer requests for credit, and for bearing the commercial risk on the credit extended to a developer.
+The PBs, in turn, would re-finance 70 percent of the credit extended to the developers from the IBRD credit made
+available to them at market rates, under onlending arrangements through the Government of Indonesia (GOI).
+
+Technical Assistance Component: This component would provide for project implementation support services,
+and institutional development. A Project Support Group (PSG), reporting to the Director-General of Electricity and
+Energy Development (DGEED), would be established to assist the private project developers with, inter alia: (i)
+environmental review of their project to ensure compliance with World Bank requirements; (ii) implementation
+support in the form of limited technical advice to the project developers in the Project pipeline to facilitate the timely
+and proper implementation of the project; and (iii) pre-investment activities, including administering GEF grants of
+$100,000 per project for 15 projects to potential project developers to assist them with their pre-investment
+activities, such as pre-feasibility and feasibility studies; and (iv) provide regular progress reports for monitoring this
+component.
+c. Comments on Project Cost, Financing and Dates
+ The project was approved on June 24, 1997 and signed on August 4, 1997. It never became effective and was
+cancelled on July 15, 1998, at the request of the Borrower.
+3. Achievement of Relevant Objectives:
+The financial and economic crisis that hit Indonesia in 1997 caused the project to be no longer viable. The collapse
+of the financial sector and the liquidity crisis situation resulted in lack of private sector participation in the project.
+4. Significant Outcomes/Impacts:
+None.
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+None.
+
+
+6. Ratings :               ICR                          OED Review                 Reason for Disagreement /Comments
+              Outcome :    Not Rated                    Not Rated
+    Institutional Dev .:   Not Rated                    Not Rated
+        Sustainability :   Not Rated                    Not Applicable
+   Bank Performance :      Not Rated                    Satisfactory
+      Borrower Perf .:     Not Rated                    Satisfactory
+       Quality of ICR :                                 Unsatisfactory
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+NOTE:
+7. Lessons of Broad Applicability:
+A satisfactory business environment is necessary for success in a market development project.
+8. Assessment Recommended?                Yes      No
+9. Comments on Quality of ICR:
+The Project Completion Note (PCN) gives a satisfactory account of the project background and the reasons why the
+loan never became effective. However, the PCN was prepared six years after the borrower informed the Bank about
+its inability to execute the project and the loan was closed -- an unacceptably long delay. Therefore, on this ground
+alone, the PCN is rated unsatisfactory.
+

DataSource/000020051-20140613031054.txt

@@ -0,0 +1,150 @@
+                                                                                                              ICRR 11991
+                                                                                              Report Number : ICRR11991
+                  ICR Review
+                  Operations Evaluation Department
+
+
+
+
+1. Project Data:                                            Date Posted : 03/08/2005
+            PROJ ID : P005589                                                   Appraisal                 Actual
+       Project Name : Solar Water Heating (GEF)             Project Costs 20.9                    21.3
+                                                                   US$M )
+                                                                  (US$M)
+             Country : Tunisia                       Loan/         US$M ) 7.3 grant
+                                                     Loan /Credit (US$M)                          7.3 grant
+            Sector (s): Board: EMT - Renewable               Cofinancing 13.6                     14.2
+                        energy (100%)                              US$M )
+                                                                  (US$M)
+         L/C Number :
+                                                          Board Approval                          95
+                                                                     FY )
+                                                                    (FY)
+Partners involved :    Belgium                              Closing Date 06/30/2004               06/30/2004
+
+Prepared by :          Reviewed by :                  Group Manager :        Group :
+ Peter W. Whitford     Fernando Manibog               Alain A. Barbu         OEDSG
+2. Project Objectives and Components
+ a. Objectives
+ To assist the Recipient (Republic of Tunisia) in encouraging the substitution of renewable solar energy for fossil
+fuels in public and commercial private institutions so as to mitigate global warming by maximising CO 2 displacement
+and demonstrate the potential of solar water heating for reducing global warming . Note: this wording is from the
+Grant Agreement; the Project Document says : "...fossil fuels in all sectors except agriculture and industry and thus
+mitigate global warming by maximising CO2 displacement and demonstrate the potential replicability of the selected
+approach - SWH - for reducing global warming."
+ b. Components
+ 1. Technical Assistance -for promotion, performance monitoring (of the equipment and the program), and
+administration of procurement and subsidies . $ 0.7 million, at appraisal.
+
+2. Investment in Solar Hot Water (SWH) equipment by targetted users - the project provided subsidies to qualified
+beneficiaries at 35% of purchase price. $ 6.6 million at appraisal.
+
+Two major changes were made to accelerate project implementation :
+
+a) allowing the use of "the normal commercial practices of the Beneficiary at a reasonable price ", rather than
+grouping of procurement into ICB packages; and
+
+b) extending the project scope to include "individual households."
+
+ c. Comments on Project Cost, Financing and Dates
+ Project costs were estimated on the basis of about 150 large public or commercial installations of $ 200,000 each.
+Unit costs declined substantially during the project period, though only a small part of this is attributable to the
+project. The project finally financed 171 systems in the "tertiary" sector at an average cost of $ 30,400 and 17,455 in
+the household sector at an average cost of $ 1,220. The assumption that a 35% subsidy would be sufficient to attract
+beneficiaries to install SWH proved to be correct . The appraisal judgement that an extended implementation period
+(nine years) would be required was a little pessimistic, as the grant was fully disbursed two years before the closing
+date.
+3. Achievement of Relevant Objectives:
+ This review finds that the change of focus to households was fully justified by the limited demand from the public and
+commercial private institutions and the unexpectedly high demand from the household sector . The modified project
+remained clearly directed at the underlying purpose of the grant : to encourage the substitution of renewable solar
+energy for fossil fuels. As available funds were fully utilized for this purpose and there is evidence that the SWH units
+financed are operating as planned, we can conclude that the project objective was fully achieved .
+4. Significant Outcomes/Impacts:
+     public awareness campaign led to substantial demand from the household sector
+     17,626 subprojects financed over a five year period, amounting to 51,060 m2 collector area (compared to
+     appraisal estimate of 50,000 m2)
+     CO2 emissions reduced by 25,000 ton/yr (compared to appraisal estimate of 18,000 tons)
+     eight suppliers of SWH systems established, of which two are also manufacturers
+     indications that private sector sales will continue without subsidies
+     monitoring and evaluation systems have ensured quality of project installations and restored reputation of SWH
+     in Tunisia
+5. Significant Shortcomings (including non-compliance with safeguard policies):
+Quality at Entry
+
+As this was the first GEF project in the SWH area, there was little relevant experience on which to base the project . It
+appears that a decision to package all procurement for ICB may have shaped the project design (rather than vice
+versa) and even led to the targeting of the project to larger units, though the Project Document (PD) is not very clear
+on the latter point. The PD should have discussed alternatives to the selected project design, projected the
+expansion of natural gas, appraised the capacity of the implementing agency, and assessed risks more seriously
+(especially, technical risks and the availability of commercial finance to complement the project subsidies ). It might
+also be argued that the project was not ready for implementation, as no list of applicants had been prepared by the
+time of Board presentation. No incremental cost analysis was done and the projected cost of avoided carbon
+emissions was a high $23/ ton (though expected to be lowered by "multiplier effects" as the SWH market expanded).
+The ICR rates the quality at entry as unsatisfactory, primarily because of the failure to see the potential of the
+household sector and the cumbersome and unproductive procurement provisions .
+
+Quality of Implementation
+
+After two years of little progress, the procurement issue was addressed through an amendment to the Grant
+Agreement allowing normal commercial practices . After a further two years, subsidies were extended to the
+household sector and implementation went into high gear . While these changes were handled well, some
+shortcomings may also be noted :
+     there was no attempt to recalculate the subsidy needed to attract the interest of the household sector; in fact, the
+     rapidity of sales suggests that a 35% subsidy left considerable consumers' surplus .
+     although the ICR states that "As a result of good quality control and mechanisms for system maintenance the
+     deployed solar water heaters will continue to operate in a satisfactory manner " and "in late 2004 all systems that
+     were installed are in good working condition ", no real evidence is cited and the ICR mission did not include an
+     engineer. The change in focus to the household sector may well have increased operation and maintenance
+     risks, including the problem of scaling (mineral deposits) discussed in the PD. Thus, project sustainability does
+     not yet seem to be assured .
+     with 11 supervision missions in 9 years, some with only one member, no Resident Mission and no use of
+     procurement specialists, Bank supervsion does not appear to have been fully adequate . Conversely, recorded
+     administrative costs (which do not include some preparation costs ) were a low 7.5% of the GEF grant.
+     while the Bank showed flexibility in changing project processes that were not working, such decisions were
+     unnecessarily delayed.
+
+Safeguards
+
+At appraisal, the project was assigned Category 'C', which appears to have been appropriate, given that any negative
+environmental impacts of SWH would be very minor . However, the reasoning of the PD, which assigned Category 'C'
+because of the large positive enironmental benefits was faulty . No other safeguard policies would have been
+triggered. Safeguard issues are not mentioned at all in the ICR .
+
+
+6. Ratings :             ICR                       OED Review                Reason for Disagreement /Comments
+               Outcome : Satisfactory              Satisfactory              Might have been highly satisfactory, as all
+                                                                             project targets were met or exceeded,
+                                                                             within time and budget. However, some
+                                                                             doubts remain on the ability of
+                                                                             householders to operate and maintain
+                                                                             SWH units, so as to ensure sustainability .
+     Institutional Dev .: Substantial              Substantial
+         Sustainability : Likely                   Non-evaluable             See above. Not enough information in the
+                                                                             ICR to evaluate the sustainability of
+                                                                             project investments.
+   Bank Performance : Unsatisfactory               Satisfactory              The pioneering nature of the project, the
+                                                                                   Bank's willingness to make changes and
+                                                                                   the successful outcome more than offset
+                                                                                   the Bank's errors of judgement noted in
+                                                                                   Section 5.
+        Borrower Perf .: Satisfactory                  Satisfactory                However, the Government's continued
+                                                                                   subsidies to natural gas connections
+                                                                                   represent a major negative factor .
+        Quality of ICR :                               Satisfactory
+NOTE:
+NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
+7. Lessons of Broad Applicability:
+1. Projects of a quasi-commercial nature like this need to be designed with considerable flexibility to allow for
+changing market conditions.
+2. Even the extended implementation period of this project was not long enough to demonstrate clearly whether
+SWH can compete with fossil fuels, although there are indications that this will be the case in the medium term .
+8. Assessment Recommended?             Yes      No
+           Why? As the first of its kind, the project potentially offers valuable lessons to later GEF operations . The
+assessment should focus, inter alia, on the ability of the Tunisian SWH industry to compete with fossil fuels without
+subsidy.
+9. Comments on Quality of ICR:
+The ICR which is generally complete and well balanced is satisfactory . The analysis of costs and competitiveness of
+SWH is particularly valuable. However, Section 10 was not used to highlight issues of concern to GEF, as suggested
+in their ICR guidelines.
+

DataSource/000020051-20140613063806.txt

@@ -0,0 +1,229 @@
+                                                                                                              ICRR 12233
+                                                                                              Report Number : ICRR12233
+                    ICR Review
+                    Operations Evaluation Department
+
+
+
+
+1. Project Data:                                             Date Posted : 09/28/2005
+             PROJ ID :P040553                                                    Appraisal            Actual
+        Project Name :Municipal Solid Waste                   Project Costs                25.2*              21.8
+                        Management                                   US$M )
+                                                                    (US$M)
+              Country :Latvia                          Loan /Credit (US$M)
+                                                       Loan/         US$M ) 7.95 loan+5.12 GEF 7.88 loan + GEF N/A
+            Sector (s):Renewable
+                     ):           energy; Solid                      US$M )
+                                                       Cofinancing (US$M)                    1.5               NA
+                        waste management; Other
+                        industry
+         L/C Number :L4286
+                                                                       FY )
+                                                       Board Approval (FY)                                            98
+Partners involved :     GEF, SIDA                             Closing Date              06/30/2003            12/31/2004
+
+Evaluator :             Panel Reviewer :               Group Manager :        Group :
+Peter W. Whitford       Peter Nigel Freeman            Alain A. Barbu         OEDSG
+
+2. Project Objectives and Components
+ a. Objectives
+ To improve management of solid waste through measures which would improve environmental quality, contain
+contamination of ground water and create new financial arrangements for recovery of the cost of solid waste service .
+ b. Components (or Key Conditions in the case of Adjustment Loans ):
+ A. Landfill (Appraisal cost estimate: $10.53 m; Actual: $12.92 m.)
+1. Remedial measures at the Getlini site to meet environmental standards with regard to leachate treatment and
+avoidance of contamination of ground water; and
+2. Measures to improve sanitary standards and separation of recyclable materials .
+B. Electricity Generation . (Appraisal cost estimate: $7.28 m.; Actual: $7.19 m.)
+Establishment of energy cells for enhanced degradation of easily biodegradable waste, collection of landfill gas and
+generation of electricity.
+C. Technical Assistance . (Appraisal cost estimate: $1.54 m; Actual: $1.40 m.)
+Provision of technical assistance to improve the operation and management of the landfill enterprise (GLE)
+
+ c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
+ * The SAR cost estimate was $25.2 million. However, the ICR states in section 5.4 that the appraisal cost was
+$24.35 million and that there were no cost overruns, while Annex 2 states that the appraisal estimate was $ 20.6
+million and actual was $21.8 million, an overrun of 6%. Some additional works were financed under the project . The
+ICR does not explain these differences or give the actual contributions from each financing source . At one point,
+implementation was two years behind the appraisal schedule, owing to : strained relations between the two
+municipalities involved; lack of cooperation between GLE and the previous operating company for the landfill; and,
+lack of commitment and managerial competence at GLE . These problems were corrected and the project closed 18
+months behind schedule, in order to finalize all activities after initial delays .
+
+ 3. Relevance of Objectives & Design :
+The project objective was highly relevant to national sectoral priorities, in demonstrating cost -effective approaches to
+the safe disposal of solid waste, protection of groundwater, and cost recovery, and also to global environmental
+priorities, by preventing the emission of methane, a potent greenhouse gas, at low cost . The project was well
+designed to achieve its objective, by focussing on transferring and demonstrating known technology from developed
+countries at a single site in Latvia, with due attention to institutional and management issues and by incorporating
+mechanisms for full cost recovery . The project was consistent with the Latvia CAS and with GEF priorities for
+greenhouse gas reduction; it was particularly relevant to Latvia's desire to join the EU, which was known to entail
+substantial modernization of solid waste management practices . There was no logframe at appraisal though a
+simple set of performance indicators was shown (which reflected well the project objective )(see below), with a legal
+requirement for the implementing agency to monitor and evaluate the project performance "in accordance with
+indicators satisfactory to the Bank ." A weakness in the design was the limited extent of public participation in project
+preparation (an adequate set of public meetings were held but many questions were answered in a technocratic
+manner). Project risks were treated too casually, though appropriate emphasis was given to good project
+management.
+
+ 4. Achievement of Objectives (Efficacy) :
+The project objective - to improve management of solid waste through measures which would improve environmental
+quality, contain contamination of ground water and create new financial arrangements for recovery of the cost of solid
+waste service - appears to have been Substantially achieved. Despite some data gaps and inadequacies explained
+below, the evidence suggests that achievement of the environmental quality part of the objective was Substantial,
+containment of groundwater contamination High and the new financial arrangements for cost recovery Substantial .
+
+According to the ICR (Section 4.1), the project achieved all of its stated objectives and resulted in a state -of-the-art
+solid waste management facility with a strong demonstration impact at an affordable cost . Actual costs are
+$14.5/ton, compared with an estimated $30/ton if a "traditional waste disposal site meeting Western -European
+standards would have been built .". The ICR also notes success in arresting surface and groundwater contamination
+and achieving a large reduction in greenhouse gas emissions .
+
+The SAR (Annex 9.2) projections of performance indicators (for 2001/2, taking into account the two -year delay in
+project completion) compare to actual achievements (presumably for 2004), as reported in the ICR Section 4.2 and
+Annexes 1 and 3.2), as follows:
+Collection of landfill gas was reported as 5.4 million m3, compared to an appraisal estimate of 33.3 million Nm3.
+However, the ICR figure appears to be an error and refers to the old waste pile only . A personal communication from
+an ICR author clarifies that gas collections for 2004 were actually 12.6 million Nm3, which is 38% of the SAR
+projection for 2002 (although the communication compares it with the SAR figure for 2000, which gives an
+achievement of 60%). The current projection approaches the appraisal projection from about 2010 on, then
+surpasses it, which explains the satisfactory rate of return now estimated . The text of ICR section 4.3 states that
+collection of gas from the old landfill is "below expectation" due to problems with 25% of the wells, while collection
+from the new energy cells is "on par" with appraisal projections - but no figures are given. However, these
+statements do not adequately explain why early results from the project are so far below appraisal expectations .
+
+
+Extracted gas per ton waste was expected to be 175 m3/ton five years after project completion . The ICR makes no
+new projection.
+
+Methane content of landfill gas was estimated at appraisal at 45-55% . According to the ICR, the actual is more
+than 50%.
+Electricity production was projected at appraisal at more than 39 GWh/year. The ICR gives no data but the personal
+communication gives an estimate of 31.9 GWh/year for 2005, rising to a peak of 73.6 GWh in 2009.  .
+
+Debt service coverage ratio for landfill enterprise was estimated at appraisal as more than 1.5. The ICR estimates
+a ratio of 1.54 for 2005 but this is projected to drop to 1.09 by 2015.
+
+Capture of methane is an important statistic for GEF and was projected at appraisal as more than 13 million
+Nm3/year; there is no comparable ICR report . However, ICR does state that the total reduction of CO 2 (equivalent)
+emissions over a project life of 25 years is now projected to be 5.5 million tons, compared to an appraisal estimate of
+5.85 million tons, a shortfall of 6%.
+
+Groundwater quality; this expected outcome was expressed at appraisal as "Arresting the ongoing groundwater
+contamination". The ICR report is equally vague : "Ongoing ground and surface water contamination [arrested]" ,
+without figures.
+
+Recording of separated waste, hazardous waste and expected trends . The ICR mentions the use of sorting
+equipment, the conversion of scavengers to employees, and that separation at source has begun, with no
+information on recording or on hazardous waste .
+
+
+ 5. Efficiency :
+The methodologies used at appraisal and at ICR for the economic and financial analysis of the project appear
+reasonable and give the following results :
+                                               SAR                        ICR
+Economic rate of return:                     15%                        18%
+NPV at 10%:                                 $4.7 million               $6.5 million
+Financial rate of return - landfill enterprise:   12%                      10%
+Financial rate of return - Riga City                NA                       22%
+
+The improvement in the ERR is explained by the inclusion at ICR of costs avoided by not having to build a new waste
+disposal site, which was not considered at appraisal . The reduced but still satisfactory enterprise FRR is due to the
+delay in the start of electricity production .
+
+ 6. M&E Design, Implementation, & Utilization:
+The performance indicators in the SAR (see section 4 above) were generally well chosen - few in number, closely
+related to the project objective and readily measurable - except for the last two, which were qualitative and could well
+have been omitted. The SAR did not specify institutional responsibilities for M&E, except for the general statement
+that the Project Steering Committee "would have overall responsibility for monitoring project implementation ." The
+legal documents require the Riga City Council to monitor and evaluate the project in accordance with "indicators
+satisfactory to the Bank" and to prepare an M&E report by June 30, 2000. Supervision reports for 2000 do not refer
+to this report, although they do refer to some actions to monitor project outputs, as these begin to be achieved . The
+ICR does not explain the extent to which the project implemented an M&E system, who maintains it and what it is
+showing. The few figures quoted in Annex 1 to the ICR are in a different form to the SAR indicators, include an
+important error and omit several key variables (see section 4 above). These deficiencies are especially disturbing in
+a GEF supported project and one which was intended to have a strong demonstration effect .
+
+ 7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):
+Safeguard Issues. The project was originally assigned Category A for environmental assessment (EA) but this was
+appropriately changed to B when a decision was made to continue waste disposal at the Getlini site (improved to
+international standards), rather than at a new site. A rather comprehensive EA was completed by independent
+experts prior to appraisal departure . Documents are not clear as to whether a draft EA report was disclosed to
+project stakeholders in Latvian (and Russian?) prior to the stakeholder consultation meetings referred to in section 3
+above (although this is not a requirement for an IBRD B project ). The Environmental Data Sheet ignores negative
+environmental impacts and emphasizes only the social issue of reduced employment for scavengers (which is not
+actually a safeguard issue ). The EA and SAR give a sketchy Environmental Management Plan (EMP) with a
+recommendation that it be revised, with a timetable and costs, after the detailed design of the project was completed .
+There was no covenant in the legal documents mandating the use of the EMP or its revision . However, supervision
+missions in 2000 (three years after appraisal) do remind the borrower that an EMP is due (possibly a result of a QAG
+review). The resulting EMP (if any) was not available for ES review. The ICR does not report at all on safeguard
+issues. It does mention that the issue of scavenger employment (which was listed as a risk at appraisal ) was
+satisfactorily resolved. Despite the rather serious lapses just noted, there is nothing in the documents reviewed to
+suggest that the project had any significant adverse environmental or social impacts .
+
+8. Ratings :              ICR                       IEG Review              Reason for Disagreement /Comments
+               Outcome : Satisfactory               Satisfactory            While early results from the project are
+                                                                            substantially below appraisal estimates,
+                                                                            this is projected in the ICR to be made up
+                                                                            over the next few years, leading to a
+                                                                            satisfactory ERR and FRR.
+     Institutional Dev .: Substantial               Substantial
+         Sustainability : Highly Likely             Likely                  The ICR rating is based mainly on
+                                                                            technical factors and may not give
+                                                                            sufficient weight to the declining debt
+                                                                            service ratio (section 4 above). A "Highly
+                                                                            Likely" rating would give a degree of
+                                                                            assurance that would be difficult to
+                                                                            achieve for any municipal project, where
+                                                                            financial viability will depend on political
+                                                                            decisions to adjust tariffs in line with
+                                                                            inflation and/or debt service needs.
+   Bank Performance : Satisfactory                  Satisfactory            Supervision deficiencies noted by QAG
+                                                                            and the shortfalls in the safeguard and
+                                                                            M&E areas, noted above, do not detract
+                                                                            markedly from a generally satisfactory
+                                                                            Bank performance.
+        Borrower Perf .: Satisfactory               Satisfactory
+        Quality of ICR :                            Unsatisfactory
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to arrive at a clear rating,
+    IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
+- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness .
+
+ 9. Lessons:
+1. Disposal of municipal solid waste is as much a social problem as it is technical (cf. Lebanon). This was only partly
+recognized during preparation and appraisal of this project, though the social problems which did arise were
+effectively dealt with by project management and the Bank .
+2. Because of the problem of social acceptability, projects to demonstrate modern disposal methods and standards
+are vitally important. The success of the present project in smoothing the way for another project in Latvia is noted in
+the ICR.
+3. The project's technical design was commendably straightforward but allowed it to demonstrate that recycling of
+leachate, to prevent ground and surface water contamination, is feasible and that collection of methane for electricity
+production is both a cost-effective means of reducing greenhouse gas emissions and a profitable source of revenue
+for the landfill enterprise.
+
+ 10. Assessment Recommended?            Yes       No
+          Why? The success of the project (and the above ratings on outcome and sustainability ) depend critically
+on accurate projections of gas production and power generation . It would be useful to review these after trends
+have been more definitely established . An audit would also contribute to greater dissemination of the important
+potential demonstration impact of the project for other countries .
+
+ 11. Comments on Quality of ICR:
+The ICR follows the guidelines in its succinctness and does a good job of presenting the basic facts on the project
+and its achievements in a very readable form; the economic and financial analyses are particularly thorough .
+However, some major shortfalls remain:
+     A very small number of performance indicators are presented, which are not the same as those in the SAR, and
+     they are not systematically discussed in the ICR text . There appears to be an important error in Annex 1 (see
+     Section 4 above).
+     Safeguard issues are not discussed at all (see Section 7 above).
+     There is no mention of the project M&E system and its results (see Section 6 above).
+     There is no clarification of the differences in project costs in the various documents . This should have been
+     clearly stated in Annexes 2 and 5.4. The actual sources of funds table should have been given in Annex 2.
+     Section 10 is not used to record information needed by GEF on the global environmental impact, such as
+     incremental costs, and an analysis of greenhouse gas reduction costs .
+     The ICR alludes to controversies over standards and mentions "Western-European", EU, Swedish and Latvian
+     standards at various points, but without any systematic discussion of the issue and of the cost -effectiveness of
+     different standards for landfill management for a country at Latvia's stage of development .
+

DataSource/000020051-20140617132408.txt

@@ -0,0 +1,303 @@
+                                                                                                               ICRR 12603
+                                                                                               Report Number : ICRR12603
+
+
+ IEG             ICR Review
+                 Independent Evaluation Group
+
+
+
+       1. Project Data:                                       Date Posted : 04/18/2007
+
+             PROJ ID : P060718                                                     Appraisal                Actual
+       Project Name : Renewable Energy                              US$M ):
+                                                     Project Costs (US$M):                      31.3                 21.7
+                         For Agriculture
+                         Project (gef)
+              Country : Mexico                        Loan/         US$M):
+                                                      Loan /Credit (US$M):                       8.9                  8.9
+      Sector Board :     ENV                          Cofinancing (US$M):
+                                                                    US$M ):                     22.4                 12.8
+        Sector (s):     Renewable energy
+                        (50%)
+                        Central government
+                        administration (45%)
+                        Animal production
+                        (5%)
+
+         Theme (s):        Other rural
+                           development (33% - P)
+                           Rural services and
+                           infrastructure (33% -
+                           P)
+                           Climate change (17% -
+                           S)
+                           Environmental policies
+                           and institutions (17% -
+                           S)
+       L/C Number :
+                                                     Board Approval Date :                                   12/21/1999
+     Partners involved :                                    Closing Date :              06/30/2004           06/29/2006
+
+
+
+Evaluator :                Panel Reviewer :          Group Manager :          Group :
+Robert Mark Lacey          Peter Nigel Freeman       Alain A. Barbu           IEGSG
+
+2. Project Objectives and Components:
+
+a. Objectives:
+ The project’s objectives were: (a) to promote the use of renewable energy for productive purposes in
+Mexico’s agricultural sector by removing barriers and reducing implementation costs; and (b) to reduce
+greenhouse gas emissions in the agricultural sector. The objectives were to be met through: (i) providing
+farmers currently without electricity with reliable electricity supply for productive purposes in a
+least-cost and sustainable manner using renewable energy technologies; (ii) increasing the productivity
+and income of farmers currently without electricity by supporting productive investments and improved
+farming practices; and (iii) catalyzing the penetration of renewable energy technologies in the
+agricultural sector.
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+c. Components (or Key Conditions in the case of DPLs, as appropriate):
+  The project consisted of a set of interrelated and mutually supporting activities which were implemented
+concurrently: a campaign promoting the use of renewable energy by farmers; studies to identify the
+potential market for renewable energy systems in the agricultural sector; installation and demonstration
+of renewable energy systems; technical assistance in the maintenance and operation of these systems;
+establishment of specifications and certification systems; a pilot program to test vendor financing of
+energy systems and components in four states; technical assistance for agricultural extension personnel
+advising farmers on the proper operation of renewable energy systems; and institutional strengthening for
+training technicians, extension personnel, vendors and the project implementation unit – the Trust Fund
+for Shared Risk (FIRCO) -- in project management (including monitoring and evaluation).
+Revisions. There were no revisions to the project components.
+
+d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ Project Cost. Total project costs at completion were US$21.73 million, about 70 percent of the
+US$31.3 million estimated at appraisal. The GEF grant of US$8.9 million was meant to cover 28.5
+percent of total project costs. It ended up being fully disbursed and accounting for 50 percent of costs.
+The cost savings of US$9.57 were concentrated in demonstration systems (US$2.87 million), vendor
+financing (US$2.09 million), and technical assistance (US$3.5 million). Project management costs,
+mainly incurred by FIRCO, were also nearly US$1 million less than anticipated. The vendor financing
+pilot component did not receive the expected response from States, and little vendor financing in fact
+materialized. Demonstration costs savings were due to lower installation and parts costs, reflecting in
+part economies of scale from increased supply. Although technical assistance was successfully
+implemented, and indeed amplified, only 81 extension workers were ultimately required, 30 less than
+originally envisaged. This is the only explanation provided in the ICR for the lower costs of this
+component.
+Financing. Since the full amount of the grant was disbursed, all the cost savings accrued to the
+counterpart financing from the grant beneficiary.
+Dates. At the Borrower’s request, the original closing date of June 30 2004 was extended by two years,
+and the project closed on June 29, 2006. This was mainly due to start-up delays. The project was under
+the auspices of a national agricultural and rural development initiative known as the Alianza para el
+Campo. Prior commitments initially prevented the Alianza program from accompanying the project’s
+investments. After these initial delays, implementation proceeded satisfactorily.
+
+3. Relevance of Objectives & Design:
+  The project was highly relevant to Mexico’s efforts to further the development of its agricultural sector
+by raising farm productivity while simultaneously reducing farmers’ dependence on carbon-emitting
+internal combustion engines for electricity generation. The design was appropriate to meet the project’s
+objectives. The project was fully consistent with the three core themes of the Mexico Country Assistance
+Strategy: (i) social sustainability (the Alianza program focuses on poorer farmers); (ii) removing
+obstacles to sustainable growth; and (iii) more effective public governance. It also contributed to the
+“win-win�? investment opportunities, stressed in the Bank’s environmental strategy, where both economic
+gains and environmental benefits may be generated through an integrated approach to development.
+
+4. Achievement of Objectives (Efficacy):
+   Despite lower expenditure than anticipated at appraisal, and despite the fact that this was the Bank’s
+first experience of promoting productive uses of renewable energy, the project achieved its development
+objectives. An estimated 2,312 farmers, who previously had no electricity, were provided with a reliable
+supply in a least-cost and sustainable manner, primarily through photovoltaic-energy (PV) water
+pumping systems. Prior to the project, between 1994 and 2000, 195 renewable energy systems had been
+installed in rural areas with the support of USAID and the US Department of Energy. Over the life of the
+project (2000-2006), a further 2,312 systems were installed. 1,545 PV pumps were set up, compared to
+an appraisal target of 1,050. A significant reduction in the cost per watt of water pump systems was
+achieved – systems sold in 2004-5 were about 25 percent cheaper than those installed prior to the project.
+The effects on farmer productivity and income can only be roughly estimated, based on the evaluation of
+three beneficiary farms. These showed that the rate of increase in farm incomes (after adjusting for
+income received directly from the project) more than doubled. In the first year of implementation, the
+project avoided 36,292 tonnes of carbon emissions, 21 percent higher than the original target figure of
+30,000 tonnes. The project helped to build capacity in both FIRCO and the Ministry of Agriculture in the
+promotion of renewable energy use. Thanks to the achievement of project objectives, especially in the
+light of the experimental nature of the operation, results were widely disseminated in the Bank and the
+GEF (through the renewable energy toolkit and the golden plough award) and more widely in Mexico
+and beyond via renewable energy congresses and the renewable energy colloquium held in Mexico City
+in 2006. Knowledge was also disseminated to private industry and to academia as well as to direct
+beneficiaries through extension services.
+
+5. Efficiency (not applicable to DPLs):
+  The target population was narrowed down to between 80,000 and 100,000 during implementation from
+the appraisal estimate of 600,000 farms without electricity. This was anticipated in the PAD which stated
+that early market research would be carried out to define the target population more precisely taking
+account of ability to purchase systems, access to reliable water supply and other factors. To assess
+project benefits at the farm level, four models were developed, three of them bovine livestock models
+(most of the target population were livestock farmers in arid areas). These models were used at appraisal
+to assess anticipated financial returns at the farm level. At completion, mature data was available up to
+the end of 2003, and showed a considerably lower rate of return on investments than that foreseen,
+especially for the predominate arid livestock beneficiaries:
+
+                  Arid livestock Arid mixed         Temperate     Tropical
+Appraisal             44%           n.a.               19%          35%
+Completion             18%          20%                17%          26%
+
+The ICR supplies no explanation for the lower than rates of return except to say that PV water pumping
+systems are profitable relative to those using conventional energy when the investment life is long, when
+relatively low volumes of energy (less than 1,500 watts) are required, and when the beneficiary is located
+a substantial distance from the grid. These last two conditions tend to limit profitable investments to
+watering livestock or producing other, non-perishable products. As a consequence, PV systems can
+increase incomes and productivity while yielding relatively low on-farm returns.
+
+The overall economic rate of return, taking account of off-farm support costs, is estimated to be 15
+percent compared with 30.9 percent anticipated at appraisal. FIRCO’s support costs were less than
+forecast.
+
+These results are still higher than the normally used opportunity cost of capital of 12 percent (not
+mentioned in either the PAD or the ICR).
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                               Rate Available?                   Point Value                Coverage/Scope*
+
+    Appraisal                      Yes                              31%                           100%
+    ICR estimate                     Yes                                        15%                                     100%
+                                          * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+   The project’s development objectives remain relevant and were achieved. The economic and financial
+rates of return, although less than anticipated, are still above the normal estimate of the opportunity cost
+of capital. The project has enabled the development of a new understanding of how to implement
+renewable energy projects, and is included as a case study in the Bank’s renewable energy toolkit.
+ a. Outcome Rating : Satisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+   The main risk to sustainability of the project’s outcome is the possibility that the government may
+discontinue subsidizing investments in renewable energy applications in agriculture. This risk is
+significant given the recent advent of a new government, and that future PV system investments will
+require continued subsidy. There are two other risks –projected increases in farm production may fail to
+materialize (for example, due to a fall in output prices), and the rate of system breakdown and
+maintenance costs may be higher than anticipated. The second of these risks is low, but the first is
+considered moderate.
+
+   a. Risk to Development Outcome Rating : Significant
+
+8. Assessment of Bank Performance:
+ Project design was sound, and quality-at-entry satisfactory. Bank staff worked closely with
+implementing agencies and implicated their staff in project preparation. The definition of the precise
+target population during implementation rather than preparation was appropriate and foreseen at
+appraisal. Supervision was diligent and flexible. During implementation, for instance, assistance to
+farmers was extended beyond help with installation, as originally envisaged, to include operation and
+application of the systems. It was also realized that the impact of the PV systems would be
+considerably enhanced if farmers were simultaneously helped to diversify cultivation and to market
+their crops.
+                     at -Entry :Satisfactory
+a. Ensuring Quality -at-
+
+b. Quality of Supervision :Satisfactory
+
+c. Overall Bank Performance :Satisfactory
+
+
+9. Assessment of Borrower Performance:
+Despite temporary disruptions, such as those following the change of government in 2001, the
+Borrower’s commitment to project objectives remained strong. Difficulties were always resolved.
+National Financiera (NAFIN) which was responsible for channeling external funding, performed
+diligently. The implementing agency, FIRCO, also performed well and met the challenge of
+temporary reductions in technical staff in 2001. Implementation benefited from FIRCO’s
+decentralized structure – a specialist working on the project was assigned to each of its 28 state
+offices, and this facilitated coverage,the tailoring of activities to local needs and building the
+institutional underpinning for sustainability.
+a. Government Performance :Satisfactory
+
+b. Implementing Agency Performance :Satisfactory
+
+c. Overall Borrower Performance :Satisfactory
+10. M&E Design, Implementation, & Utilization:
+  18 key indicators were developed at appraisal; these were appropriate and most of them were used to
+measure the project’s impact. Separately, FIRCO is able to measure the carbon emission reductions
+resulting from the introduction of PV systems. Field activities were closely monitored throughout, with
+information being collected by each of FIRCO���s 28 regional offices. The offices prepared energy
+programs for their states, and also training events and demonstrations. These fed into the national
+workshops and programs. A web-based information system was developed. Both the MTR and the
+Borrower’s report (prepared by FIRCO) contain a thorough assessment of project achievements. One
+drawback of the indicators was that they did not enable the regular monitoring of changes in beneficiary
+income or types of beneficiary.
+a. M&E Quality Rating : Substantial
+
+
+11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
+  Environment. The project was rated category B since no major negative environmental impact was
+anticipated. Indeed, the project was intended to benefit the environment, and complied throughout with
+all relevant safeguards policies. The concern raised during preparation over possible pollution leading
+from the use of batteries to store power was addressed by ensuring direct power usage in all cases and no
+storage. Water depletion was mitigated by ensuring that beneficiary farms had an adequate supply of
+groundwater and sufficient wells to supply the pumping equipment.
+Resettlement No resettlement was associated with the project.
+Fiduciary compliance was assured by NAFIN which managed project disbursements. The agency also
+made sure of compliance with auditing requirements. NAFIN staff is trained on both Bank regulations
+and eligibility and fiduciary issues associated with GEF projects. All work was carried out to a high
+standard. FIRCO successfully implemented the agreed action plan for strengthening its financial
+management system.
+
+
+12. Ratings :
+12.                                    ICR            IEG Review                  Reason for
+                                                                           Disagreement /Comments
+                    Outcome : Satisfactory       Satisfactory
+         Risk to Development Moderate            Significant          Of the three main risks identified –
+                    Outcome :
+                                                                      (i) discontinuance of government
+                                                                      subsidy, (ii) higher than anticipated
+                                                                      breakdown of installed systems,
+                                                                      (iii) failure to achieve anticipated
+                                                                      on-farm productivity increases -- (i)
+                                                                      is considered significant and (iii)
+                                                                      moderate, while (iii) is considered
+                                                                      low. Overall, therefore, the risk
+                                                                      must be considered significant.
+          Bank Performance : Satisfactory        Satisfactory
+
+      Borrower Performance : Satisfactory        Satisfactory
+
+                Quality of ICR :                 Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to
+arrive at a clear rating, IEG will downgrade the relevant ratings as
+warranted beginning July 1, 2006.
+- The "Reason for Disagreement/Comments" column could
+cross-reference other sections of the ICR Review, as appropriate .
+
+13. Lessons:
+   The main lessons are:
+1.       The choice of an agricultural sector institution (FIRCO) as the implementing agency, rather
+than an energy sector entity, was highly beneficial since it ensured that renewable energy provision
+remained demand-driven and could be tailored to the needs of farmers.
+2.       The impact of the PV systems is considerably enhanced if farmers are simultaneously helped to
+diversify cultivation and to market their crops.
+3.       The establishment of vendor financing systems in new sectors and remote geographic areas
+requires careful design, and must take full account of already operating replication systems.
+4.       An effective financing scheme for renewable energy use for productive purposes in rural areas
+will likely require continued subsidized financing.
+5.       In future renewable energy projects, it would be useful to include indicators which measure
+changes in beneficiary income and in category of beneficiary.
+6.      The project shows the benefits of flexibility during implementation, especially in an innovative
+operation of this kind.
+
+14. Assessment Recommended?                  Yes     No
+
+
+
+
+15. Comments on Quality of ICR:
+
+Substantively, the ICR contains a full discussion of all the elements required to evaluate the impact of the
+project. It suffers, however, from careless proof-reading. Significant parts of the text are missing,
+including paragraphs from important sections such as the discussion of project outcome. It would have
+been useful to have analyzed why the completion rates of return (both economic and financial) were
+lower than foreseen at appraisal.
+a.Quality of ICR Rating : Satisfactory
+

DataSource/000020051-20140619091525.txt

@@ -0,0 +1,376 @@
+                                                                                                                ICRR 13040
+                                                                                                Report Number : ICRR13040
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+        1. Project Data:                                      Date Posted : 04/15/2009
+
+              PROJ ID : P049770                                                     Appraisal                Actual
+        Project Name : Second Renewable                            US$M ):
+                                                    Project Costs (US$M):                        300                  257
+                         Energy
+               Country : India                       Loan/         US$M ):
+                                                     Loan /Credit (US$M):                        135                  108
+       Sector Board :    EMT                                       US$M):
+                                                     Cofinancing (US$M  ):
+         Sector (s):     Power (96%)
+                         Central government
+                         administration (4%)
+
+          Theme (s):        Climate change (29% -
+                            P)
+                            Rural services and
+                            infrastructure (29% -
+                            P)
+                            Other financial and
+                            private sector
+                            development (28% - P)
+                            Water resource
+                            management (14% - S)
+        L/C Number :         C3396; L4571
+                                                    Board Approval Date :                                     06/27/2000
+      Partners involved :                                   Closing Date :              03/31/2006            03/31/2008
+
+
+
+Evaluator :                 Panel Reviewer :        Group Manager :           Group :
+Ramachandra Jammi           Fernando Manibog        Monika Huppi              IEGSG
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+  (1) increase power supply through investments in small hydro schemes; (2) mobilize private sector investment
+in renewable energy; and (3) promote energy efficiency and demand -side management investments.
+
+Global environmental Objective (GEO) : Enhance and sustain improved end -use energy efficiencies with consequent
+reduction in carbon emissions .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components (or Key Conditions in the case of DPLs, as appropriate):
+ Part A: Small Hydro Schemes (Cost at Appraisal: US$263M; at Completion: US$210M)
+Support a range of eligible small hydropower (SHP) projects including (i) Canal-based and dam toe schemes; (ii)
+Run-of-river schemes; (iii) Rehabilitation and/or upgrading of old plants; (iv) Use of tail ends of cooling water systems
+of thermal power plants; and, (v) Stand alone micro-hydro sub-projects of up to 100 Kilowatts (kW) each. Over 80
+percent of the sub-projects were expected to be categories (i) and (ii) projects, ranging in sizes from 1 MW to 25 MW.
+
+Part B: Energy Efficiency and Demand-Side Management Investments (Cost at Appraisal: US$30M; at Completion:
+US$42M)
+Provide financing for energy efficiency as a new line of lending business that would complement the renewable
+energy financing activities of the Indian Renewable Energy Development Agency (IREDA) including: (i) design,
+development and implementation of integrated energy management services operated by Energy Service
+Companies (ESCOs) and end-users on a performance guarantee basis; (ii) end-user purchase and installation of
+energy efficiency and/or load management devices and systems; (iii) production of energy-efficient equipment; and,
+(iv) end-user participation in State Electricity Boards (SEBs) and other utility-sponsored Demand-side Management
+(DSM) programs.
+
+Part C: Technical Assistance and Training (Cost at Appraisal: US$5M; at Completion: US$5M)
+Support IREDA’s efforts in the new area of energy efficiency by financing : (i) pre-investment activities to develop a
+sustainable pipeline of energy efficiency investments, preparation of standard bidding documents for procuring
+ESCO services, operational and business development modules and information dissemination; (ii) establishing
+in-house capacity within IREDA to appraise, supervise and promote energy efficiency services and schemes; (iii)
+assisting participating states in promoting end -use efficiency including development of appropriate policy incentives;
+and (iv) training of public and private sector energy and industry officials and staff on energy conservation and DSM .
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ Project cost at completion was US$ 257M, which was US$43M less than at appraisal, and the corresponding
+IBRD/IDA funding was US$108M, about US$26M less than the US$135M approved at appraisal. The Global
+Environment Fund (GEF) disbursed US$5M as planned. Projects costs and IBRD/IDA disbursements were lower at
+project completion mainly because the target for SHP development was reduced from 200MW to 153MW, owing to
+commercial banks stepping in to finance sub -projects that were originally intended to be financed through IREDA .
+
+Though the project was substantially appraised by 1997, it became effective only in 2001 due to prevailing
+international sanctions against India . Project implementation was delayed by two years due to several factors
+including changes in the policy and regulatory environment . Central government guidelines for renewable power
+purchase tariffs lapsed in 2000, and while this mandate was passed on to individual state electricity regulatory
+commissions (SERCs) under the Electricity Act (2003), the states took time to act on this mandate ). This resulted in
+uncertainty for SHP project developers, and delays in replacing the top -level management of IREDA.
+
+ 3. Relevance of Objectives & Design:
+  At project preparation, India’s power industry was generally characterized by inadequate and inefficient power
+supply, uneconomic pricing, and a variety of market and non -market barriers. Encouraging renewable sources of
+energy and improving energy efficiency through private sector participation was seen as part of the solution, and
+appropriate policies and institutions were in place for this purpose, but were in need of financial and technical
+assistance. There were also regional variations, with several southern states being more advanced than their
+northern counterparts in creating an enabling environment for renewable energy sources and energy efficiency . In
+this context, the objectives of the project were in line with the 1997 Country Assistance Strategy (CAS), which
+proposed assistance to India for reducing infrastructure bottlenecks and promoting private sector participation across
+sectors. These issues remained relevant in the CASs of 2001, 2004 and 2008. Relevance of project objectives is
+rated high.
+
+The project design built upon the experience with the preceding Renewable Resources Development Project
+(RRDP; 1999-2001), which facilitated early private sector interest in renewable energy development . The current
+project sought to broaden the impact of the program and provide continued support to the nascent private sector
+market for small-scale power generation, particularly in the northern states, and to build capacity within IREDA to
+finance energy efficiency projects .
+
+The project also sought to catalyze the energy efficiency services industry in the country . Activities relating to the
+GEO were supported through a Global Environment Facility (GEF) grant for strengthening institutional capacities,
+creating awareness and conducting appropriate studies to support pilot interventions in the area of energy efficiency .
+The design of this technical assistance was revised at mid -term review (following the creation of the Bureau of
+Energy Efficiency (BEE), which assumed the lead role in work on energy efficiency policy in the country ) to reduce its
+emphasis on certain policy aspects, and focus more on near -term market opportunities.
+
+It was recognized during project preparation that some categories of SHP – particularly in the 1 to 25 MW range –
+presented relatively greater financial risks but would nevertheless yield lessons in promoting the decentralized
+generation of power. The project provided for flexibility towards the types of energy efficiency interventions eligible
+for support. In retrospect, the project design underestimated the risk from changes in government policy incentives
+for renewables, especially the impact of the lapse of the tariff regime administered by the Ministry of
+Non-Conventional Energy Resources (MNER) and the passage of the Electricity Act of 2003. Additionally, the risks
+emanating from multi-year variations in hydrology were not envisaged at appraisal, which particularly impacted
+sub-projects in Andhra Pradesh. On the balance, relevance of project design is rated high, and overall quality at
+entry rated high.
+
+4. Achievement of Objectives (Efficacy):
+   4. Achievement of Objectives (Efficacy):
+Objective 1. Augment power supply through environmentally sustainable small hydro investment . Substantially
+Achieved.
+The project supported 45 SHP sub-projects with an installed capacity of 158.25 MW, which was marginally higher
+than the revised target of 153 MW. Of these, 37 sub projects (with installed capacity of 140.65 MW) have been
+commissioned and 6 sub projects totaling 12.2 MW are expected to be commissioned by March 2009. Together with
+38 MW from dropped sub-projects that were financed from other sources, the project supported about 25 percent of
+the planned SHP additions in the country during this period .
+Objective 2. Mobilize private sector investments in renewable energy power projects . Substantially Achieved .
+At a time when funding from other sources was scarce, the project provided funding for 33 SHP entrepreneurs, who
+leveraged these resources to set up multiple projects in their home states as well as in other states . Expertise in
+project implementation and plant management was improved . IREDA's appraisal process has helped to demonstrate
+the viability of SHP, which has encouraged commercial banks to fund such projects, creating a more competitive
+market for SHP. Other financial institutions (see section 7) capable of providing higher loan limits and better loan
+terms have started partnering with IREDA through consortium financing on the strength of IREDA ’s expertise in
+evaluation of projects. This has allowed IREDA to finance medium and large scale hydro projects .
+Objective 3. Promote energy efficiency and demand -side management (DSM) investments. Substantially Achieved .
+At the time of project completion, 17 energy efficiency projects – amounting to US$36M and over 90 MW in additional
+capacity and avoided peak demand – were financed by the project and IREDA's own resources . Of these, 12 projects
+have been commissioned and the estimated savings projected for these projects is 249 million kWh equivalent per
+year. It is expected that the total investment for IREDA ’s energy efficiency loan portfolio, including sponsor ’s equity
+contributions and other co-financing, will exceed $74 million once final commissioning is complete .
+Lending by IREDA demonstrated the financial viability of energy efficiency sub -projects, leading to increased
+acceptance and financing by both the industrial and banking sectors . Based on IREDA’s experience in energy
+efficiency financing, at least five major local commercial banks have also launched loan programs for energy
+efficiency, such as waste recovery systems .
+Global Environmental Objective : Enhance and sustain improved end -use energy efficiencies with consequent
+reduction in carbon emissions . Modestly Achieved .
+GEF’s technical assistance focused on developing a market and a pipeline of projects for improving energy
+efficiency, and to increase the capacity of the financial sector for this purpose . GEF’s technical assistance also
+generally provided support to IREDA in new business development, resource mobilization, organizational
+restructuring, expanding awareness, and increasing lending for energy efficiency . The number of ESCOs (whose
+role is to promote sub-projects for energy efficiency ) increased from 4 to 8 in 2002 to about 25 at project completion.
+However, this mechanism has not achieved widespread success, as the ESCOs face a number constraints including
+insufficient capacity to prepare bankable projects, limited legal and contractual capabilities and poor contract
+enforcing environment. Overall, a reduction of 6.70 million tons of CO2 is expected from energy efficiency projects
+that are under implementation.
+
+ 5. Efficiency (not applicable to DPLs):
+  Based on available data, financial and economic internal rates of return (FIRR and EIRR) for SHP sub-projects and
+energy efficiency projects were above the cost of capital and compared favorably with estimates at appraisal .
+SHP Sub-projects: FIRRs for 24 completed sub-projects (for which data was available) ranged between 15 and 51%
+compared to 15 to 56% at the time of loan approval. These figures compared favorably with 22 to 40% anticipated
+for 14 representative sub-projects at appraisal. EIRRs for the same set of sub-projects ranged between 27 to 224%
+compared to 21 to 47% at the time of loan sanctions. These figures compared favorably with 20 to 51% anticipated
+for 14 representative sub-projects at appraisal.
+Energy efficiency Sub-projects: FIRRs for 5 completed sub-projects (for which data was available) ranged between
+11 and 91% compared to 26 to 51% at the time of loan sanctions. These figures compared favorably with 26 to 58%
+anticipated for 16 representative sub-projects at appraisal. EIRRs were calculated for a sample of projects and found
+to range between 53 and 238 percent, which broadly compared favorably with appraisal estimates of 26 to 55
+percent for a different sample of projects (not a one-to-one comparison).
+Efficiency is rated substantial . Given that the FIRRs and EIRRs are based on a sample of projects and assumptions
+relating to successful completion of others, the lower end of the range of EIRR estimates are recorded below .
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+                                 Rate Available?                            Point Value                         Coverage/Scope*
+
+    Appraisal                        Yes                                        27%                                     98%
+
+    ICR estimate                     Yes                                        20%                                     98%
+                                          * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+ 6. Outcome:
+   Quality at entry for the project is considered substantial (see section 3). Efficacy is rated substantial for each of the
+three objectives relating to increased power supply through investments in small hydro schemes, mobilizing private
+sector investment in renewable energy; and promoting energy efficiency and demand -side management
+investments.
+Achievement in respect of the Global Environmental Objective (GEO) is modest, but the project responded flexibly to
+institutional changes, and has provided institutions in the field of energy efficiency with valuable initial experience .
+Together with substantial efficiency, overall outcome is rated Satisfactory
+  a. Outcome Rating : Satisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+    The EIRRs of sub-projects under this operation were broadly favorable despite uncertainties relating to policy and
+institutions. The Government of India displayed commitment to the scaling -up of renewable energy and energy
+efficiency, most recently as part of the National Climate Change Action Plan (2008). IREDA appears well-positioned
+to lend in familiar areas such as small hydro and wind, supply -side efficiency, niche end -use energy efficiency
+projects (such as waste heat recovery ), biomass gasification for thermal applications in industries, and solar photo
+voltaic projects. While IREDA was not successful in sourcing additional low cost funds from the domestic market, it is
+mobilizing funds from multilaleral banks (Asian Development Bank (ADB); European Investment Bank (EIB), and
+bilateral agencies (KfW)) and has partnered with domestic financing agencies (Power Trading Corporation (PTC);
+Power Finance Corporation (PFC); and the Infrastructure Development Finance Company (IDFC)), enabling it to
+finance larger projects such as the 100MW Tata Power Wind Project (co-financed by IREDA and ADB). However,
+there remain several geographical areas which are not being served well by the commercial finance market including
+areas in the north-east. Also, IREDA will always carry higher levels of exposure to natural disasters such as drought,
+due to the composition of its lending portfolio which supports its mission .
+While recognizing that institutional strengthening of IREDA was not an explicit part of the PDO, it seems that IREDA
+still has remaining weaknesses – specifically reimbursement and procurement efficiency, as well as incomplete
+Financial Management (FM) and loan accounting systems -- that need to be addressed . This should have been
+achieved by now, given the long period of that has elapsed since the first renewable energy project which was also
+the subject of an IEG Project Performance Assessment Report .
+
+   a. Risk to Development Outcome Rating : Negligible to Low
+
+ 8. Assessment of Bank Performance:
+  Quality at entry was satisfactory (see section 3) and the project remains strategically relevant to government
+priorities including reduction of infrastructure bottlenecks and the development of renewable energy and
+improving energy efficiency in the country .
+
+At least eleven supervision missions were undertaken by the Bank during the project and addressed problems
+during implementation as they arose, including disbursement concerns, changes in IREDA management
+structure, financing strategy and improved organization structure /business processes. The GEF technical
+assistance component was modified appropriately to take into account the mandate of the newly -created Bureau
+of Energy Efficiency (BEE). A number of field visits were undertaken to ensure compliance with safeguards, and
+to verify physical progress and achievements . The Bank provided substantive input to IREDA ’s Strategy and
+Action Plan.
+                       at -Entry :Satisfactory
+ a. Ensuring Quality -at-
+
+b. Quality of Supervision :Satisfactory
+
+ c. Overall Bank Performance :Satisfactory
+ 9. Assessment of Borrower Performance:
+Project implementation was delayed by two years due to several factors including changes in the policy and
+regulatory environment and delays in replacing the top -level management of IREDA. Numerous projects were
+delayed or dropped due to this change in the enabling environment . On the positive side, the Bureau of Energy
+Efficiency (BEE) was established by Ministry of Power after the project had been effective, and while it was not a
+formally a project counterpart in project design, it did provide effective coordination and collaboration with
+relevant energy efficiency activities supported by the GEF technical assistance program . During the last two
+years of implementation, the MNER provided significantly improved levels of support to IREDA and to the World
+Bank project.. Nineteen states have specific policies for SHP, 10 states have formalized feed-in tariff orders for
+SHP, and MNER has announced a new capital subsidy scheme to further support SHP .
+
+As the implementing agency, IREDA committed adequate internal staff and resources for project implementation .
+It complied with all Bank loan covenants and discharged its fiduciary duties in a satisfactory manner . The quality
+of supervision support by IREDA technical officers was high, and they put in intensive efforts in following up with
+the individual promoters. IREDA’s policies and lending norms could not adequately keep pace with changing
+market conditions, and several sanctioned projects were ultimately taken up by local financial institutions which
+could offer more competitive projects . The major shortcoming in IREDA’s performance was the slow pace of
+reimbursement processing and the slow pace of procurement in following WB guidelines for activities funded by
+GEF’s technical assistance, although this showed some improvement by project completion .
+ a. Government Performance :Moderately Satisfactory
+
+b. Implementing Agency Performance :Satisfactory
+
+ c. Overall Borrower Performance :Moderately Satisfactory
+
+
+
+ 10. M&E Design, Implementation, & Utilization:
+  Design: The M&E plan for the project was a mix of outputs and intermediate outcomes including the number of
+SHP sub-projects commissioned, increase in generation capacity, and energy and capacity savings from energy
+efficiency sub-projects. It is recognized that the project was appraised before the more recent emphasis on outcome
+indicators.
+Implementation: Output and intermediate output indicators were reported regularly through quarterly progress reports
+(QPRs) from IREDA, annual reports, energy audits, and direct feedback from relevant stakeholders . IREDA built and
+strengthened its overall M&E systems during the course of the project, thus acting on an issue that was raised by
+IEG in its project performance assessment of the preceding RRDP project .
+Utilization: QPR formats were revised during implementation to improve their effectiveness and identify the need for
+corrective action. M&E information from QPRs was used to provide feedback to IREDA on issues pertaining to
+project implementation, sectoral performance, contribution of the projects to the installed capacity of hydro projects,
+development of capacity in the energy efficiency sector . This information helped IREDA/Government and the
+Bank/GEF to maintain focus on key outstanding issues .
+ a. M&E Quality Rating : Substantial
+
+
+ 11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
+  Environmental Safeguards: The project was placed in Category B for safeguards and OP 4.01 (Environmental
+Assessment) was triggered. For SHP sub-projects, the main environmental safeguards involved potential adverse
+impacts on the water environment and sensitive areas such as forests . For the energy efficiency sub -projects, the
+potential negative impacts on air quality were the key environmental safeguards issues . Both categories of
+sub-projects had issues related to ensuring worker and site safety . In general, all sub-projects were reported to be in
+compliance with Bank safeguards policies . Pre-disbursement inspections were used to encourage the project
+developers to improve on-site environmental management. In some SHP sub-project locations, good environmental
+practices were noted including planting of trees, innovative arrangements for debris disposal, and changing design of
+intake weir to have better control on minimum downstream flow requirement . On the social front, some SHP
+developers encouraged community involvement, and tried to provide employment opportunities for local people .
+Common shortcomings included limited attention to workers ’ safety during implementation and delays in obtaining
+regulatory clearances, especially from pollution control boards . IREDA was pro-active in adopting the key
+recommendations of an audit of its internal systems relating to environmental safeguards, though the impact of this
+will be felt only in future activities, since the audit was completed towards the end of this project .
+
+Financial and Procurement Issues : Financial management (FM) arrangements from a fiduciary perspective were
+implemented in a satisfactory manner . The project management report formats were refined during the second year
+of implementation to make them less cumbersome, and were submitted regularly . Entity audits were regular and did
+not contain any major accountability issues . Project audits for the IDA credit, GEF grant and IBRD loan were also
+submitted in time. Consolidated reporting for the three funding sources (IBRD, IDA, GEF) was done for the financial
+statements from 2006-07 onwards. However, the contract for the installation of an improved FM system and loan
+accounting system for IREDA was delayed and remained incomplete at project closing . Procurement was largely
+satisfactory, although several activities experienced long procurement -related delays.
+
+Unintended Impacts: Forty four sub projects involved the development of almost 90 km of roads and bridges, and
+contributed to the accessibility to neighboring villages . This has had a positive developmental impact, especially in
+the hilly areas of Himachal Pradesh, which were completely inaccessible before . The roads and project activity in
+general had some favorable impacts on local area businesses, educational facilities, and employment .
+
+
+
+12. Ratings :
+12.                                       ICR                  IEG Review                    Reason for
+                                                                                      Disagreement /Comments
+                    Outcome : Satisfactory                Satisfactory
+         Risk to Development Negligible to Low            Negligible to Low
+                    Outcome :
+
+           Bank Performance : Satisfactory                Satisfactory
+
+       Borrower Performance : Moderately                  Moderately
+                                Satisfactory              Satisfactory
+               Quality of ICR :                           Exemplary
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to
+arrive at a clear rating, IEG will downgrade the relevant ratings as
+warranted beginning July 1, 2006.
+- The "Reason for Disagreement/Comments" column could
+cross-reference other sections of the ICR Review, as appropriate .
+
+13. Lessons:
+ The ICR suggests a number of lessons, of which those of broader applicability are presented below :
+
+    A predictable policy and regulatory environment is a critical precondition for private sector led RE
+    development, including predictable feed -in tariffs and policy decision making .
+    Economic Valuation of Renewable Energy vis -à-vis Conventional Energy can provide significant policy and
+    regulatory insights. In addition to direct power benefits such valuation should take into account other benefits
+    such as local and global environmental benefits, improvements in energy security and fuel risk mitigation .
+    SHP sub-projects can be extremely vulnerable to unforeseen variations in hydrology, especially in the first few
+    years of commissioning. Adequate risk coverage/insurance products could be built in the business model to
+    mitigate such risks for both the developers and lenders .
+    Financial Intermediation projects which fund energy efficiency should allow for development of different
+    business models to account for shifting market conditions . In India, end-user implemented approaches have
+    been more successful when compared to ESCO and DSM type projects .
+    Unlike larger firms with access to technical and financial resources, smaller energy efficiency projects in
+    SMEs face several additional market constraints and barriers and may be best reached through decentralized
+    means such as working through local financial institutions .
+
+14. Assessment Recommended?                  Yes     No
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is well organized and written in a clear and logical manner . It explains the background to the project as well
+as the implementation experience in a balanced fashion, providing relevant facts and arguments . Detailed annexes
+are provided in support of outputs /outcomes and for explaining the assumptions and methodology for calculating
+efficiency indicators. Lessons are drawn in an analytical and objective manner .
+ a.Quality of ICR Rating : Exemplary
+

DataSource/000020051-20140620082511.txt

@@ -0,0 +1,395 @@
+                                                                                                                 ICRR 13367
+                                                                                                 Report Number : ICRR13367
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+        1. Project Data:                                        Date Posted : 09/27/2010
+
+              PROJ ID : P072480                                                      Appraisal                Actual
+        Project Name : Renewable Energy                               US$M ):
+                                                       Project Costs (US$M):                     502.0                 750.8
+                          Project
+               Country : Turkey                         Loan /Credit (US$M):
+                                                        Loan/         US$M ):                    202.0                 223.1
+       Sector Board :     EMT                                         US$M):
+                                                        Cofinancing (US$M  ):
+         Sector (s):     Renewable energy
+                         (50%)
+                         Micro- and SME
+                         finance (40%)
+                         Central government
+                         administration (10%)
+
+          Theme (s):        Other financial and
+                            private sector
+                            development (29% - P)
+                            Climate change (29% -
+                            P)
+                            Legal institutions for a
+                            market economy (28%
+                            - P)
+                            Water resource
+                            management (14% - S)
+        L/C Number :         L7221
+                                                       Board Approval Date :                                   03/25/2004
+      Partners involved :                                     Closing Date :              06/30/2010           06/30/2010
+
+
+
+Evaluator :                 Panel Reviewer :           Group Manager :          Group :
+Robert Mark Lacey           Fernando Manibog           IEGSE ICR Reviews        IEGSE
+
+2. Project Objectives and Components:
+
+a. Objectives:
+
+The project development objective (PDO), as stated in the PAD, is “to increase privately owned and operated power
+generation from renewable sources, without the need for government guarantees, and within the market -based
+framework of the new Turkish Electricity Market Law .�?
+
+The PDO statement in the Loan Agreement is differently worded but substantively the same : “to expand privately
+owned and operated distributed power generation from renewable sources within the market -based legal framework.�?
+
+This Review evaluates the project on the basis of the statement of the PDO in the PAD as this is more detailed and
+precise.
+
+The PAD further states that the PDO “will be achieved by establishing a commercial financing mechanism for
+renewable energy projects and demonstrating the feasibility of private development of economic and financially
+viable renewable energy projects within a competitive market framework .�?
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+No
+
+c. Components (or Key Conditions in the case of DPLs, as appropriate):
+
+The project had one component – the special purpose debt facility (SPDF) for financing generation using renewable
+energy sources – which absorbed 100% of the value of the Bank loan . The SPDF is a term lending facility
+established and operated by two selected financial intermediaries – the privately owned Turkish Industrial
+Development Bank (TSKB) and the publicly owned Turkish Development Bank (TKB). The World Bank loan was
+on-lent to the two intermediaries by the Government (the Turkish Treasury), which, in turn, provided long term
+financing to private sponsors of renewable energy projects . The SPDF was intended to leverage additional long term
+financing for renewable energy, including equity investment from local private sources .
+
+d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+
+After the project became effective at the end of July 2004, progress was slow – only 10% of the loan amount had
+been disbursed by April, 2006. This was due to (i) delays in legislative approval of the new electricity law which led
+investors to hold off until the legal and regulatory framework became clear; (ii) the time taken to agree to an
+appropriate pricing mechanism for renewable power purchase; and (iii) restrictions resulting from Bank procurement
+practices designed for public sector projects, but less well adjusted to those executed by the private sector, notably
+(a) a prohibition against civil works being undertaken by a potential investor or its affiliates; (b) limits on individual
+sub-project size (capacity of no more than 50 MW and restrictions in the size and volume of reservoirs for hydro
+plants); and (c) low ICB thresholds for the procurement of equipment (US$5 million) and civil works (US$8 million).
+These problems were resolved by early 2007 – the new law had been enacted in May, 2005; the law was amended in
+April 2007, to allow for 10 year power purchase agreements and a floor price of 5.5 US cents/kWh for renewable
+power; renewable energy was also allowed to be sold on the wholesale electricity market established in 2006; and
+the Loan Agreement was amended to double the capacity limits for hydro sub -projects, raise the ICB threshold on
+civil works to US$15 million and allow the financing of civil works undertaken by sponsors or their affiliates . After this,
+implementation proceeded swiftly: by the third quarter of 2008, all project funds had been committed, and the loan
+was fully disbursed eight months ahead of the closing date of June 30, 2010.
+
+
+
+3. Relevance of Objectives & Design:
+
+The PDO was and remains highly relevant. It is consistent with the Turkish Government ’s strong emphasis in the
+Ninth Development Plan on augmenting the country ’s power supply from renewable sources, as well as its
+commitment to mitigate climate change as a ratified signatory of the Kyoto Protocol . It also supports Turkey’s
+convergence with the European Union on environmental and renewable energy targets . The project was prepared at
+the specific request of the Government in order to meet these needs through private investment in renewable power
+sources. The operation is also fully consistent with the Bank ’s 2008-2011 Country Partnership Strategy for Turkey
+which stresses continued support for the development of a sustainable energy sector with privately financed
+investment playing a central role .
+
+Project design was substantially relevant. It relied heavily on the Bank’s extensive prior engagement with Turkey and
+built upon its knowledge of the country ’s energy and financial sectors, as well as its international experience of
+renewable energy projects. Design addressed directly the previous reluctance of commercial banks to provide long
+term financing for capital-intensive renewable energy projects, especially to small and medium -sized enterprises.
+The reliance on local banks and the special loan structure offered by the project enabled the former to offer maturities
+up to 12 years with four year grace periods to their clients . A minimum equity of 25% was also stipulated to
+encourage leverage. Proper attention was paid during preparation to determining an appropriate financial
+intermediation mechanism, building up an investment pipeline, and completing a well structured operational manual .
+There was close and harmonious cooperation with the two main financial intermediaries and with the government
+agencies involved in developing the legislative and regulatory enabling environment for private investment . Key
+performance indicators (KPI) were simple, easy to measure, and closely related to the PDO . Some of the factors that
+caused delay in the early stages of implementation – especially the holdup in approval of the new Electricity Law and
+the poor fit between prevailing Bank procurement guidelines and private sector imperatives – could have been
+foreseen and mitigated during the preparation stage .
+
+
+4. Achievement of Objectives (Efficacy):
+The PDO -- to increase privately owned and operated power generation from renewable sources, without the need
+for government guarantees, and within the market -based framework of the new Turkish Electricity Market Law – has
+been highly achieved . The project has successfully demonstrated an appropriate long term financial intermediation
+mechanism for renewable power generation, and has generated significant interest among other Turkish and
+international financial institutions . For example, the mechanism developed under the project has been replicated by
+agencies such as the European Investment Bank, the Council of Europe Development Bank, and the Agence
+Française de Développement.
+
+All four KPIs were exceeded:
+
+1) Increased generating capacity of privately owned renewable plants . By project completion, additional renewable
+power generating capacity funded by the project amounted to 618.5 MW as against an original target of 500 MW. 23
+renewable energy plants have been developed by 19 private sponsors, 18 of them using hydropower. 16 of the 23
+were commissioned by November 2009, and the other seven are expected to be operating before the end of 2010.
+
+2) Increased volume of electricity produced from private renewable generation facilities . The amount of electricity
+generated is 3,810 GWh per year, representing an increase over the pre -project situation of 2,320 GWh compared to
+a target of 2,200 GWh.
+
+3) Decrease in carbon dioxide equivalent emissions as a result of increased renewable energy generation         . The
+project contributed to the reduction in carbon dioxide (CO2) emissions through substituting renewable energy for
+fossil fuels that would otherwise have been used to generate electricity . The reduction in emissions due to project
+supported investments is estimated to be 50 % higher than the target of 932,000 tons, using the same emissions
+factor as that in the PAD (421 tons/GWh). This was due to higher than foreseen creation of renewable energy
+capacity, and a project-financed landfill gas plant at Mamak near Ankara, resulting in the reduction of methane
+emissions (methane is 21 times more potent than CO2 in terms of climate change impact).
+
+4) Demonstration and leveraging effect . The project successfully demonstrated the viability of long term financing
+for renewable energy projects in Turkey . The amount of funding received from international financial entities by TSKB
+and TKB for such investments has amounted to just over US$ 400 million equivalent (excluding the Bank loan) since
+the project started. Significant interest has also been displayed by local equity investors and commercial banks .
+Overall, for every dollar of World Bank financing through the SPDF US$ 2.65 of additional funding for long term
+renewable energy development had been raised by the end of 2009. This compares to an appraisal target of
+US$1.48.
+
+5. Efficiency (not applicable to DPLs):
+
+The combined ex post economic rate of return (ERR) of all of the 20 subprojects financed by the Bank loan was
+calculated in the ICR to be in the range of 10% to 45%, compared to a range of 19% to 23% at appraisal for a sample
+of three subprojects. The wide variation reflects that in unit construction costs . The combined ex post ERR varies
+between 18% and 24%, depending on assumptions concerning the long run electricity market price and the value of
+greenhouse gas emissions reduction . If electricity is priced at the current government -guaranteed floor price, and
+emission reduction benefits are conservatively valued at US$ 10 per ton of CO2 equivalent, then the ex-post project
+ERR for all subprojects combined is estimated at 20%, the same as the appraisal calculation for the three sample
+subprojects, the combined ERR of which was also 20%. At closure, the overall estimated financial rate of return
+(FRR) is between 16% and 19%, again virtually identical to the 16% to 20% range calculated at appraisal . Efficiency
+is rated as substantial .
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                Rate Available?                           Point Value                         Coverage/Scope*
+
+    Appraisal                       Yes                                       20%                                     15%
+
+    ICR estimate                    Yes                                       20%                                     100%
+                                        * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+
+With high relevance of project objectives and of efficacy, combined with substantial design relevance and efficiency,
+project outcome is rated as Highly Satisfactory .
+
+ a. Outcome Rating : Highly Satisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+
+The Government remains fully committed to furthering the development of renewable energy and building on the
+successful experience of the project . According to the ICR, demand and supply prospects for electricity in Turkey
+indicate that high prices will continue for some time, thereby ensuring financial viability for renewable generation . At
+the technical level, all subprojects have been successfully implemented, and rigorous licensing and appraisal
+procedures help to ensure satisfactory O&M and performance . Effective environmental safeguards are in place, and
+where large dams are involved, the investor is obliged to appoint an independent panel of experts to ensure that
+O&M are properly carried out together with periodic safety inspections of the dams .
+
+   a. Risk to Development Outcome Rating : Negligible to Low
+
+ 8. Assessment of Bank Performance:
+
+Quality at entry : Satisfactory . The preparation team made good strategic choices – an appropriate financial
+intermediation mechanism was set up;TSKB and TKB proved to be able partners; attention was paid to building
+up a solid pipeline of potential subprojects; implementation arrangements were carefully thought through and a
+well-structured operating manual prepared; compliance with the Bank ’s environmental and social safeguard
+policies was assured; and a fruitful dialogue conducted with the Borrower on the legislative and regulatory
+underpinnings for renewable energy development . Timely technical assistance was provided where needed and
+asked for. On the negative side, and as noted in Section 3 above, the preparation team did not foresee, and
+consequently did not mitigate, the risks to delay stemming from the time taken to approve the new Electricity Law
+and the rigidities associated with the Bank ’s procurement procedures.
+
+Quality of supervision : Satisfactory . The supervision team consisted of the right mix of specialization and there
+was continuity of team leadership and of most key positions . Eight missions were conducted over the six year life
+of the project, with an intensification of the effort during the difficult initial period after effectiveness . The Bank's
+office in Ankara was closely involved throughout, and latterly the team leader was based there . The supervision
+team demonstrated initiative and flexibility in adjusting procurement and safeguard compliance requirements to
+make them more suitable to a private sector led operation, thus helping to ensure effective implementation .
+Although these adjustments were not reflected in a Loan Agreement amendment until two years after
+effectiveness, thereafter implementation proceeded rapidly . According to the ICR, this flexibility did not, however,
+signify neglect of safeguard requirements, and the technical assistance provided for the screening and
+monitoring of the environmental and social dimensions of subprojects was highly appreciated by TSKB and TKB .
+
+                      at -Entry :Satisfactory
+ a. Ensuring Quality -at-
+
+b. Quality of Supervision :Satisfactory
+
+ c. Overall Bank Performance :Satisfactory
+
+
+ 9. Assessment of Borrower Performance:
+
+Government performance : Satisfactory . Throughout preparation and implementation, the Government
+demonstrated strong commitment to the PDO . Its policies, such as the enactment of market -liberalizing and
+enabling legislation in the power and water sectors were critical to the project ’s success. The Authorities also
+responded in a flexible and timely manner to feedback they received from investors and financial institutions . For
+example, when companies complained that setting a maximum price for renewable energy with no price limit for
+conventional power discriminated against the former, the Government permitted renewable power to be traded on
+the wholesale market at a price above the guaranteed feed -in tariff. The Government does, however, share some
+of the responsibility for the delays in securing legislative passage of the new Electricity Law .
+
+Implementing agency performance : Satisfactory . The implementing agencies were the two financial
+intermediaries, TSKB and TKB. Both performed satisfactorily in selecting individual subprojects, ensuring their
+economic, technical and financial viability, and their compliance with safeguard policies and other guidelines .
+Even before the project, TSKB had established itself as the leading Turkish financing institution for renewable
+energy projects. Thanks in part to its long term working relationship with the Bank, it has developed a
+well-functioning environmental management system . TKB did not have a comparable level of expertise, and at
+the start experienced a considerably lower rate of disbursement . Gradually, however, its capacity was built up,
+and it did acquire in-house project screening and environmental expertise instead of relying, as previously, on
+engineers who did not possess the appropriate qualifications .
+
+ a. Government Performance :Satisfactory
+
+b. Implementing Agency Performance :Satisfactory
+
+ c. Overall Borrower Performance :Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+Design . The M&E system, designed in collaboration with the implementing agencies, was simple with a few clear,
+measurable and time-bound KPIs directly related to the PDO . Their achievement was within the control of the
+Borrower and implementing agencies. The baseline data were also well defined and the system was put in place
+prior to the start of implementation.
+
+Implementation . The M&E system was well operated throughout implementation, and reporting on the status of all
+subprojects was thorough and timely . Hence, factors contributing to initial delays, such as pricing problems,
+procurement rigidities and lack of capacity in dealing with safeguard issues, were quickly identified and solutions
+found.
+
+Utilization . Both TKSB and TKB now have well-established units for assessing and monitoring renewable energy
+subprojects, and the M&E arrangements put in place remain in use for subprojects financed from non -Bank sources.
+The establishment of such M&E capacity was of special importance in TKB which lacked the pre -project
+infrastructure of its sister institution .
+
+a. M&E Quality Rating : High
+
+
+11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
+
+Environment . All subprojects, several of them in what would be Category A under OP 4.01, were subjected to an
+environmental review process. This process reflected both Bank and Turkish regulatory requirements . Initially,
+Category A projects could not be financed under the loan since there appeared to be an inconsistency between
+national regulations and the Bank ’s policy – the former seemed to entail only one public consultation during the
+preparation of the Environmental Impact Assessment (EIA), whereas the Bank stipulates a minimum of two .
+However, upon further review, it was determined that Turkish regulations do in fact require more than one
+consultation – a draft EIA is required to be made available for public comment, and the comments would be taken into
+account in finalizing the Assessment . This procedure was deemed to satisfy the Bank ’s requirements for a second
+public consultation for Category A projects, and the initial prohibition on the financing of such subprojects under the
+loan was removed. The Operating Manual (OM) was revised to include procedures for Category A activities . The ICR
+reports that all subprojects were deemed to be “generally compliant�? with environmental safeguards requirements,
+thereby implying that compliance was less than 100%. The project team subsequently clarified that Bank supervision
+missions had identified some small hydro plants for which Environmental Management Plans (EMP) had not been
+prepared prior to the approval of the subprojects by the financial intermediaries . However, the Bank requested that
+EMPs be prepared for these plants and this was done by the investors . Eventually, therefore, according to the project
+team, all subprojects complied with the stipulations of OP 4.01.
+
+Land Acquisition . At appraisal, the Bank received assurance from the implementing financial intermediaries that all
+land acquisition for the subprojects would be negotiated directly between the investors and the landowners, and that
+no expropriation would take place . During implementation, however, it became clear that, in some cases,
+expropriation had already taken place before the investors concerned had approached TSKB and TKB for financing .
+The OM was, therefore, revised to include guidelines for dealing with expropriation in subsequent cases . Each land
+acquisition was subject to Bank review and non -objection, and the ICR reports that social safeguard policies were
+complied with. Moreover, the project team later informed IEG that Turkish expropriation law is consistent with the
+Bank's social safeguards, so that even those cases of prior expropriation did not involve any conflict with Bank
+policies. No resettlement took place as a result of the project ’s activities.
+
+Fiduciary . According to the ICR, financial management arrangements were satisfactory, and were monitored by
+Bank staff in the Ankara office as well as by the Turkish Banking Regulatory and Supervisory Agency . This Agency
+maintained close and frequent communication with the Bank in order to keep the latter informed of any problems that
+might arise concerning either of the financial intermediaries . However, according to the ICR, no fiduciary issues
+arose during implementation.
+
+Procurement . As reported in Section 2.d above, Bank procurement requirements were eased to make them more
+compatible with private investment requirements . In a follow-up renewable energy project, these more flexible rules
+are being applied from the outset . In order to ensure that Bank procurement principles are, nonetheless, respected,
+an independent post hoc procurement audit is being carried out for the follow -up energy project referred to, and is
+expected to be completed by the end of FY 10.
+
+Other impacts and contributory factors . TSKB and TKB estimate that the portfolio benefiting from the loan led to
+direct long term employment opportunities for some 530 people, many of them in less developed, mountainous parts
+of the country where there are fewer possibilities for regular employment . The Mamak landfill, financed under the
+project ,has reduced the exposure of the citizens of Ankara to pollution, unpleasant odors and health risks .
+
+Although not financed by this loan, the Bank has been active in supporting related government efforts which were of
+critical importance to successful project implementation, including (a) improving the collection, evaluation and
+dissemination of technical data and information about possible renewable project sites to potential investors; (b)
+development of enabling legislation for renewable energy (for example, policy advice for the Electricity Market Law
+and related application manuals ); (c) the establishment of a well-functioning power wholesale market and other
+institutional development activities; (e) restructuring of the electricity distribution system; (f) improving public-private
+cooperation in developing hydropower (for example, in helping to set up the procedures for licensing and allocating
+water use rights for small hydro plants ).
+
+
+
+12.
+12. Ratings :                               ICR                 IEG Review                      Reason for
+                                                                                         Disagreement /Comments
+                     Outcome : Highly Satisfactory         Highly Satisfactory
+          Risk to Development Negligible to Low            Negligible to Low
+                     Outcome :
+
+           Bank Performance : Satisfactory                 Satisfactory
+
+       Borrower Performance : Satisfactory                 Satisfactory
+
+                 Quality of ICR :                          Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to
+arrive at a clear rating, IEG will downgrade the relevant ratings as
+warranted beginning July 1, 2006.
+- The "Reason for Disagreement/Comments" column could
+cross-reference other sections of the ICR Review, as appropriate .
+
+13. Lessons:
+
+Among the lessons drawn in the ICR from the preparation and implementation of this project, the following are
+noteworthy:
+    There is very considerable potential for leveraging Bank financing for renewable energy projects . However, for
+    this to be fully realized, proper attention must be paid, as in this case, to developing the project screening and
+    monitoring capacity of the financial intermediaries, and ensuring that supportive, and socially and
+    environmentally appropriate, policy, regulatory, pricing and land acquisition regimes are in place .
+    It is almost certain that a significant number of subprojects will consist of hydro plants; these require, in
+    addition to the above, transparent and streamlined procedures for obtaining licensing and water use rights .
+    It is important for Bank procurement requirements and procedures to be applied flexibly when dealing with
+    private sector subprojects . In order, however, to ensure that Bank procurement principles are respected, it
+    may be appropriate to carry out an independent procurement audit .
+
+14. Assessment Recommended?                Yes      No
+
+ Why?
+To help update IEG's 2005 review of the Bank's renewable energy portfolio, as an input to IEG's ongoing study on
+the Bank Group's performance with respect to climate change .
+
+
+
+
+15. Comments on Quality of ICR:
+
+
+This is a well written and thoroughly prepared ICR, and reflects both sector and country knowledge. The discussion
+of procurement and safeguards issues would, nonetheless, have benefited from greater clarity.
+
+a.Quality of ICR Rating : Satisfactory
+

DataSource/000020051-20140624191709.txt

@@ -0,0 +1,480 @@
+                                                                                                              ICRR 13562
+                                                                                              Report Number : ICRR13562
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+        1. Project Data:                                     Date Posted : 05/16/2011
+
+              PROJ ID : P071464                                                   Appraisal                Actual
+        Project Name : Renewable Energy                            US$M ):
+                                                    Project Costs (US$M):                      8.85                 7.33
+                          Resources Project
+               Country : Croatia                     Loan/         US$M ):
+                                                     Loan /Credit (US$M):                      5.85                 4.39
+       Sector Board :                                              US$M):
+                                                     Cofinancing (US$M  ):
+         Sector (s):     Central government
+                         administration (55%)
+                         Central government
+                         administration (55%)
+                         Renewable energy
+                         (45%)
+                         Renewable energy
+                         (45%)
+
+         Theme (s):         Pollution management
+                            and environmental
+                            health (29% - P)
+                            Climate change (29% -
+                            P)
+                            Regional integration
+                            (14% - S)
+                            Regulation and
+                            competition policy
+                            (14% - S)
+                            Law reform (14% - S)
+       L/C Number :
+                                                    Board Approval Date :                                   06/23/2005
+      Partners involved :                                  Closing Date :              03/31/2010           05/31/2010
+
+
+
+Evaluator :                 Panel Reviewer :        Group Manager :          Group :
+Fernando Manibog            Robert Mark Lacey       IEG ICR Review 1         IEGPS1
+
+2. Project Objectives and Components:
+
+a. Objectives:
+
+This project was financed by the Global Environment Facility (GEF); no IBRD or IDA funds were involved . According
+to the GEF Trust Fund Grant Agreement dated July 27, 2005: "The objectives of the Project are to assist in
+developing an economically and environmentally sustainable market for renewable energy (RE) in Croatia."
+
+The PAD dated May 27, 2005 states on page 4 essentially the same Project Development Objective (PDO), which is
+"...to help develop an economically and environmentally sustainable market for renewable energy resources in
+Croatia." In addition, the PAD also indicates the Global Environment Objective (GEO) as follows: "...to reduce
+greenhouse gas emissions on a continuous basis by overcoming barriers to implementation of renewable energy ."
+
+This Review is based on the PAD statements of both the PDO and the GEO since they are more monitorable .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+No
+
+c. Components (or Key Conditions in the case of DPLs, as appropriate):
+
+The project included two components :
+
+Component I: Market Framework (appraisal cost, US$2.0 million; actual cost, US$2.10 million)
+This component provided technical assistance (TA) to support the Government of Croatia (GOC) in designing and
+implementing the necessary policies and secondary legislation to increase the share of renewable energy in the
+country's electricity supplies . The TA consisted mainly of legal and technical support, as well as capacity -building
+and advice, to the government agencies and other entities involved in creating the regulatory framework for
+renewable energy, implementing the new system, and streamlining the permitting process . Those institutions
+included:
+     MoELE: Ministry of Economy, Labor and Entrepreneurship (the Bank's direct counterpart )
+     EPEEF: Environmental Protection and Energy Efficiency Fund
+     HBOR: Croatian Bank for Reconstruction and Development
+     CERA: Croatia Energy Regulatory Agency
+     HEP: Croatian Electricity Company, which is also the transmission and distribution system operator
+     MoEPPPC: Ministry of Environmental Protection, Physical Planning and Construction
+and also the banking community, and private developers, and NGOs . Component I also included support for the
+Project Implementation Unit (PIU), information dissemination, and monitoring and evaluation, which was later
+cancelled.
+
+Component II: Project Preparation (appraisal cost, US$6.50 million; actual cost, US$4.88 million)
+This component provided contingent loans, as well as grants for initial project development costs and investment
+support. The Contingent Loan Facility (CLF) was established to provide loans to qualified project developers on a
+cost-sharing basis. The contingent loans would either be capitalized in the project financing, or converted into a grant
+if the project did not proceed to implementation . The grants were used to identify candidate projects for RE
+investments and cover initial development costs, such as feasibility studies . To facilitate the creation of this project
+pipeline, a Renewable Energy Advisory Facility (REAF) was created under MoELE to provide information and
+know-how to project developers and equipment suppliers . Capacity-building and financial advice were also provided
+to EPEEF, commercial banks and municipal finance authorities .
+
+d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+
+Cost and Financing :
+The GEF provided US$890,000 of grants for Component 1. For Component II, the GEF financed US$ 2.0 million to
+establish the CLF and provided grants of US$ 1.5 million, for a total of US$3.5 million. The rest was provided by
+mainly by GOC. It was anticipated that EPEEF and the final private borrowers would also provide funds, but only one
+deal reached financial closure . Thus, at project closing, the total actual costs (including a Project Development
+Facility funding of US$350,000) amounted to US$7.33 million, of which GEF financed US$4.39 million, and GOC
+provided US$2.94 million.
+
+Key Dates :
+In March 30, 2010, the Closing Date was extended by two months, from March 31, 2010 to May 31, 2010, to allow
+the signing of six contracts that were pending approval under the CLF . On October 5, 2010, an undisbursed amount
+of about US$1.46 million was cancelled from the Grant.
+
+
+
+3. Relevance of Objectives & Design:
+
+Relevance of Objectives : Substantial
+The project’s objectives were, and still are, substantially relevant to the development of Croatia ’s energy sector. In
+January 1999, the Government’s Energy Sector Development Strategy called for post -war recovery and transition
+towards energy security through, among other measures, the promotion of energy efficiency and renewable energy
+resources development. The Energy Law of July 2001 provided for the development of renewable energy resources
+and for a minimum share of total energy supply to be met from renewable energy . Similarly, Croatia’s National
+Environmental Action Plan (NEAP) of 2001 called for encouraging the use of environmentally friendly fuels in thermal
+and electrical energy generation, together with investments in energy efficiency . The current FY09-FY12 Country
+Partnership Strategy focuses on assisting Croatia in joining the EU, within which renewable energy development
+continues to be relevant by reducing the vulnerability of the economy to oil price shocks, increasing the sustainabilit y
+of long-term development, and helping to mitigate climate change .
+
+Relevance of Design : Modest
+The design of the project's implementation timetable was too ambitious in light of the weak capacities in the RE
+sub-sector when the project was conceptualized and appraised, leading to significant risk that the RE investments
+would not materialize. The legal and regulatory environment was clearly inadequate, hence it was not clear whether
+the pipeline of RE projects could be defined, since the enabling environment had not yet been established in the first
+place. The PAD did acknowledge this risk of including Component II for Project Preparation, but as recognized on
+page 4 of the ICR, the Bank under-estimated the time for these legal and regulatory barriers to be overcome,
+resulting in a two-year delay in starting Component II of the project . Legal issues already delayed Grant effectiveness
+and the establishment of the Project Implementation Unit (PIU) at the outset. The ambitiousness of the
+implementation time frame became clear shortly after Grant effectiveness when the operational aspects of a contract
+on the CLF that was signed in May 2006 between the Croatian Bank for Reconstruction and Development (HBOR)
+and EPEEF could not be finalized until January 2007 due to unresolved issues regarding EPEEF's role . This was yet
+another unfortunate delay since the GEF Project Document and the Project Implementation Plan had assigned
+EPEEF an important upstream role for the technical appraisals of CLF projects and as a co -financier.
+
+Moreover, the sequencing of activities also had design shortcomings . Despite the long experience and lessons
+already available from Bank lending for credit line operations, the project was designed to prepare a pipeline of
+sub-projects, which is dependent on first implementing the necessary secondary legislation and conditioning of the
+market through a new system of incentives . But the latter was hampered by Government delays and institutional
+weaknesses, which were to be addressed by : (i) creating an advisory facility to provide (yet-unavailable) information
+to private developers and equipment su ppliers, and (ii) building the capacity and providing financial advice to EPEEF
+as well as to (suspicious and highly risk -averse) commercial banks and municipal finance authorities . The proper
+design sequence and realistic time frame of capacity strengthening, confidence building, market conditioning, project
+pipeline preparation, and eventually investment financing was not evident from the project documentation . The
+simultaneous rather than sequential implementation of these inter -dependent stages had the unfortunate result that
+(partly through Government delays and lack of buy -in from lenders) some of the key enabling TA activities were
+carried out only during the last year of the project .
+
+
+4. Achievement of Objectives (Efficacy):
+
+PDO : To help develop an economically and environmentally sustainable market for renewable energy resources
+PDO:
+in Croatia . Achievement - Substantial
+
+The project has contributed improvements to the overall environment for RE investments, e .g., RE grid integration,
+the RE Registry to support pre-feasibility studies, provision of RE information and practical guidance to project
+developers, high-quality TA to the grid and market operators, and streamlined procedures for registration and
+processing of RE project applications . An important achievement was the secondary legislation that included
+technology-specific feed-in tariffs for RE. Market uptake was initially slow (as explained below) but by the project’s
+Closing Date, the CLF had a $2.0 million portfolio of 15 projects, with 10 other projects on the waiting list . Although
+delayed, the CLF is functioning as planned : 3 of the 15 projects have reached financial closure, with a further 6 to
+follow in 2011. The 3 projects represent 40 MW of RE capacity, while the 6 additional projects represent 79 MW (or
+29% and 56% of the 140 MW planned for the CLF, respectively ). By the end of 2011, the CLF would have leveraged
+a total RE investment value of US$150 million, which is a significant achievement .
+
+With respect to technical assistance, the project helped develop a regulatory environment for RE that is compliant
+with EU requirements, and is expected to help support Croatia in its EU accession efforts . The ICR (pages 26-27)
+indicates that this has received very positive feedback from the Croatian counterparts (e.g., the Ministry of Economy
+credits the project as pivotal to Croatia ’s achievements in the RE area). However, many delays negatively affected
+the market conditioning and setting of incentive frameworks . The secondary legislation with feed -in tariffs was almost
+two years late (i.e., it was passed by Parliament only in July 2007 compared to the end-2005 original target) due to
+resistance from vested sector interests . This delay had the cascading effect of : (i) delaying Component II for Project
+Preparation, hence the CLF became operational only in the latter part of 2007; (ii) the first few loans were signed
+only almost a year later in the second half of 2008; and (iii) most of the other contracts were signed only during the
+last two months of the project. Market uptake was slowed down initially by a general lack of information about the
+CLF, complaints concerning the lending conditions, overly short implementation periods allowed, and the extensive
+bureaucracy. Some TA activities could only be defined when gaps and barriers became more visible as measures to
+support RE were being implemented, but the foregoing delays means that some of the enabling TA were pushed out
+of sequence into the last year of project implementation .
+
+GEO:
+GEO : To reduce greenhouse gas emissions on a continuous basis by overcoming barriers to implementation of
+renewable energy .
+
+At project closing, only one project (out of 15 in the CLF pipeline) reached financial closure, with a projected
+reduction of 17,710 tons of CO2 emissions reduction from its operations . This is 33% of the projected 54,417 tons of
+CO2 emissions reduction from the project . Moreover, compared to the appraisal goal of 3.5% share of RE in national
+energy supplies, an actual share of 0.32% was achieved, which is 9% of the target. These GEO targets of GHG
+reductions and increased RE share in energy supplies depended on the implementation of RE projects, but as of the
+project's Closing Date, uncertainties remained on the financing amount and timing of the 14 projects remaining in the
+pipeline. The 15 CLF loans achieved toward the project's 2010 Closing Date fell short of the 18 loans by the end of
+2009 that was targeted at appraisal .
+
+The ICR indicates that in May 2009 (i.e., one year before the Closing Date ), the GEO rating was downgraded from
+Satisfactory to Moderately Satisfactory due to the lower -than-expected rate of RE project implementation .
+Subsequently in March 2010, the final ISR downgraded the GEO and Implementation Progress rating to Moderately
+Unsatisfactory since only 20% to 25% of the quantitative targets in the Results Framework were likely to be achieved
+before the project's Closing Date . These successive downgrades indicate the project team's own recognition that the
+GEO and its performance targets were far from having been achieved .
+
+
+5. Efficiency (not applicable to DPLs):
+
+The PAD provided the required GEF incremental cost analysis and a "cost-benefit analysis" (CBA) by Frontier
+Economics, a consulting firm. However, the PAD's Annex 9 on Executive Summary of the CBA discussed mainly
+policy questions such as the minimum share of RE in total electricity production, cost recovery principles, and
+regulatory issues. A range of rates of return based on alternative investment scenarios across different RE
+technologies was not provided, although the annex did provide a cash flow model for the CLF and financial
+projections.
+
+The ICR in Annex 3 did provide ex ante calculations of Net Present Value (NPV) and Internal Rates of Return (IRR)
+for the 15 projects in the CLF pipeline. The ICR indicates, however, that although all 15 projects are expected to be
+profitable -- that is, if they can reach financial closure -- the "NPVs may be overstated as the discount rates used in
+the calculation were relative low (between 4% and 7.5% for different projects)." Moreover, the key assumption was
+made that the projects would obtain promotional feed -in tariffs, without which "they would either be unprofitable or
+have to seek highly subsidized financing for their capital costs " according to the ICR.
+
+Component I resulted in a large pipeline of RE and cogeneration projects that have obtained a Preliminary Energy
+Approval. Component II, however, was not cost -effective due to the uncertainty of financial closure despite resources
+spent on preparing them. Although the expected amount of RE investments could potentially exceed US$ 300 million
+if all 15 projects with CLF support reach financial closure, whether closure will be achieved and the timetable for
+financing and construction remained uncertain at project closing .
+
+Efficiency is rated modest on the basis of the foregoing . (The ICR used the rating of moderately unsatisfactory ,
+which is not consistent with the harmonized OPCS -IEG ratings criteria,)
+
+Note: The figures provided below are based on the one wind farm project that reached financial closure (see page
+19, Annex 3 of the ICR).
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                Rate Available?                             Point Value                         Coverage/Scope*
+
+    Appraisal                        No
+
+    ICR estimate                    Yes                                       12.13%                                    12%
+                                          * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+
+Although the project objectives were substantially relevant, the relevance of project design was modest since it
+sought to implement simultaneously, within an unrealistic timetable, the normally sequential steps of enacting
+secondary legislation, institutional capacity strengthening, confidence building among stakeholders, conditioning of in
+centive frameworks and markets, project pipeline preparation, and eventually investment financing . Efficiency was
+modest . The achievement of the PDO was substantial : the project helped to develop the overall regulatory and
+incentive framework for RE development that is also compliant with EU requirements . Although market take-up was
+initially slow, the CLF is functioning, with 9 projects by 2011 representing 119 MW of RE capacity (or 85% of the 140
+MW planned for the CLF). By 2011, the CLF would have facilitated RE investments amounting to a significant
+US$150 million. With respect to the GEO, and the targeted GHG reductions and increased share of RE in energy
+supplies were far from being achieved .
+
+ a. Outcome Rating : Moderately Unsatisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+
+The meager achievement of the GEO and the sustainability of the CLF's impact depend heavily on the extent to
+which RE project developers can secure financing for their projects . Given the lingering effects of the financial crisis,
+particularly the tightening of credit, "... success in finding financiers is far from certain " according to page 12 of the
+ICR. Regarding PDO outcomes, the capacity -building from TA and the enabling environment resulting from the
+secondary legislation (particularly with respect to feed -in tariffs) are likely to be sustainable. However, market
+development has been hindered by the cancellation of a key study under the project that was intended to provide
+operational guidance on levels of feed -in tariffs and RE market share in national energy supplies (see Section 4
+above). Risks to development outcome are significant .
+
+   a. Risk to Development Outcome Rating : Significant
+
+ 8. Assessment of Bank Performance:
+
+Quality At Entry :
+The project preparation efforts adequately covered the technical, financial, procurement and financial
+management aspects of the project . A detailed Project Implementation Plan was prepared as a condition of
+effectiveness. Design alternatives were considered, and lessons from earlier operations were taken into account,
+although the PAD focused mainly on citing cost -sharing grants as existing or having been tried before, without
+really discussing whether they worked, and if not, what lessons have been learned that were reflected in project
+design. Reform and market conditioning steps that should have been sequential were designed to proceed
+simultaneously. The institutional analysis was also deficient given the Bank's underestimation of the time it would
+take for GOC to pass the secondary legislation, especially regarding the feed -in tariffs, which resulted in
+significant delays. This apparent mis-reading of the GOC's ability to enact the necessary legal and regulatory
+framework is surprising given the long lead time provided by the almost 3-year lapse between the Project
+Concept Review (May 2002) and Appraisal (February 2005). The Bank's quality at entry was moderately
+unsatisfactory .
+
+Supervision :
+The staff and budgetary resources for supervision, and the frequency of field visits, seem to have been adequate .
+Documentation was regular (ISRs, Aide-Memoires), and reflects a consistent dialogue that focused on
+implementation concerns and the need for corrective actions . As corroborated by the Borrower's own completion
+report, respect for, and relations with the Bank team were "excellent". In the face of GOC delays in passing the
+secondary legislation, however, the Bank was slow in adjusting the project to a new timetable, which should have
+been done in July 2007 (according to the ICRR) rather than a mere 2 months before the Closing Date. The
+midterm review should have also been carried out around that time, rather than in December 2008. With the
+Bank's own delays, it was no longer credible to try to restructure the project in March 2010 when a restructuring
+was done to extend the project's closing date by 2 months (see section 2 above), especially since only 1 out of 15
+CLF projects reached financial closure by that time . The Bank also agreed to cancel an important M&E
+sub-component (see Section 10 below). The Bank's performance at supervision was moderately unsatisfactory .
+
+                      at -Entry :Moderately Unsatisfactory
+ a. Ensuring Quality -at-
+
+b. Quality of Supervision :Moderately Unsatisfactory
+
+ c. Overall Bank Performance :Moderately Unsatisfactory
+ 9. Assessment of Borrower Performance:
+
+Government :
+The Government demonstrated its support for the project by requiring MoELE to establish a Renewable Energy
+and Energy Efficiency Department under its Directorate of Energy . The Government also created the
+Environmental Protection and Energy Efficiency Fund (EPEEF) and the Renewable Energy Advisory Facility
+(REAF) to promote RE projects. These agencies successfully introduced a new RE legislative and regulatory
+framework as well as the CLF as a dedicated funding facility for project preparation . However, the passing of the
+secondary legislation was significantly delayed by about 2 years. Moreover, although the key agencies and
+funding/advisory facilities were created, GOC allocated inadequate staff and budgetary resources, thus creating
+work overload and long backlogs . Consequently, several important TA activities, including studies on feed -in tariff
+levels and the setting of a realistic RE share in the energy balance, were delayed and eventually cancelled
+because MoELE had limited staff capacity to provide needed inputs to, and clear Terms of Reference for the
+studies. The Government's performance is moderately unsatisfactory .
+
+Implementing Agency :
+The Croatian Bank for Reconstruction and Development (HBOR) was the implementing agency, under which the
+Project Implementation Unit (PIU) was created. Although HBOR's cooperation and coordination with MoELE and
+EPEEF were good, HBOR was very slow in starting up the activities, thus resulting in a precipitous workload
+crunch during the last year of project implementation . Many TA contracts were rushed through during the final 8
+months, which put tremendous pressure on the TA recipients, particularly the market operator, system operators,
+and the energy regulator. In addition, very few loans were signed under the CLF up until the final months before
+the closing date, when 15 contracts were signed. Finally, the restructuring and Closing Date extension request
+reached the Bank about one year after the recommendation was made during a previous Portfolio Review . The
+Implementing Agency's performance is moderately unsatisfactory .
+
+ a. Government Performance :Moderately Unsatisfactory
+
+b. Implementing Agency Performance :Moderately Unsatisfactory
+
+ c. Overall Borrower Performance :Moderately Unsatisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+Design :
+The presentation of indicators in the ICRR, the ICRR Data Sheets, and the PAD was inconsistent and confusing . One
+of the GEO indicators in the ICRR Data Sheets was the "introduction of a new Energy Law ", which was confusing
+since an Energy Law had already been approved in July 2001. This GEO indicator in the Data Sheets is not in page
+4 of the PAD, which indicates only CO2 reductions and an increased share of RE in the national energy supply as the
+two GEO performance indicators. Nonetheless, a more accurate and monitorable indicator --- instead of "the
+introduction of a new Energy Law " -- would have been the "introduction of secondary legislation especially feed -in
+tariffs, market conditioning based on incentives, and the preparation of a project pipeline ." Stated in this manner,
+however, it would have been more appropriate as a PDO indicator rather than a GEO indicator . The PDO indicators
+in the PAD were appropriate, i.e., introduction of the enabling regulatory and incentive framework for renewable
+energy, and number of renewable energy projects reaching financial closure . The ICRR's Data Sheets do not show
+any PDO indicators. However, para 1.2 on page 4 of the ICRR text does distinguish between a GEO and a PDO, and
+indicates two performance indicators under each, as in the PAD . Annex 3 of the PAD, which shows the Results
+Framework and Monitoring Arrangements, seems inadequate since no indication was given on how the information
+from monitoring the GEO performance indicators would be used, even though (at least in the PAD) it was indicated
+that the relevant data will be collected . The GEO outcome information would have been useful in developing a
+strategy for scaling-up RE, fine-tuning policy to address remaining barriers, prioritizing the necessary investments to
+achieve the revised GHG reduction goals, and mobilizing financial resources .
+
+Implementation :
+An information dissemination and M&E sub -component was allocated $350,000 of GEF funds but was not
+implemented, since "the PIU found the M&E requirements to be straightforward and was able to carry out these
+requirements without procuring special consultant support " according to page 3 of the ICR. The ICR did not provide
+any further explanatory details . The cancellation of the M&E component by the PIU (with the Bank's agreement)
+meant that highly useful information -- not only for monitoring deal closures, physical construction milestones, and
+funds flows, but also for evaluating what worked and what did not in the incentive framework -- was not obtained. The
+information would also have provided basis for adjusting scaling -up strategies and market creation policies .
+
+Utilization :
+Since the M&E system was cancelled, and more fundamentally, only one deal reached financial closure, there was
+no utilization of information gathered from monitoring of the performance indicators .
+
+a. M&E Quality Rating : Modest
+
+
+11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
+
+Safeguards :
+The project was classified as a Category "C" and no environmental assessment was required . The ICR reports that
+the Project Implementation Plan specified the procedures for environmental compliance of CLF projects, which were
+followed in preparing the environmental impact studies for those projects .
+
+Fiduciary Compliance :
+The Financial Management rating was Satisfactory for five out of six ISRs . The rating was Moderately Satisfactory
+once, in May 2009, when the FM reports failed to include Government contributions . However, this was resolved in
+the first quarter of 2010, when Government contributions were included in the FM reports and the rating was
+upgraded back to Satisfactory .
+
+
+
+
+12.
+12. Ratings :                               ICR                  IEG Review                      Reason for
+                                                                                          Disagreement /Comments
+                    Outcome : Moderately                   Moderately
+                              Unsatisfactory               Unsatisfactory
+         Risk to Development Significant                   Significant
+                    Outcome :
+
+           Bank Performance : Moderately                   Moderately
+                                Unsatisfactory             Unsatisfactory
+       Borrower Performance : Moderately                   Moderately
+                                Unsatisfactory             Unsatisfactory
+               Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to
+arrive at a clear rating, IEG will downgrade the relevant ratings as
+warranted beginning July 1, 2006.
+- The "Reason for Disagreement/Comments" column could
+cross-reference other sections of the ICR Review, as appropriate .
+
+13. Lessons:
+
+The ICR's Lessons Learned are the appropriate ones and were well formulated, having been clearly derived from
+the preparation and implementation experience of the project . However, the importance of developing a robust
+pipeline of sub-projects by project appraisal or at the latest prior to implementation start -up, needs to be added to
+the ICR's lessons, as summarized below :
+
+    Support for RE development needs to be sequenced carefully and assigned clear milestones that need to be
+    achieved before moving to the pre -investment and investment support stages .
+
+    Creating an enabling RE regulatory framework with adequate financial incentives (such as guaranteed and
+    preferential feed-in tariffs) is a vital pre-requisite for stimulating investor interest in RE projects . A pipeline of
+    credible RE projects can be developed only when this framework is in place .
+
+    Financing of RE projects is still a relatively unknown and untested idea for local banks, which can result in
+    difficulties in mobilizing financial support for RE investments .
+    A centralized registry of potential RE projects can be a valuable tool in managing and disseminating
+    information that is useful to potential RE investors, and can facilitate the development of a RE project pipeline .
+
+    Bank project teams need to pay early attention to address project restructuring needs and take timely actions
+    in order to reduce the chances of the project's falling into problem status .
+
+The ICR also offered as a lesson that "a contingent loan facility could be a key risk mitigation device for small, local
+developers." However, this seems a premature conclusion to draw from the project since only 1 out of 15 projects
+in the CLF reached financial closure .
+
+
+14. Assessment Recommended?                   Yes     No
+
+Why?
+
+Many valuable lessons (related to the adequacy of the regulatory framework, effectiveness of market incentives,
+financial viability and sustainability of RE investments, and institutional capacity requirements ) can be learned from
+the operation of the CLF, since many if not the majority of the 14 remaining CLF projects could still reach financial
+closure in 2011 and 1012. This in turn could help identify further TA and capacity -strengthening needs to scale -up
+RE development, which would be very useful for GOC's sector planning purposes .
+
+
+
+
+15. Comments on Quality of ICR:
+
+
+The ICR is candid and made good use of quantitative evidence . It is clearly written, logical, and in compliance with
+the guidelines for ICRR preparation, including page limits . However, there was inconsistency in the presentation of
+objectives and indicators between the PAD, the ICR's Data Sheets, and the ICR main text . The ICR's Section 3 on
+Assessment of Outcomes should have been based on the project;s objectives, rather than on each of the indicators .
+The Efficiency rating ("Moderately Unsatisfactory") should have been based on the High, Substantial, Modest and
+Negligible scale (hence"Modest" in this case). Annex 7 (Summary of the Recipient's ICR) is very useful in showing
+the legal and regulatory actions supported by the project, although further work to correlate it with the studies listed in
+Annex 2 would have been useful. There were a few errors (e.g., page 1 of the ICR indicates appraisal as April 2005,
+while the Data Sheets show February 2005).
+
+a.Quality of ICR Rating : Satisfactory
+

DataSource/000020051-20140625111521.txt

@@ -0,0 +1,590 @@
+                                                                                                              ICRR 13895
+                                                                                              Report Number : ICRR13895
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                      Date Posted : 09/17/2013
+
+               Country : Armenia
+             Project ID : P083352                                                 Appraisal                Actual
+        Project Name : Renewable Energy                            US$M ):
+                                                    Project Costs (US$M):                     28.70                 30.25
+                          Project
+  L/C Number :            C4159                      Loan/         US$M ):
+                                                     Loan /Credit (US$M):                      5.00                  4.99
+      Sector Board :      Energy and Mining                        US$M):
+                                                     Cofinancing (US$M  ):                    10.00                  9.07
+
+           Cofinanciers : EBRD                       Board Approval Date :                                  03/29/2006
+                                                            Closing Date :             12/31/2010           06/30/2011
+          Sector (s):     Renewable energy (100%)
+          Theme (s):      Climate change (67% - P); Other financial and private sector development (33% - S)
+
+
+Prepared by :             Reviewed by :           ICR Review                 Group :
+                                                  Coordinator :
+Ramachandra Jammi         Kristin Hallberg        Soniya Carvalho            IEGPS1
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+ The Project Development Objective is stated identically in the Project Appraisal Document and Credit Agreement as
+follows:
+"To increase privately owned and operated power generation utilizing renewable energy "
+
+The Global Environmental Objective is stated in the Project Appraisal Document as :
+"To reduce greenhouse gas (carbon dioxide) emissions by overcoming barriers to the development of renewable
+energy."
+
+The project is assessed against the PDO as stated in the Credit Agreement ..
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components:
+  A. Assistance to remove barriers and support project implementation (indicative amount : US$3    US$ 3.65 million; At
+              US$ 3.18 million ): This component was planned to support the following key areas :
+completion : US$3
+1. Improvement of legal and regulatory framework and capacity building for state agencies : (a) revising the existing
+legislation and regulations to improve and streamline procedures for transparent and fair allocation of resources (e.g.
+land rights, water permits, and licenses ); (b) developing sub-legislation to operationalize the law on renewable
+energy and energy efficiency; (c) reviewing and amending the rules of acceptance for small renewable generation for
+the system operator; (d) strengthening the capacity of the (Public Services Regulatory Commission (PSRC), the
+Ministry of Energy (MOE), State Water Committee, and Meteorological Service; (e) limited commodity support to the
+PSRC and MOE.
+2. Support in facilitating investments in renewable sub -projects: (a) Technical Assistance (TA) and capacity
+building to local Financial Institutions (FIs), private investors, local engineering and consulting industry, including
+information and incentives about new renewable energy technologies and associated benefits; (b) developing a
+comprehensive database of renewable energy resources, with a related open source Geographic Information
+System (GIS), and a web portal for identification, assessment, and monitoring of potential renewable energy projects;
+(c) field survey of potential sites; (d) establishing a one-stop-shop for potential investors to facilitate the process of
+obtaining required permits, licences, and other documents; (e) TA to potential investors for project preparation
+activities, such as business plans, feasibility studies, and preliminary designs .
+3. Mechanisms to leverage additional financing : Assistance to the Renewable Energy and Energy Efficiency
+(R2E2) Fund and other implementing agencies to prepare a long -term strategy for the mobilization of additional
+financing for developing renewable energy, including : (a) roadshows and conferences for potential investors; (b)
+design and piloting of different financial instruments to accelerate lending to sub -borrowers, replenish funds and
+enhance the leveraging impact of the Project . These instruments were planned to to involve risk -sharing
+arrangements like partial-risk guarantees, or asset -backed securities such as bonds or other suitable marketable
+instruments secured against the portfolio of renewable projects . Furthermore, syndication was considered for local
+FIs to jointly finance large renewable projects that would be beyond the financing capacity of a single FI .
+4. Project implementation and monitoring: (a) Technical assistance, equipment, and logistical support to
+implementing agencies for project implementation, monitoring, supervision, collection and dissemination of lessons
+learnt; (b) institutional support to the R2E2 Fund to act as an umbrella institution for Clean Development Mechanism
+(CDM) transactions relating to the sub -projects. CDM capacity-building was to be funded by the Government .
+
+                                                US$21.
+B. Financing of investments (at appraisal : US$21                                   US$23.
+                                                                                       23 .27 million ): This component
+                                                    21 .40 million; at completion : US$23
+was to enable private investors to access financing for the development of renewable energy projects . Based on
+comparative analysis of economic and financial viability of different types of renewable projects, it was expected that
+the financing would be mainly targeted at Small Hydropower Projects (SHPP) on natural (run-of-the-river) and
+artificial (drinking water, irrigation pipes and canals ) water flows and Wind Power Projects (WPPs). The sub-loans
+were expected to be in the range of US$ 100,000 to US$2 million with an average project size of US$ 500,000. The
+demand for financing was expected to be significant since different studies confirmed that there was significant
+potential for SHPPs and WPPs that would be competitive with other forms of new generation and that under current
+conditions could add over 300 MegaWatts (MW) of capacity. Further, there were already 35 SHPPs with roughly 90
+MW of total capacity that had obtained all or most of the pertinent water permits, land rights and licenses and were
+ready for implementation if long-term financing was made available. In addition to new SHPPs, there were about 45
+MW of small hydropower capacity operated by the private sector, which was generally in need of rehabilitation and
+had the potential to increase the electricity output .
+
+IDA funds were to be channeled through the R 2E2 Fund. The R2E2 Fund would provide financing to project
+beneficiaries through on-lending to CC (Cascade Credit CJSC or closed joint stock company ), licensed with the
+Central Bank of Armenia and owned by the Cafesjian Family Foundation (CFF), a US based Armenian Diaspora
+organization. CC would pool IDA and EBRD funds and its own co -financing in pre-determined proportions and extend
+loans to beneficiaries.
+
+The project was implemented in cooperation with other donors and partners involved in supporting penetration of
+renewable energy in Armenia. Specifically, EBRD and CFF provided US$ 7 million and US$3 million respectively to
+co-finance the “investment financing�? component of the project. The co-financing provided by EBRD and CFF was
+pooled together by CC with IDA project funds and on-lent to project developers. Additionally, implementation of the
+TA component of the project was coordinated with USAID, which provided some technical assistance to private
+sector for appraisal of renewable energy projects and to PSRC for improvement of regulatory framework for
+renewable energy. Additionally, the R2E2 Fund coordinated with a TACIS-financed project supporting energy sector
+policy in Armenia to update the small hydropower scheme for one of the regions (Gegharkunik Marz).
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+  Project cost, financing and borrower contribution : IDA financed the credit component while GEF financed the
+technical assistance component (the IDA-financed Renewable Energy Project (P083352) was linked to the GEF
+Renewable Energy Project (P090058). The European Bank for Reconstruction and Development (EBRD) also
+co-financed the project while the remaining funds were provided by the project's financing intermediaries and
+sub-borrowers.
+
+The final project cost was US$27.70 million, somewhat higher than the planned cost of US$ 25.05 million. IDA and
+GEF funding at project completion was US$ 4.99 million and US$2.77 respectively, approximately the same as the
+planned amounts (US$5.00 million and US3.00 million respectively). EBRD and borrower contributions at completion
+were US$6.30 million and US$0.45, being marginally lower than the planned levels of US$ 7.00 million and US$0.45
+million respectively. The financial intermediaries and sub -borrowers made up for the rest by together providing
+US$12.59 million against a planned US$$9.60 million.
+
+GEF Grant proceeds were reallocated from “training�? and “unallocated�? categories of the project to “incremental
+operating costs.�? The reallocation was needed because the R 2E2 Fund exhausted the originally allocated funds for
+incremental operating costs due to significant depreciation of the US$ / Armenian Dram (AMD) exchange rate. In
+particular, the AMD depreciated by over 30 percent since project appraisal in December of 2005.
+
+Dates: Given that implementation of some activities under the GEF funded technical assistance component were
+progressing slowly, the Bank agreed to the government's request to extend the project closing date from December
+31, 2010 to June 30, 2011.
+
+3. Relevance of Objectives & Design:
+
+ a. Relevance of Objectives:
+Since 1996, the Government of Armenia undertook structural reforms in the power sector and the sector substantially
+recovered from the severe deterioration of the early 1990s. The key challenge the country’s power sector was facing
+at appraisal was to ensure sustainable and reliable power supply by: (a) shifting reliance from costly sources of
+energy (e.g. electricity for heating) to lower cost alternatives (home insulation, gas, solar heating); and (b) increasing
+the energy diversification and achieving a higher degree of energy security through the utilization of indigenous
+renewable energy resources.     . Armenia was estimated to have significant renewable energy resources, but they
+played a limited role in the country’s energy supply. Approximately 740 MW of small hydropower, wind and
+geothermal resources was identified, which, if implemented, would represent approximately 25 percent of the total
+installed capacity at appraisal date .
+
+The project was well aligned with the strategic objectives of the government as stipulated in the Poverty Reduction
+Strategy Paper (PRSP) adopted by the government in October 2003. The PRSP emphasized the need for policy
+reforms in five key areas, including promotion of private sector development and improvement of public
+infrastructures. More specifically, the PRSP emphasized the importance of maintaining and strengthening energy
+independence by developing indigenous and alternative energy sources and promoting energy efficiency. The
+project was also consistent with the CAS objective of promoting private sector growth by strengthening the financial
+sector and reducing infrastructure bottlenecks .
+
+The project is relevant to current priorities of the country and Bank assistance strategy. In particular, the project is
+well aligned with the existing Energy Sector Strategy (2006) and the National Program on Renewable Energy and
+Energy Efficiency (2007), which prioritizes development of renewable energy as a means of improving the country’s
+energy security and ensuring sustainable energy supply .
+
+The project objective is consistent with the current development priorities as reflected the Country Partnership
+Strategy (CPS) with Armenia for FY 2009-2012. One of the key objectives of the current CPS is to strengthen the
+foundations for competitiveness through investments in new power generation capacity, including renewable energy
+based energy.
+
+Relevance of objectives is rated high
+
+
+ b. Relevance of Design:
+The results framework was clear and logical . The project was designed to work on several fronts : improve the legal
+and regulatory framework and build capacity in relevant state agencies to reduce barriers to development of
+renewable energy and energy efficiency; provide technical assistance to all stakeholders including financial
+institutions and entrepreneurs on technical and administrative issues; and design and pilot different financial
+instruments to accelerate lending to sub -borrowers, replenish funds and enhance the leveraging impact of the
+Project. All these actions would contribute to increasing investment in renewable energy and ultimately result in
+savings in greenhouse gas emissions . A public sector-financed credit line was necessary for various reasons
+including the limited access to long -term finance and lack of experience of local financial institutions; and an
+unfamiliar risk profile of borrowers together with a perception of high risk for renewable energy projects .
+
+Relevance of project design is rated high
+
+
+4. Achievement of Objectives (Efficacy):
+
+Project Development Objective : To increase privately owned and operated power generation utilizing renewable
+energy . Rated Substantial .
+
+Outputs
+Financing of investments in new SHPPs The project provided financing for construction of new SHPPs on natural
+and artificial water flows. The ICR stats that the demand for funds was strong given affordable interest rates, and
+loan maturities that were longer than most prevailing in the market .
+
+Training. The planned training events were completed including "Renewable Energy Weeks" as well as several
+workshops with sessions on preparation of business plans, new renewable energy technologies /equipment,
+prospects and obstacles for development of certain renewable energy technologies in Armenia, renewable energy
+resource potential assessments, and preparation of Environment Management Plans (EMPs).
+
+Overcoming barriers to development of renewable energy . The project conducted several activities to overcome
+barriers to the development of renewable energy in Armenia as below :
+
+    Support for the preparation of legislative amendments for development of renewable energy in the country .
+    Development and adoption of technical standards for renewable energy and regulations for dispatching and load
+    regulation of grid-connected renewable energy plants . These enabled the smooth absorption of new small
+    renewable energy plants by the grid .
+    Support for removing barriers to flow of information on investments in renewable energy . In particular, the project
+    contributed to development of GIS of renewable energy resources in the country and an associated database,
+    which were made publicly available. Additionally, the project supported an update of the SHPP Scheme, which
+    provided critical information/data on potential SHPP sites in the country with brief assessment of
+    economic/financial viability. The update SHPP Scheme was made publicly available and received positive
+    feedback from project developers and investors as a useful resource to facilitate decision -making. Moreover, the
+    R2E2 Fund prepared a detailed guide for investors /project developers with key legislation and regulations
+    pertaining to renewable energy sector and a comprehensive guide on development of business plans and
+    feasibility studies, including financial appraisal of renewable energy projects .
+
+Intermediate Outcomes
+
+Improved capacity of project developers . The project substantially contributed to strengthening of project developers ’
+capacity to prepare and implement renewable energy projects that were connected to the power grid, through
+provision of training and finance . The ICR states that this was evidenced by reduced demand from project
+developers for R2E2 assistance in preparation of business plans /financing applications during the final years of
+project implementation.
+
+Introduction of project financing and improvement due diligence skills of financial institutions . Implementation of the
+on-lending component of the project helped CC to strengthen its professional capacity to provide project financing
+and conduct due diligence of small renewable energy projects . Although CC was merged with Cascade Bank and the
+latter was subsequently overtaken by Ameria Bank, there have been substantial “skill spill-over�? effects as the
+several of the key staff involved in the Bank project were retained .
+
+Outcomes
+
+The total installed capacity of SHPPs financed by the project including EBRD and CFF co -financing was 44.5 MW
+with a total annual estimated generation of 159 GWh (GigaWatt hours).
+
+The technical assistance provided by the project - which aimed at improving the investment environment for
+renewable energy -, together with the strong demonstration effect of early sub -projects, contributed to leveraging
+around US$48 million of private investments in other small renewable energy projects, which added another 88.5
+MW of new renewable energy capacity to the grid with estimated annual generation of 258 GWh. The share of small
+renewable projects in the total generation mix increased from 0.5% at appraisal to 6.5% at completion.
+
+Overall the project contributed to the development of 133 MW of renewable energy capacity against the target of 127
+MW; and 417 GWh of renewable generation to the generation against the target of 336 GWh.
+
+The ICR notes that the implementation of the TA component of the project was coordinated with USAID, which also
+provided some technical assistance to the private sector for appraisal of renewable energy projects and to the PSRC
+(Public Services Regulatory Commission ) for improvement of the regulatory framework for renewable energy .
+Additionally, the R2E2 Fund coordinated with TACIS (Technical Assistance to the Commonwealth of Independent
+States" program, a technical assistance program implemented by the European Commission ) which financed a
+project supporting energy sector policy in Armenia . The project outcomes appear to have benefited from these
+parallel efforts.
+The Global Environment Objective was to reduce greenhouse gas                    (carbon dioxide ) emissions by overcoming
+barriers to the development of renewable energy .
+
+The global environment objective of reducing greenhouse gases was served by the project ’s assistance for
+increasing the capacity for renewable energy in the country, as described above . The development of renewable
+energy was in turn underpinned by the technical and policy assistance provided by the project .
+
+From the combined impact of TA and “financing of investments�? components Carbon dioxide emission reductions
+attributable to the project were 270,770 tCO2 (tons of carbon dioxide) compared to the project target of 218,400
+tCO2 from displacement of more polluting gas -fired thermal generation.
+
+
+ 5. Efficiency:
+  The post-completion economic and financial viability of the project was estimated using cost -benefit analysis for
+framework-type projects. The economic and financial analysis was based on the actual outputs of each component,
+the actual costs during the project implementation and revised projection of costs and benefits . The economic costs
+and benefits were calculated exclusive of taxes and subsidies .
+
+At completion, the project was estimated to have an EIRR of 22 percent, compared to appraisal stage EIRR of 17
+percent. Improvement of the post-completion economic viability of the project is primarily due to higher actual total
+investments in small hydropower plants and, thus, larger amount of more expensive gas -based thermal generation
+displaced. Additionally, the project contributed to improvement of the country ’s energy security by increasing the
+share of electricity supply based on indigenous energy resources .
+
+There was a shortfall in the Financial Internal Rate of Return (FIRR) from appraisal estimates due mainly to a 30-35%
+increase in nominal investment costs . The ICR states that the project was financially sound despite a substantial
+increase in key factors affecting the financial viability of the project .
+
+The financing of investments component of the project provided funding for 23 SHPPs and demonstrated the
+financial and technical viability of such investments . The demonstration effect coupled with the TA component, which
+contributed to improvement of the regulatory environment for renewable energy, facilitated leveraging of around
+US$48 million of private investments in renewable energy .
+
+Overall efficiency is rated substantial .
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                                  Rate Available?                             Point Value                         Coverage/Scope*
+
+     Appraisal                         Yes                                        17%                                     100%
+
+     ICR estimate                      Yes                                        22%                                     100%
+                                            * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+ 6. Outcome:
+   The relevance of objectives and relevance of design are both rated high. The achievement of the project
+development is substantial from the increase in privately owned and operated power generation utilizing renewable
+energy. The global environmental objective is rated substantial with considerable progress in lowering barriers to
+renewable energy and energy efficiency and exceeding the targeted level of greenhouse gases from the project .
+Efficiency is rated substantial given a favorable economic rate of return fore the project . Overall outcome is rated
+satisfactory .
+  a. Outcome Rating : Satisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+   The regulatory environment for development of SHPPs continues to be favorable with limited political interference.
+The feed-in tariff is automatically adjusted for changes in inflation and AMD/Euro exchange rate to compensate the
+owners for changes in the local currency denominated costs of imported equipment and inflation. The SHPPs are
+run in technically sound manner with adequate operation and maintenance budget.
+
+However, it should be noted that future rate of increase in the share of renewable energy based power generation
+might be lower given that economically/financially most viable projects have mostly been developed. Therefore, to
+maintain the momentum of small renewable energy development, the government will need to revisit its interim and
+long-term renewable energy penetration targets, identify and remove the remaining obstacles to development of
+renewable energy and make a decision on future feed-in tariffs in order to realize the less attractive renewable
+energy potential. The Renewable Energy Roadmap developed as part of this project would facilitate the government
+thinking on those issues.
+
+The Government decided to continue using the R2E2 (which has gained significant experience from other Bank and
+donor funded projects) to further invest and promote investments in renewable energy and energy efficiency. In
+particular, the Government plans to authorize the R2E2 Fund to use the repayments from on-lending components of
+the Bank financed Renewable Energy and Urban Heating Projects to directly finance renewable energy and energy
+efficiency projects or on-lend the revolving funds through financial institutions. However, the government needs to
+take several steps to further secure the sustainability of renewable and energy efficiency projects:
+
+    improve enforcement of compliance with minimum environmental flow requirements of rivers to discourage
+    SHPP owners from utilizing the technically possible maximum of the river volume and not honoring the minimum
+    environmental flow regulations.
+    expedite adoption of the revised methodology for calculation of the environmental flow of rivers and maximum
+    allowed intake from surface waters since the existing methodology is not clear enough and creates room for
+    misinterpretations.
+    further improve the regulatory framework for renewable energy. Specifically, the current validity period of 3
+    years for water use permits should be increased, to reduce regulatory risks for investors. Moreover, the
+    maximum review period allowed to the Ministry for reviewing reports on Environmental Impact Assessment
+    should be reduced from the current maximum of 12 months, so not to hurdle timely development of projects due
+    to bureaucratic delays.
+
+Overall, taking into account all of the above issues, the risk to development outcome is rated negligible to low .
+
+   a. Risk to Development Outcome Rating : Negligible to Low
+
+ 8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+    The project design drew upon the lessons learned from design and implementation of similar renewable
+energy projects, including Turkey Renewable Energy Project (2004), Hungary Small Hydro Project financed by
+GEF (2003), Macedonia Power System Improvement Project, which had a component on rehabilitation of mini
+hydropower plants (1998), India Renewable Resources Development Project (1992), a number of Mexican
+renewable energy projects.
+
+The project appropriately relied on competent private financing institutions to implement the on -lending
+component, and included substantial TA to remove obstacles to development of renewable energy .
+
+The project was underpinned by sound economic and financial analysis . Specifically, analysis of costs of small
+renewable projects (SHPPs on natural and artificial water flows and WPPs ) was conducted to demonstrate the
+cost-competitiveness of small renewable projects compared to new mid -size/large hydropower plants, new CCGT
+(combined cycle gas turbine) plants, and electricity imports. The project team also conducted a cost -benefit
+analysis for investment component of the project to assess its economic and financial viability .
+
+Some aspects/technologies of renewable energy are quite knowledge -intensive and involve significant “learning-
+by-doing.�? Therefore, the project design should allow sufficient flexibility to adjust project implementation
+accordingly. The TA component of the project was flexible enough to allow changes in the focus of activities
+given the results/findings of various feasibility studies /estimates of renewable energy resource potential .
+Moreover, the “financing of investments�? component did not prescribe specific types of renewable energy based
+power plants that could be financed under the project, which is considered good practice in the sector . It rather
+required CC to conduct its own due diligence and ensure that the project is technically, financially and
+environmentally sound.
+
+The project was geographically dispersed . This served to take advantage of the renewable energy potential
+across the country. This process was aided by the update of the SHPP scheme, the GIS and the associated
+database on renewable energy potential covering the entire territory of the country .The “financing of investments�?
+component financed a total of 26 SHPPs in 8 regions (marzes) of Armenia. The TA component of the project also
+had broad geographical coverage .
+
+The risk assessment was thorough and focused on both PDO level risks (changes in the legal and regulatory
+framework for renewable energy, lack of private sector interest to borrow for renewable energy investments ) and
+component result risks (e.g. competency of R2E2 Fund, capacity of CC to implement the project ). The identified
+mitigation measures were appropriate and took into account the experience of similar projects implemented by
+the Bank. It should be noted that during the project implementation none of the risks materialized and
+implementation of the project suffered neither from identified PDO level nor component result risks .
+
+The monitoring and evaluation (M&E) framework was well defined with clear and measurable indicators as
+discussed in section 10 a.
+
+            at -Entry Rating :
+   Quality -at-                                  Highly Satisfactory
+
+ b. Quality of supervision:
+    The Bank Team carried out 12 supervision missions during the project . Overall, the supervision missions
+provided a comprehensive assessment of the implementation progress . The skill mix of supervision missions
+ensured that all the key issues arising were adequately handled and that the government received the needed
+advice and guidance.. Issues arising during implementation were discussed with the government counterparts in
+a constructive manner and appropriate action plans were developed and agreed . The project team proactively
+observed the situation on the ground to ensure that the project design remained relevant . Several of the project
+team members were field-based, including the operations officer, the energy consultant, the procurement
+specialist, and the financial management specialist . This allowed for more effective and quick resolution of
+fiduciary issues. During the project implementation, the task team composition did not change, which increased
+the efficiency of support provided to the Government . During supervision, the task team closely coordinated with
+EBRD and the Cafesjian Family Foundation (CFF) to discuss outstanding issues and to develop a unified
+approach in handling them. The fiduciary and safeguards aspects of the project were adequately supervised .
+The financial management supervision and procurement ex -post reviews were conducted as scheduled . The
+implementation and utilization of the M&E framework was supervised effectively as described in section 10.
+
+
+   Quality of Supervision Rating :               Highly Satisfactory
+
+   Overall Bank Performance Rating :             Highly Satisfactory
+
+
+9. Assessment of Borrower Performance:
+
+ a. Government Performance:
+    Throughout the project preparation and implementation the key counterpart, the Ministry of Energy and
+Natural Resources, provided the needed support to resolve various project related issues. When the project was
+designed, the Government had already established quite attractive feed-in tariffs for renewable energy based
+power plants (higher than for any other generation plants at the time of appraisal) and introduced mandatory
+off-take of all the electricity generated for the period of 15 years after receipt of operating license.
+The project funds under “financing of investments�? component of the project were almost entirely disbursed by
+the end of 2009.
+
+The implementation of the technical assistance component was delayed towards the final two years of the
+project implementation. This was primarily due to absence of consensus within the government on spending
+directions for the remaining technical assistance funds. It was planned to use those funds to finance preparation
+of a pilot solar PV project, technical and economic/financial assessments of the Loriberd hydropower project, and
+a study on innovative financial mechanisms for financing of renewable energy projects. However, the
+Government found a private investor for the pilot solar PV project and decided to pursue construction of the
+Loriberd power plant as a private project. Moreover, the government reached a consensus on specific focus of
+the study on innovative financing mechanisms at a late stage of project implementation, which did not allow
+sufficient time to complete the procurement and the study before the project closing date, which was extended by
+6 months.
+
+   Government Performance Rating                              Satisfactory
+ b. Implementing Agency Performance:
+    The implementing agency of the project, the R 2E2 Fund had adequate capacity to implement the project . The
+R2E2 Fund had solid management team with adequate qualifications and extensive experience, including a
+project coordinator. The operations of the R2E2 Fund were overseen by the Board of Trustees, originally chaired
+by the Prime Minister and subsequently by the Minister of Energy and Natural Resources .
+
+The R2E2 Fund was adequately staffed and professionally managed . The turn-over of key staff at the R2E2
+Fund was low, which ensured seamless implementation of the project . The R2E2 Fund effectively managed both
+the investment and TA components of the project . The R2E2 Fund was effective in coordinating and providing
+guidance on the project implementation to the private financial institutions, implementing the financing of
+investments component of the project . There were no major issues associated with fiduciary aspects of the
+project. The R2E2 Fund engaged on an “as needed�? basis, an environmental expert to review the project -specific
+EIAs/EMPs for SHPPs and to supervise construction and operation of SHPPs through random site visits . All
+audits were unqualified.
+
+   Implementing Agency Performance Rating :                   Highly Satisfactory
+
+   Overall Borrower Performance Rating :                      Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+ a. M&E Design:
+   The key outcome indicators for the project (installed capacity (MW) of renewables added to the power grid;
+Renewable generation (GWh) added to the generation mix; and Carbon dioxide emission reductions (tCO2)) were
+well-defined, relevant to the PDO and consistent with the project components . The baseline data for all outcome
+indicators was available at appraisal . The R2E2 Fund had overall responsibility for monitoring and evaluation of the
+project and developed a management information system meeting the project needs . The management information
+system provided information and data on the pipeline of renewable energy sub -projects; types of sub-projects;
+disbursed, committed and invested amounts, cost -sharing with financing partners; repayment delays; and fund
+reflows.
+
+ b. M&E Implementation:
+   Based on that information system, the R 2E2 Fund submitted regular and on-demand implementation progress
+reports to the Bank, which also contained the key outcome and intermediate results indicators . The ICR states that
+the data on key outcome indicators, which was obtained from PRSC (Public Services Regulatory Commission ), was
+reliable. Specifically, data on installed capacity of renewable generation added to the power grid and renewable
+energy generation added to the generation mix was provided by the PSRC – an independent multi-sectoral regulator
+with well-established data collection and reporting systems . Additionally, CC regularly submitted to the R 2E2 Fund
+quarterly reports on pipelines of projects, disbursements, repayments, etc .
+
+ c. M&E Utilization:
+   The M&E system was a useful feedback for the implementing agency and Government during the project
+implementation and augmented the decision -making.
+
+M&E Quality Rating : High
+
+
+
+
+11. Other Issues
+
+ a. Safeguards:
+Environmental and Social Safeguards : The project was designed and implemented in compliance with the Bank's
+safeguard policies and procedures . The project was assigned the “Financial Intermediary�? environmental screening
+category and triggered OP 4.01 (Environmental Assessment), OP 7.50 (Projects on International Waterways ) and OP
+4.37 (Dam Safety). The EMP adequately described the potential threats and their mitigations . The Operations
+Manual (OM) of the project contained an elaborate description of the environmental assessment process as well as
+requirements for compliance monitoring .
+The project did not have significant or irreversible long -term environmental impacts. On the opposite, it contributed to
+reduction of GHG emissions by replacing some of the gas -fired thermal generation. The only environmental impacts
+were caused by the construction of SHPPs . CC had a designated specialist, which reviewed all of the 26 sub-project
+financing applications to ensure that the environmental assessment report and EMPs of specific projects were in
+compliance with Bank’s safeguard procedures. Additionally, the R2E2 Fund regularly hired a qualified environmental
+specialist to review the environmental due diligence process at CC and conduct site visits during construction and
+operation of SHPPs financed under the project . As part of the supervision missions, the Bank ’s environmental
+specialist also did not identify any major environmental issues and deviations from the EMP .
+
+ b. Fiduciary Compliance:
+Procurement: Procurement under the project was carried out in accordance with the project design and in
+compliance with the legal agreement. The R2E2 Fund had adequate procurement capacity with qualified
+procurement specialists and accurate as well as comprehensive procurement filing . The bidding documents,
+evaluation reports and contracts were prepared and presented in a competent manner . No major procurement issues
+were identified during the project implementation .
+
+Financial Management: Financial management under the project was conducted in accordance with the Bank
+guidelines and rules. The FM staffing and organization arrangements were overall adequate and acceptable to the
+Bank. The Interim un-audited financial reports (IFRs) as well as the project and R2E2 annual financial audits were
+submitted without delays and were of adequate quality . The level and timeliness of the government co -financing was
+satisfactory. There were no qualified audits.
+
+c. Unintended Impacts (positive or negative):
+
+
+ d. Other:
+The project had temporary and permanent impact on poverty reduction. Specifically, several residents from the local
+rural areas were temporarily hired to work on construction of 26 SHPPs financed under the project. There was also
+development of local manufacturing tied to renewable energy infrastructure. The average construction time is
+estimated at around 24-36 months and the average salary for temporary employees was around US$400/month.
+Additionally, the project contributed to long-term poverty reduction by creating permanent jobs. In particular, each
+new operational SHPP resulted in creation of 3-5 new jobs (e.g. power engineers, janitors). Therefore, the project is
+estimated to have generated 100 new jobs with the average monthly salary of around US$ 200-300.
+
+
+12.
+12. Ratings :                              ICR                   IEG Review                   Reason for
+                                                                                       Disagreement /Comments
+                    Outcome : Satisfactory                  Satisfactory
+         Risk to Development Negligible to Low              Negligible to Low
+                    Outcome :
+
+           Bank Performance : Satisfactory                  Highly Satisfactory   Sound project design, risk assessment,
+                                                                                  and supervision; including the M&E
+                                                                                  framework and implementation..
+       Borrower Performance : Satisfactory                  Satisfactory
+
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+13. Lessons:
+ The following two lessons are adapted from the ICR :
+ Market -driven choice of technology is essential for sustainable development of renewable energy . The project
+—Market
+did not prescribe any renewable energy resource and application of specific renewable energy technologies, but
+rather focused on creation of enabling environment, specified general sub -project eligibility criteria and required
+the PFI, implementing the “financing of investments�? component, to do its own due diligence .
+
+ Well-
+ Well -designed financing mechanisms for renewable energy projects are important for scale-
+—Well                                                                                       scale-up of renewable
+         investments Introduction of project financing coupled with capacity building support to CC on project
+energy investments.
+financing, technical, environmental and other aspects of renewable energy projects helped to introduce to market a
+new lending product, thus, explicitly displaying the viability of commercial lending for renewable energy projects
+and eliminating unwarranted perceptions of risks associated with such projects .
+
+14. Assessment Recommended?                 Yes     No
+
+Why? Renewable energy projects have had a mixed record in different countries, both within the Eastern Europe
+and Central Asia region and elsewhere . A field-based assessment of this project as part of a cluster of similar
+projects will throw light on the factors driving sustainability of renewable energy promotion efforts .
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is written in a clear, thoughtful and analytical manner . The document provides evidence of outputs and
+outcomes. The lessons are well-grounded in the project's institutional and implementation experience . The core
+portion of the document is concise, and relevant information is provided in annexes
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000020051-20140625234238.txt

@@ -0,0 +1,456 @@
+                                                                                                                ICRR 14105
+                                                                                                Report Number : ICRR14105
+
+
+ IEG               ICR Review
+                   Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                        Date Posted : 10/03/2013
+
+               Country : Mongolia
+             Project ID : P099321                                                   Appraisal                Actual
+        Project Name : Renewable Energy                             US$M ):
+                                                     Project Costs (US$M):                       23.0                 22.23
+                          For Rural Access
+                          Project (reap)
+  L/C Number :            CH263                       Loan/         US$M):
+                                                      Loan /Credit (US$M):                       3.50                  3.43
+      Sector Board :      Energy and Mining           Cofinancing (US$M):
+                                                                    US$M ):                      9.50                  8.81
+
+           Cofinanciers : Government of               Board Approval Date :                                 12/19/2006
+                          Netherlands, GEF                     Closing Date :           12/31/2011          06/30/2012
+          Sector (s):     Renewable   energy  (90%);  Central government  administration (8%); Health (1%); General
+                          education sector (1%)
+          Theme (s):      Rural services and infrastructure (50% - P); Regulation and competition policy (25% - S);
+                          Climate change (25% - S)
+
+Prepared by :             Reviewed by :            ICR Review                  Group :
+                                                   Coordinator :
+Varadarajan Atur          Robert Mark Lacey        Soniya Carvalho            IEGPS1
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+ As per the project appraisal document (PAD, pp 4-5), the project development objective (PDO) is “to increase
+access to electricity and improve reliability and affordability of electricity services among the herder population and in
+off-grid Soum-centers�? (a Soum is a district within a province) and the global environment objective (GEO) is “to
+remove barriers to the development and use of renewable energy technologies in grid and off-grid connected
+systems and reduce emissions of carbon dioxide.�?
+
+According to the Financing Agreement (p 5), “the objective of the Project is to assist the Recipient in: (i) expanding
+and improving access to electricity and reliability of electricity services in selected off-grid Soum centers and among
+herder population; and (ii) removing barriers to the scale-up of renewable energy use.�? This is identical to the PDO
+stated in the GEF Grant Agreement (p6). The PDO from the Financing Agreement will be used as the basis for this
+evaluation.
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components:
+  There were three components:
+Component 1: Herders’ Electricity Access (US$11.6 m at appraisal; US$11.75 m at completion) involved two
+subcomponents: (i) the investment cofinancing subcomponent (US$10.7 m at appraisal; US$11.0 m after
+reallocation and at completion) supported a combined 67,224 units (50,000 targeted at appraisal) of solar home
+systems (SHS) and small wind turbine systems (WTS) for the Herder population through smart subsidies (i.e.
+targeted subsidies to improve effectiveness) to buy down the investment cost for beneficiaries. This was financed by
+the Government and the grant from the Netherlands; and (ii) the complementary TA part (US$0.9 m at appraisal;
+US$0.76 m at completion) supported sales / service network development, equipment quality standards & control
+and marketing and sales/service.
+
+Component 2: Soum Center Electricity Service (US$10.1 m at appraisal; US$9.31 m at completion) involved two
+subcomponents: (i) investment financing for rehabilitation of mini grids in about 30 off-grid Soum Centers (SCs)
+(US$0.9 m at appraisal; US$0.88 m at completion) and conversion of existing diesel generation units to renewable or
+renewable-diesel hybrid systems (R/RDHS) in about 20 of the rehabilitated SCs (US$8.3 m at appraisal; US$8.0 m
+at completion); and (ii) complementary technical assistance to support policy, regulation, energy management and
+capacity building in SCs, and feasibility studies for hybrid systems (US$0.89 m at appraisal; US$0.43 m at
+completion).
+
+Component 3: National Capacity Building (US$1.31 m at appraisal; US$1.17 m at completion) aimed at national
+renewable energy policy and regulatory framework development and strengthening National Renewable Energy
+Center (NREC) in project management, monitoring, evaluation activities. Some of these activities were also directed
+towards removing barriers to renewable energy use.
+
+A restructuring approved in August-2009 reallocated savings to modestly increase the allocation to the Herders'
+Access component. A second restructuring approved in November-2011 extended the closing date by six months.
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+  Project cost. The final project of US$22.23 m is close to the appraisal estimate of US$23.0 m and the small
+savings allowed expanding the access component. Considering that most of the components were substantially
+implemented as planned, the project costs appear realistic for the nature and scope of activities implemented in the
+local conditions. However, it is not clear from the PAD or ICR how the costs borne by the herders are accounted for
+in the projects costs; it is good practice to include these costs in the project cost and financing plan.
+
+Financing. The financing plan included an IDA Grant (US$3.50 m; actual US$3.43 m), GEF Grant (US$3.50 m;
+actual US$2.46 m), a Grant from the Government of the Netherlands (US$6.0 m; actual US$5.85 m) and the
+contribution of the Government of Mongolia (US$10.0 m; actual US$10.0 m). The “smart subsidy�? part was fully
+covered out of the contributions from the Netherlands and Mongolia. As noted above, for the SHSs under component
+1, the financing provided by herders themselves for the portion of costs above the subsidy part should have been
+clearly shown.
+
+Borrower Contribution. The Borrower’s contribution was substantial at about 44% of project costs and financed
+about 63% of the smart subsidy component.
+
+Dates. Even though the solar home system (SHS) component took two years initially to take off, the project required
+only a six-month extension to complete all subcomponents. The ICR attributes the initial delay to the piloting of the
+mechanism relying on private dealers to self-finance the SHSs first and then to recover costs from the project funds
+and from buyers.
+
+3. Relevance of Objectives & Design:
+
+ a. Relevance of Objectives:
+The project objectives are relevant to Mongolia’s scattered rural population, including many with nomadic life style.
+The project objectives are equally relevant to the Bank's priorities in Mongolia, as noted in the Country Partnership
+Strategy for Fiscal Years 2013-2017 (p. 33). The necessity for rural electrification was also noted in the Bank’s
+Country Assistance Strategy (CAS) of 2005-08. The Government’s own emphasis on rural electrification and large
+budgetary allocation, including for this project, underlines the pertinence of the project’s objectives. The objectives
+are in line with the Bank’s Strategic Framework on Development and Climate Change.
+Relevance of the objectives is rated high
+
+
+ b. Relevance of Design:
+The components were designed to support the achievement of the project development and Global Environment
+objectives, and enabled synergy in the use of IDA, GEF and other funds in the financing plan. The three components
+aimed at the particular target beneficiary group, namely, nomadic herders through component 1, Soum centers
+through component 2 and national frameworks through component 3, with component specific technical assistance
+embedded in them. The choice of portable solar and wind systems was appropriate for the mobile herder population,
+as was the renewable-diesel hybrid for Soum centers. The design also included proven methods to motivate the
+target population to adopt the new technologies.
+Relevance of Design is rated high
+4. Achievement of Objectives (Efficacy):
+  Project Development Objective
+
+(i) to expand and improve access to electricity among herder population
+
+Outputs: The project enabled distribution and sales of 67,224 SHS systems to herder populations compared to
+66,816 units anticipated from the project component at the time of restructuring / reallocation of some savings. The
+ICR notes that these systems covered up to 62.5% of the herder population in 331 Soums, in line with the expanded
+reach (compared to 50% from 50,000 units estimated at appraisal).
+
+Outcomes: The ICR records the favorable results from a qualitative survey of herders covering 10 Soums, wherein
+beneficiaries expressed a high degree of satisfaction with improved lighting and access to communication, and
+information. They also demonstrated a favorable attitude towards the new systems (Annex 5). A typical herder
+family’s annual savings on lighting alone is estimated at $35, which would be about 5% of median income (the
+survey put no monetary value on the other benefits indicated).
+
+Efficacy of this objective is rated “high�?.
+
+(ii) to expand and improve access to electricity in selected off-grid Soum centers
+
+Outputs: The project’s reach under this component was significantly smaller than was estimated at appraisal.
+Rehabilitation of mini grids was performed only at 15 instead of 30 Soum centers; installation of new technology
+equipment was made in 15 SCs instead of 20 planned, of which 11 of were funded by Government itself; further, all
+these 15 SCs with new systems were transferred to Aimag (equivalent of province) utilities and hence were not
+under the management of Soum centers by project closure; the project set up only 15 Soum user association
+compared to 30 planned at appraisal. The ICR notes that the Government allocated substantial resources (about
+US$51 million) for rural electrification initiatives, but is not clear what part of the results achieved is due to this
+government initiative. Therefore, the claim that the project benefitted 18,410 people in off-grid SCs compared to
+16,000 at appraisal is not entirely attributable to the Bank project; it is also not clear if it can be linearly prorated
+since Soum centers would have different population bases.
+
+Outcomes: The ICR records the results from a survey (termed rapid appraisal) conducted in October 2012 (Annex 5
+of the ICR), after the formal closing of the project. The survey covered 3 sites in two regions and included both
+Government financed and Bank financed systems and involved 34 interviews. Generally, the survey found the
+following: (i) the new services are cost effective where recipients could use modern and energy efficient lamps; (ii)
+residents indicated increased comfort, leisure, improved access to communication, ability to store food and thus the
+ability to save money; and (iii) availability of medical care from equipment using electricity and some perceived
+growth in small business like bakery, workshop and the like. The sample size was, however, limited, and a broader
+survey would be needed to confirming these findings. Efficacy of this objective is rated “modest�?.
+
+(iii) to improve reliability of services to herder population For the herder population, the replacement of candles and
+kerosene lamps with SHSs is an immensely superior choice, on the basis of lumens (measure of quality and quantity
+of light), safety, and environmental protection. Since the SHSs also had storage capacity, the herders could use
+them any time when needed with ease and comfort. These factors could be regarded as proxies of reliability with
+safety and comfort. Efficacy of this objective is rated “high�?.
+
+(iv) to improve reliability of electricity services to selected off-grid Soum centers The ICR does not provide any
+evidence of improved reliability to off-grid Soum Centers (e.g. reduced outages, grid losses, etc); also while it is not
+clear if the 4 solar-diesel hybrids installed per se improved reliability due to choice of technology, the rest of the
+Soum Centers with wind-diesel hybrids are reported to have encountered operational problems at close of project (p
+34 of ICR). The survey does not indicate the proper baseline to correctly attribute and assess the results conveyed
+therein. Efficacy of this objective is rated “negligible�?.
+
+v) to remove barriers to the scale-up of renewable energy use. The barriers confronting the implementation of the
+two investment components were collectively overcome by the project’s technical assistance support as well as by
+the Government’s own initiatives (for example, passing the Renewable Energy Law in 2007; converting the National
+Renewable Energy Center (NREC) to a self-financing structure in 2009; substantial allocation of funds for rural
+electrification). Experience from other countries has demonstrated that these interventions are necessary for
+overcoming initial barriers, as this project has also shown. However, further expansion and sustainable use of
+renewable energy in the Soum Centers and among herder populations need to be monitored and the ICR does not
+provide specific evidence of such monitoring taking place or a process in place to do so. The market for such
+renewable energy adoption is also not significant (about 3% according to the PAD). Since the effectiveness of the
+after sales service and battery recycling is still to be verified, it can only be argued that the direction of efforts are
+appropriate but that the results are yet to be seen. Efficacy of this objective is rated “modest.�?
+
+Global Environment Objective (Unrated)
+
+(vi) to reduce emissions of carbon dioxide. The SHS systems sold under the project replaced kerosene in the herder
+homes and the solar/wind hybrids with diesel in Soum centers reduced use of diesel correspondingly as noted by the
+ICR (Annex 3). The ICR estimated the equivalent reductions in carbon dioxide to be about 11,333 tons per year
+(Annex 3 of ICR); based on the 67,224 SHS systems sold, the carbon dioxide reduction would be about 8,390 tons
+per year (using assumptions per Annex 16 of PAD), which imputes 2,943 tons per year reductions due to 15 hybrids
+at 15 Soum centers installed under the project. This is in line with the appraisal estimates of 9,000 tons per year
+(about 6,240 tons from SHSs and 2,760 tons from hybrids).
+
+
+ 5. Efficiency:
+  The project uses a cost effectiveness approach aimed at identifying the amount of capital subsidy necessary for (1)
+the herder population to realize perceptible savings from their current expenditure on candles and kerosene of about
+US$86 per annum based on substitution; and (2) the SCs to fully recover costs over the affordable tariffs of
+US$0.17/kWh, using a discount rate of 12%.
+
+For the GEO, the project aims to show carbon dioxide (CO2) reductions through avoided use of kerosene and diesel.
+
+
+SHSs for herder population: The proposed subsidy of $80 per SHS at appraisal was based on costs of typical
+systems (about $160 for <50 Watt peak [50Wp]), baseline studies in Mongolia, and benchmarks in other countries.
+The subsidy led to net savings of about US$44 per annum (just over 50% of the subsidy). The SHSs provided nearly
+15 times the amount of quality light than would be available from candles and kerosene (measured as lumen-hours
+per year) for standard use. The actual costs of SHSs increased nearly 150% due to choice of larger than 50Wp
+systems and necessitated doubling the subsidy to $160 for herder families. Because the costs of candles and
+kerosene (alternatives) also went up (to $124 compared with $86 at appraisal), the savings to families at project
+closure was estimated at $35 instead of $44 at appraisal.
+
+Soum centers: At appraisal, several types of replacement alternatives for hybrids were considered and shown to be
+efficient choices at 12% discount rate (Annex 9 of PAD). The ICR based its estimates on the solar-diesel hybrid due
+to ease and quality of data available at completion (Annex 3 of ICR). Due to the rapidly decreasing trend in costs of
+solar panels (about 33% since 2009 - see p34), the ICR duly notes the favorable impact on Soum centers and users
+in sustaining the choice of such systems for expansion and replacement.
+
+Global environmental benefits: The ICR does not provide details of actual measurements or good proxy estimates
+for avoided use of kerosene and diesel and also does not adjust the baseline estimates due to expanded scope of
+the herder component following reallocation of funds at restructuring. This notwithstanding, the penetration of SHSs
+and wind/solar hybrids in Soum centers in the scale achieved by the project attests to significant avoidance of
+kerosene and diesel and the CO2 estimates could be surmised to be in the vicinity of adjusted baseline estimates or
+even slightly lower due to the corresponding smaller number of SCs covered under the project.
+
+There were no significant operational or administrative inefficiencies.
+
+Overall efficiency is rated “substantial�?.
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                                  Rate Available?                            Point Value                         Coverage/Scope*
+
+     Appraisal                        No
+     ICR estimate                     No
+                                           * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+  The project objectives were highly relevant as was the design, including the approach, the components and the
+clarity of the results framework. Planned outputs were achieved for the most part, and the outcomes demonstrated
+the technical and financial feasibility of the options, and indicated overcoming of barriers to adoption of new and
+small scale renewable energy technologies. The specific parts of the objectives were achieved in a mixed manner
+(as shown by varied ratings from high to negligible for outcomes). Considering that the efficacy of the Soum center
+component, with 42% of funding, is modest to negligible, and the efficiency rating is substantial, the overall outcome
+is rated as moderately satisfactory.
+  a. Outcome Rating : Moderately Satisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+   At project completion, (i) the SHSs were well accepted by the herder population, which was also evidenced by the
+large penetration supported by the parallel Government initiatives; (ii) the solar hybrids with diesel in select Soum
+centers had demonstrated operability, while the wind hybrids encountered some technical issues; and (iii) the NREC
+had a self-financing structure with enabling legal and regulatory frameworks in place. The operating issues of wind
+hybrids need to be addressed. Also, the safe disposal and handling of old batteries needs care and attention. The
+country’s overall growth and rapid income gains should help sustain Government’s continuing interest and focus on
+rural development priorities.
+
+   a. Risk to Development Outcome Rating : Moderate
+
+ 8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+    The Bank ensured consistency of project objectives with Government priorities and with the Country
+Partnership Strategy and appropriately considered the alternatives in the design of components and smart
+subsidies. It pooled IDA, GEF and other bilateral grants to support the the removal of barriers to the adoption of
+new technologies. The Bank also promoted international standards for new products in renewable technologies,
+an innovative approach to "crowding in" of the private sector (though it was over ambitious on hind sight
+regarding the sector's financial capacity) and the use of technologies that were already proven in other countries.
+The component-specific technical assistance, along with support aimed at regional and national levels, were
+appropriate for the project. The risks were properly identified during preparation, as were the mitigation
+measures adopted. M&E design was adequate.
+
+            at -Entry Rating :
+   Quality -at-                                   Satisfactory
+
+ b. Quality of supervision:
+    As the ICR notes, the Bank’s supervision was more vigorous on investment components and less so on the
+technical assistance activities, which was borne out in the canceled parts of the latter, especially unused GEF
+funds. The Bank team seems to have taken a long time in the initial phase (first two years) before modifying the
+procurement approach. It is not clear if the decision to adopt a bulk purchase alternative using the project funds
+could have been made sooner, say six months to a year, thereby completing the project on or before the original
+schedule. Nevertheless, the six month extension for completing the scope of the project seems reasonable given
+the innovative features of the project and the relatively low capacity of the institutions involved at the beginning of
+implementation. The focus on the SC component could have been better as pointed in the gaps of information
+gathered to evidence reliability improvements as well as concerning the technical problems in wind hybrids
+adopted in certain Soum centers. The efforts to conduct surveys and rapid appraisal are noteworthy and could
+be followed up for monitoring sustained use and spread of adoption of SHS by herder population.
+
+
+   Quality of Supervision Rating :                Moderately Satisfactory
+
+   Overall Bank Performance Rating :              Moderately Satisfactory
+
+
+ 9. Assessment of Borrower Performance:
+
+ a. Government Performance:
+    The ICR recognizes the Government’s role, commitment, funding, and performance. Its rapid responsiveness
+to certain issues – for example, enhancing the subsidy to the herder populations – helped recover the time lost
+during the initial sluggish start of the project. The Government’s sustained commitment to rural electrification
+overall, including through large budget outlays, helped the momentum for the Bank’s parallel project in a
+synergistic way. The timely adoption of supporting regulations by the National Renewable Energy Center (NREC)
+and renewable energy law are testimony to the Government’s ownership and performance.
+
+   Government Performance Rating                               Satisfactory
+
+ b. Implementing Agency Performance:
+    Considering the innovative aspects of the project, the Project Implementation Unit (PIU) in the NREC seems
+to have performed quite well, adjusting to new demands as they arose (e.g. the change in procurement method,
+contract difficulties experienced). The project had built in technical assistance for such capacity building at the
+outset. The rapid pickup of the implementation pace after the initial lull demonstrates the PIU’s sustained efforts
+and focus on the project’s objectives, including the surveys undertaken. However, the ICR also candidly points
+out the shortcomings of the PIU during implementation, especially regarding record keeping for project
+management and fiduciary purposes. The PIU seems to have addressed the documentation concerns after
+receiving training (pp 20-21 of ICR).
+
+   Implementing Agency Performance Rating :                    Moderately Satisfactory
+
+   Overall Borrower Performance Rating :                       Moderately Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+ a. M&E Design:
+   The M&E framework was designed for the components to track the outputs and outcomes and the achievement of
+the project development and Global Environmental objectives. The results framework identified and established the
+outcome indicators by component and over time in the implementation plan. The survey approach was appropriate
+to track the mobile herder population’s adoption of SHS systems, use, etc., and covered 10 Soum centers. A similar
+survey of Soum centers for monitoring the benefits of the electricity service covered only 3 Soum centers. The PIU
+was responsible for M&E and baseline data and targets were defined for most of the indicators.
+
+ b. M&E Implementation:
+   Even though the PIU was provided with training in M&E at the launch of the project, the ICR notes the difficulties
+encountered by the PIU, and hence the Bank team, in assessing progress in some key areas during implementation.
+The tracking of key data for assessing the GEO achievement could be done only at the end of the project due to
+specific information needed on Soum centers. While reasonably good estimates can be made of the herder
+component based on baseline and average displacement for kerosene, more pertinent data would have been
+needed for properly estimating the avoided diesel use at Soum centers with hybrid systems.
+
+ c. M&E Utilization:
+   The surveys and rapid appraisal provide an important basis for improving the quality of data to estimate the
+benefits and subsequently to fine tune the approach in the continuing rural electrification initiatives. The efforts made
+by the PIU and the Bank team to disseminate the results and lessons from the project are noteworthy and attest to
+good practice.
+
+M&E Quality Rating : Substantial
+
+
+
+
+11. Other Issues
+
+ a. Safeguards:
+This is a category C project for safeguards compliance and management. The project had positive benefits for
+environment. The ICR candidly notes the shortcoming and oversight in the failure to tackle early on the potential
+issues with handling and disposal of used batteries for SHS systems. Even though the individual SHS system battery
+is small, the widespread use by a large number of herders does pose health hazards if the batteries are not properly
+handled and disposed after their useful life span. The team appropriately supported a study to examine the feasibility
+of a battery recycling facility, and the ICR records the interest already shown by the private sector in this regard
+(page 15). It is important to follow up on the handling nand disposal of used batteries in view of their potential
+adverse impacts. The project team confirmed that the project was in compliance with the applicable safeguards
+policies of the Bank at all times.
+
+ b. Fiduciary Compliance:
+Both procurement and financial management are noted as in compliance with agreed standards, except for minor
+shortcomings in records maintenance for a short time during implementation. The ICR reports that the shortcomings
+were handled by the PIU and the Bank team in a timely manner, and the project team confirmed that the audit
+reports were satisfactory (that is, unqualified) throughout implementation. Delays in procurement were handled by
+changing the approach for bulk procurement of SHSs and a contract dispute was able to be settled in local courts.
+
+c. Unintended Impacts (positive or negative):
+
+
+d. Other:
+
+
+
+12.
+12. Ratings :                              ICR                   IEG Review                Reason for
+                                                                                    Disagreement /Comments
+                     Outcome : Satisfactory                 Moderately        The outcomes planned for the Soum
+                                                            Satisfactory      center component were not achieved
+                                                                              fully and no evidence was provided to
+                                                                              support improvements in reliability. The
+                                                                              effectiveness of technical assistance
+                                                                              for barrier removal and safe handling of
+                                                                              used batteries was deficient .
+
+         Risk to Development Moderate                       Moderate
+                    Outcome :
+
+            Bank Performance : Satisfactory                 Moderately        As the ICR itself notes, there were
+                                                            Satisfactory      shortcomings in the responsiveness of
+                                                                              Bank supervision to handle issues in a
+                                                                              timely manner
+
+       Borrower Performance : Satisfactory                  Moderately        As the ICR itself notes, the PIU
+                                                            Satisfactory      performance regarding record keeping
+                                                                              for fiduciary aspects was less than fully
+                                                                              satisfactory.
+
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+ 13. Lessons:
+   The lessons of broader significance from the ICR are the following:
+ (i) Transfer of international experience requires care and adaptation: International experiences in energy
+efficiency promotion are generally transferable, but to be effective they have to be carefully selected and
+customized to suit local conditions.
+(ii) Smart subsidies are effective: Targeting subsidies are effective in promotion of, and removal of barriers to,
+energy efficiency. The effectiveness of such subsidies would be better if distortions in fuel subsidies are minimized
+or removed (e.g. diesel subsidies to utilities would reduce incentives to select other renewable options).
+(iii) Safe handling and disposal of batteries is essential: In addition to the above two lessons noted in the ICR,
+the project has highlighted the need for adopting appropriate safety and mitigation measures for ensuring proper
+handling and disposal of batteries with hazardous chemicals, including adequate funding and institutional
+responsibility for ensuring implementation.
+
+14. Assessment Recommended?                 Yes     No
+
+Why? The project offers important lessons regarding the choice approach, technologies, etc., for off-grid and
+mini-grid development in rural electrification and access, which are important challenges in the power sector at this
+time. The lessons could be beneficial, for example in the South Asia and Africa Regions, both of which have large
+populations without electricity access.
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is comprehensive, candid and provides evidence for the most part of assessment. It provides sufficient
+information to validate the outputs and outcomes and the quality of analysis is satisfactory. The format is in
+conformity with guidelines and the lessons are useful and relevant for practical operational purposes. In Annex 5, the
+various survey responses could be tabulated for better understanding and clarity. The ICR could also have provided
+more details of the Government funded wind-diesel hybrids.
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000146597-20140619154348.txt

@@ -0,0 +1,599 @@
+                                                                                                                ICRR 13138
+                                                                                                Report Number : ICRR13138
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+        1. Project Data:                                      Date Posted : 05/10/2010
+
+              PROJ ID : P046829                                                     Appraisal                Actual
+        Project Name : Cn-renewable Energy Project Costs (US$M):
+                                                            US$M ):                             444.2             317.27
+                          Development
+                          (Including P038121)
+               Country : China                Loan/         US$M):
+                                              Loan /Credit (US$M):                                 13               12.94
+       Sector Board :     EMT                 Cofinancing (US$M  ):
+                                                            US$M):                                 27               26.86
+         Sector (s):     Renewable energy
+                         (100%)
+
+          Theme (s):       Climate change (50% -
+                           P)
+                           Rural services and
+                           infrastructure (50% -
+                           P)
+        L/C Number :        L4488
+                                                    Board Approval Date :                                     06/08/1999
+      Partners involved : GEF                               Closing Date :              06/30/2007            06/30/2008
+
+
+
+Evaluator :                Panel Reviewer :        Group Manager :            Group :
+Fan Zhang                  Fernando Manibog        IEGSE ICR Reviews          IEGSE
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+ The PAD and Loan Agreement stated that the objective of the Renewable Energy Development Project (REDP) was
+to establish sustainable markets for wind and photovoltaic (PV) energy technologies in order to (i) supply electricity in
+an environmentally sustainable manner; and (ii) increase access of isolated rural populations to electricity services .
+
+The objectives of the grant cofinancing from the Global Environment Facility (GEF) were to (a) reduce greenhouse
+gas emissions by producing electricity from renewable energy; (b) reduce costs of renewable energy to permit
+long-term financial sustainability; and (c) remove barriers to the large-scale commercialization of the technologies .
+
+The project was restructured between approval by the Board and signature of the Loan, Grant and Project
+Agreements. Because the Loan Agreement was signed after the restructuring of the project, it is considered as the
+latest legal document capturing the objective and key associated outcome targets of the restructured project .
+Therefore, the objective described in the Loan Agreement and the objectives of GEF cofinancing are used as the
+basis for this ICR review.
+
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components (or Key Conditions in the case of DPLs, as appropriate):
+ As stated in the Loan Agreement, the project had three components (percentage of total project cost in
+parentheses):
+1. Wind Farm Component (12%)   12 %) was to construct two wind farms in Shanghai totaling 21MW and to provide
+     technical assistance to support the management of the wind farms and preparatory work on large coastal sites .
+2.                   PV) Component (75.
+      Photovoltaic (PV)                   75 .9%) for off-grid electrification. The component had three subcomponents :
+          Investment (70.70 .6%) that provided grants for 10MW peak (MWp) of PV systems to households and
+          institutions in Qinghai, Gansu, Inner Mongolia, Xinjiang, Tibet and Sichuan . Subsidies of $1.50 per Wp of
+          PV capacity, per system (with a capacity of 10 Wp or greater) would be provided to participating PV
+          companies to improve PV product quality, to improve warranties and after -sale services, to strengthen
+          business capabilities, and to increase marketing efforts .
+          Market development (3.4%) to overcome barriers and developing PV markets through public information
+          campaign, capacity building for PV companies etc .
+          Institutional strengthening (1.9%) to improve product quality, certification and standards, and project
+          management and monitoring.
+3.    Technology Improvement (TI)   TI ) Component (12.12 .1%) for wind and solar technology to improve quality and reduce
+      costs. The component had two subcomponents :
+          Investment (11.     %) . Cost-shared grants were available to participating TI companies through Competitive
+                         11 .4%).
+          Grant Facility (CGF) to improve quality or reduce costs of products; a quick response fund for small and
+          urgent cost-shared projects was provided through Quick Response Facility (QRF); and a Production
+          Investment fund provided commercial loans to companies for purchase of production equipment, follow-up
+          investment to grant-financed activities, or other investment activities .
+          Institutional strengthening (0.7%) was to support program management and to improve the capacity of
+          staff in manufacturing companies, and carry out special studies to facilitate project implementation .
+
+During implementation, the project introduced the following significant changes :
+In June 2003, the Market Development Support Facility (MDSF) was introduced to provide cost -shared grants to PV
+companies to improve their commercial skills and develop markets .
+
+In May 2005, the project increased the number of target provinces to include Yunnan, Sha'anxi and Ningxia
+Autonomous Region. It increased the PV subsidies from US$ 1.50/Wp for modules meeting the project standards to
+US$2.0/Wp for PV modules meeting the higher performance requirement of the international and the new Chinese
+national standards. From July 2007, only sales of systems with modules conforming to the higher standard were
+accepted.
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ Project Cost : After restructuring, three out of five proposed windfarms were cancelled, totalling 170 MW capacities.
+The technology improvement investment for wind technology was also dropped . As a result, IBRD financing was
+reduced from US$100 million at appraisal to US$13 million, GEF grant from $35 million to $27 million, and the total
+project cost from US$444.2 million to US$317.27 million. The project was financed as shown in the following table .
+
+Project Components, Sources of Financing and Costs          (USD millions )
+
+                           Subcomponent /             Appraisal
+          Component      sources of Financing       Cost Estimate          Revised cost            Actual /Latest cost
+                                                                             Estimate                  Estimate
+     Wind Farm           Investment                 202.70              22.40                    25.58
+                         Institutional              6.00                2.30                     1.50
+                         strengthening
+     PV                  Investment                 145.0               145.0                    91.60
+                         Market Development         7.00                7.00                     3.34
+                         Institutional              4.00                4.00                     1.96
+                         Strengthening
+     TI                  Investment                 78.00               23.40                    190.00
+                         Institutional              1.60                1.40                     1.95
+                         Strengthening
+     TOTALS              IBRD                       100.00              13.00                    12.94
+                         GEF                        35.00               27.00                    26.86
+                         Local                      309.20              165.40                   277.47
+                         Total                      444.
+                                                    444 .20             205.
+                                                                        205 .40                  317.
+                                                                                                 317 .27
+
+Source: PAD and ICR
+Note: The numbers include taxes, duties, and physical & price contingencies . Local counterpart financing came from
+a combination of domestic banks, participating companies and end users .
+
+Dates : The project was approved on June 8, 1999. The signature of the legal agreements was delayed until June 26,
+2001 and the project only became effective two and a half years after the approval date on December 21, 2001. The
+delay was caused by several events that led to the restructuring of the projects . First, the reform of China's power
+sector broke up large regional grids such as the North China Power Grid (NCPG) into provincial grids. The impact of
+high prices for windpower was greater on the smaller provincial grids than on NCPG which would have been the
+original buyer of the wind power from Huitingxile and Zhangbei windfarms . Because the provincial grids were
+unwilling to share the incremental costs of wind power, no power purchase agreements were able to be reached .
+Uncertainties over the power purchase price also deterred local counterpart financing for the two wind farms .
+Secondly, the Chinese authorities raised a concern about the environmental impact of the Pingtan windfarm under
+new and more stringent regulations which prohibit trees being removed for any project development .
+
+The closing date was extended for one year to June 30, 2008 to allow full achievement of the development objective
+of the PV and TI components. The delay was partly due to the abolition of the SETC and the transfer of the
+responsibility for implementing these components to the NDRC early in the implementation period.
+
+3. Relevance of Objectives & Design:
+ Rating: Substantial
+
+Relevance of Objectives:
+
+Relevance of objectives is rated substantial : The stated objective of the project was well embedded in both the
+Government and the Country Assistance strategies (1997-2005), which emphasize meeting infrastructure demand in
+an environmentally sustainable way . REDP also addressed three of the four core goals of the Bank ’s 2001 Energy
+Business Renewable Strategy (EBRS): help the poor directly through improved access; promote private sector
+development; and protect the environment . The project also addressed the government objectives of economic
+development in western provinces, where much of the renewable resources are located .
+
+The project objective remains highly relevant at the time of evaluation . It supports the current Bank Country
+Partnership Strategy (2006-2010), wherein the third pillar is to manage resource scarcity and environmental
+constraints to the country ’s future growth. In addition, the project objectives are fully consistent with GEF -4’s strategic
+objectives to reduce GHG emissions and mitigate climate change, and GEF ’s Operational Program 6, supporting the
+promotion of renewable energy (RE) by removing barriers and reducing implementation costs .
+
+The project objectives were aligned with the country's mid - and long-term energy development objectives . China has
+set a target of obtaining 10% of the country’s primary energy from renewables by 2010 (expected 60 GW); and 15%
+by 2020 (totalling 120 GW, including 30GW of wind power and 1 GW of grid-tied PV). In the long term, China has set
+an objective of having 30% or more of its total energy requirements satisfied by renewable sources by 2050.
+
+Relevance of Design:
+
+The overall relevance of design is rated substantial . The subsidy instrument adopted by the project was innovative,
+which effectively addressed some of the key barriers in the pre -REDP PV market. By design, companies were
+qualified for sales subsidies /grants, if companies met the following criteria : (a) a product met REDP quality
+standards; (b) maintained sales and service outlets with trained staff and stocks of spare parts in the area; and (c)
+kept adequate sales and financial records, and comply with the normal REDP verification requirements . Clearly, such
+performance - and output-based subsidies provided incentives and direct grants to companies to achieve economies
+of scale (by expanding output and extending sales and service networks ), improve product and service quality, and
+strengthen their financial and business capabilities . The subsidies were partially passed onto consumers and partially
+retained by producers, thus spurring both demand and investment . Furthermore, because the subsidy approach was
+technologically neutral (the grant is based on per Wp of capacity ) without specific restrictions on system size and
+design, it encouraged innovation and allowed business decisions to be made in line with market demand .
+
+MDSF grants allowed companies full flexibility to identify capacity weaknesses and to improve business and market
+development. This bottom-up approach was different from a common practice in rural PV projects that
+pre-determines the capacity-building needs and offers standardized packages of training and promotion . Similarly,
+the cost-shared grants under the TI component provided broad scope for the entire PV sector to explore TI
+opportunities. The cost-shared scheme also leveraged additional private investments, as the companies typically
+self-financed 50-60% of the incremental costs of MDSF activities, and 70% of the TI costs.
+
+Notwithstanding the project’s innovative design, there were some shortcomings : (a) At the time of project
+preparation, there was no consistent national policy to support the development of RE by spreading the incremental
+costs as broadly as possible across regional grids . The project underestimated the institutional and policy barriers
+that led to the restructuring of the project and originally set over -ambitious targets which were revised before loan
+signing. Although the delays and subsequent cancellation of the wind farms were largely out of the control of the
+Bank, in retrospect, the project could have made a larger contribution by focusing on a longer -term policy oriented
+approach. (b) Functions of the sub-components are somewhat overlapping . As reported by the ICR, the parallel QRF
+facility ended up funding similar projects to the CGF . And it may have been more effective to eliminate QRF to free
+up scarce PMO resources to concentrate on other aspects of the components .
+
+Project's Results Framework
+
+The key performance indicators of REDP included : (a) avoided emissions from replaced thermal power generation;
+(b) installed wind and PV capacities; (c) increased wind power generation; (d) increased PV systems sold for
+households and institutions; (e) decreased capital cost of windfarms (US$/kW) and PV systems (US$/Wp), and (f)
+number of qualified PV components suppliers . These indicators were defined at the country -level, rather than at the
+project-level, namely they reflect emission reduction, capacity expansion, and cost decline resulting from all RE
+programs in the nation (indicators (a) through (c)). Indicators (a) through (d) also included forecast data for year
+2009.
+
+The causal chain in the design of the monitoring and evaluation (M&E) system was vague. Since there was no M&E
+on the project demonstration effect and given the large presence of other RE programs in China, the link between
+achievements at the country level and intervention of this project is not clear . Country-level and forecasting indicators
+are also too broad or inexplicit to be used for measuring progress and achievements . Disaggregated cost indicators
+would have been needed also to verify the links between project inputs and the outcome for decreased capital costs .
+The cost of PV system is largely determined by exogenous factors, including the world silicon feedstock price, metal
+plumbum price for battery production and the world demand for solar PV modules .
+
+
+4. Achievement of Objectives (Efficacy):
+
+The efficacy of the project is assessed against the achievement of the PDOs as described above . Achievement of
+the GEOs is also discussed, although the efficacy rating is based on achievement of PDOs only. The objective of
+establishing sustainable markets for wind energy was modestly achieved . Taking into account that 88% of the project
+costs correspond to PV development and the related increase in access, overall efficacy is rated substantial .
+
+Establishing sustainable markets for PV technology
+
+Rating: Substantial
+
+Three barriers were identified in pre -REDP PV market at appraisal: (1) small scale and relatively inexperienced
+companies; (2) Poor-quality products and service . (3) High Cost/Lack of mechanism to increase affordability . Overall,
+REPD was effective in addressing these barriers to PV system development, and contributed to the rapid growth of
+China’s PV manufacturing sector. This is discussed in detail below .
+
+(1) The combination of financial mechanisms, capacity -building and strict monitoring and internal controls helped the
+start-up of small companies in the rural SHS market to expand output, deepen the distribution network and improve
+financial practices. There is currently a well established sector of companies operating in the production, integration
+and distribution of PV systems in the target market areas . Verified sales of PV systems have dramatically increased
+to more than 11 MWp, compared with the target of 10MWp. The PV companies also upgraded their financial
+management during REDP. Companies computerized their accounting systems and introduced standardized
+documentation and controls to comply with the eligibility requirements of REDP . The steadily rising rate at which the
+companies’ report of sales was verified by the PMO is an indication of the improvement . (The success rate for
+verifications increased from 74-percent to 91-percent in units and from 71-percent to 93-percent in Wp capacity from
+2002 to 2007. )
+
+(2) REDP used the “carrots and sticks�? principle to motivate companies to improve product and service quality :
+companies that met REDP standards were eligible for subsidies; companies whose product quality fell short of
+standards were subject to financial penalties . Tests were conducted on products sampled at outlets and warehouses
+to ensure compliance. By the end of the project, all but two PV participating companies become ISO 9001 certified
+for quality management. The project also introduced steadily higher technical specifications, and strengthened
+domestic capacity in testing and certification . The PMO has maintained lists of the suppliers of certified components –
+panels, batteries, lights and controllers . By requiring PV companies to use only certified components, REDP also
+motivated PV manufacturing companies to improve quality . In the end, there were 74 component suppliers that were
+certified as meeting the REDP standards, compared to the original target of 30.
+
+(3) After adjusting for inflation, the average market prices of all PV systems have declined at the end of REDP .
+Although PV system prices were largely determined by exogenous drivers outside of the control of the project (as
+discussed in the previous section ), REDP have contributed to price reduction in the following ways : (1) output-based
+subsidies were directly transferred to consumers; (2) The transparent and technology neutral design of the project
+helped the SHS market remained competitive with the gross margins estimated to be as low as around 13%.
+
+However, the project did not overcome the key barrier identified at project appraisal : the lack of financing mechanism
+to improve system affordability. REDP sales were concentrated in Tibet, Qinghai, Sichuan and Xinjiang and were
+relatively weak in the other six provinces . Partly because of the absence of consumer financing, it was difficult for PV
+companies to penetrate into non -herders market where consumers typically cannot afford the high upfront costs of
+the system.
+
+Establish sustainable markets for wind energy technology :
+
+Rating: Modest
+
+Four barriers were identified in pre-REDP wind market at appraisal: (1) Higher generation costs than coal -fired
+thermal power plants. (2) Lack of a legal framework for wind farm projects . (3) Lack of institutional capacity . (4)
+Inadequate information to wind resources, site characteristics and equipment performance . As could be expected
+from the substantially reduced scale of the wind component after restructuring prior to loan signing, the project ’s
+impact on removing barriers was mostly at the local level . This is discussed in detail below .
+
+(1) REDP's support for scale-up investments as a way to reduce wind power costs no longer appear to be essential,
+since China’s wind power capacity, including that in less developed provinces, has been growing at over 100% per
+year in each of the last three years . REDP also intended to lower wind farm costs in China by introducing
+international competitive bidding. However, as discussed above, there was no net change in installed cost at the end
+of the project.
+
+(2) REDP had a major, albeit unintended impact on establishing a regulatory framework for RE in China . The
+difficulties encountered in putting in place the power purchase arrangements of the wind farms to be supported by
+the projects highlighted the need for a stable pricing framework and a basis for the subsidization of wind power . The
+follow-up Bank projects contributed to the design and development of a new regulatory framework with a range of
+studies, workshops and study tours, most actively during the extended CRESP preparation activities from
+2000-2007.
+
+(3) The project improved the technical, financial and legal capacity of local utilities (SMEPC and SWPC) to initiate or
+participate in wind project development . SEWP was highly appreciative of Bank ’s capacity building contribution .
+Through REDP, the company obtained ample experience in wind turbine operating and maintenance, and
+procedures and methods for public bidding .
+
+(4) The project generated valuable data on the performance of installed wind turbines . Local utilities benefited from
+REDP in learning about constructing foundations in soft soils, and in conducting wind resource measurement which
+contributed directly to the adoption of 310 MW government wind project in Shanghai .
+
+Overall, REDP effectively helped establish a sustainable market for wind energy technology in Shanghai . However, it
+fell short of meeting its intended impact at the national level
+
+
+Increase Access of Isolated Populations to Electricity Services
+
+Rating: Substantial
+
+REDP exceeded its physical targets of increasing access to modern energy through distribution of SHSs . Verified
+sales of SHS were more than 400,000 systems, exceeding the targets of 350,000. More than 2 million people in
+western China have been provided electricity service through the project . The REDP has also supported PV village
+systems (and a few with wind and PV) to provide electricity for public facilities such as schools, health centers, village
+satellite telephones, forest protection, road maintenance, climate monitoring and Buddhist temples .
+
+Poverty Alleviation
+
+Although REDP did not explicitly spell out a poverty alleviation objective, by providing electricity services to rural
+areas, it did promote local economic development and improve living conditions of unelectrified households . This was
+supported by an end-user survey covering 1,203 households in 6 villages in 2007. The survey reported that 95% of
+SHS users claimed that the system increased their incomes; 15% claimed that the increase was significant .
+Gobal Envrionment Objective: Reducing greenhouse gas emissions by producing electricity from renewable energy
+
+The weakness in the design of project ’s M&E makes assessment of the emissions reduction objective difficult,
+because emission baseline values were not provided, and there were no outcome target indicators to directly
+measure CO2 emissions resulting from the project . The avoided CO 2 emission from Shanghai wind farms was
+estimated to be 33,700 tons per year. For the PV component, it was estimated that for a 20 Wp system, 550 kg of CO
+2
+  were avoided assuming 15 years of system lifetime. The calculation was based on kerosene usage surveys
+conducted in four counties in Gansu and Tibet in 2007. Results from the survey may not represent the actual project
+benefits because (a) kerosene use in other target provinces was much higher than in Gansu and Tibet; (b) emissions
+from candles, ghee lamps and the substituted production of dry cells were ignored due to lack of reliable data; and (c)
+the calculation did not take into account the carbon cost of manufacturing PV systems .
+
+GEO: Reduce costs of renewable energy to permit long -term financial sustainability
+
+The project aimed at lower wind farm costs in China by allowing international competitive bidding and large -scale
+development. During 2002-2003, wind turbine costs in China went down dramatically to about US$ 860/kW, as
+compared to US$1,300/kW at the start of the project . However, wind turbine costs climbed up again by the end of
+the project, mainly because of foreign exchange rate change and the rapid growth in installed wind power worldwide
+which created shortages of wind turbines and pushed up wind turbine prices . Installed cost of Shanghai wind farm
+was $1,264/kW. The PV system costs started at about US$ 16/Wp and had fallen to US$9/Wp by the end of the
+project, well below the target of $11/Wp. However, no detailed indicators were developed to measure how much of
+the cost reduction was attributable to REDP, and how much was related to exogenous factors such as worldwide
+price reduction of silicon feedstock . Note that when insufficient information is provided by the Bank for IEG to arrive
+at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
+
+
+
+5. Efficiency (not applicable to DPLs):
+
+With the exception of the wind farm component, which accounted for just 12% of project costs, the project delivered
+high financial and economic rates of return . The overall project efficiency is therefore rated high.
+                                                                                                high
+
+Wind Component : Based on the ICR, the economic rate of return (ERR) for wind exceeded that estimated at
+appraisal as a result of large estimated consumer willingness to pay (WTP). The consumer WTP is assumed to be
+the wind power purchase price plus a premium paid by environmental conscious consumers who voluntarily joined
+the “green�? electricity program. One concern with this calculation is that the green tariff may already reflected
+consumer WTP to avoid greenhouse gas emissions . If this is the case, the ERR calculation for the wind component
+is overestimated through double -counting. The windfarms had poor financial returns . The financial rate of return
+(FRR) was below the 12% at completion due to low capacity utilization (around 20%).
+
+PV and TI Components : Based on the ICR, the PV and TI components jointly delivered exceptionally high ERR . At
+the PV subproject level, ERR including CO2 emissions reduction benefits and considering consumer WTP was
+estimated to be 93.4%. The FRR was 88%.
+
+The project effort for ERR calculation should be commended since few Bank projects attempted an analysis of
+consumer surplus change as rigorous as this one . Nonetheless, the economic analysis was potentially biased in
+several ways discussed below .
+
+(1) This analysis seems to attribute all REDP -subsidized adoption to REDP. But households were already adopting
+before REDP and would have continued to do so even in REDP ’s absence. REDP seems to have brought about a
+reduction in the relative price of 40 W and 50 W systems and thus may have pushed some people from a 20 W solar
+system to a 40W system. Improvements in quality may have tipped the balance from kerosene for others . But if the
+increased solar system sale relative to a counterfactual is smaller than that from comparing before and after
+adoption, then the gains would be overestimated .
+
+(2) The study estimated the project welfare gains as the change in consumer surpluses by moving from total
+kerosene consumption to total reliance on a 20 W CFL. However, as the survey indicated, consumers used a mix of
+lighting sources both before and after electrification, including kerosene, ghee and candles etc . Therefore, the
+welfare change is not a straightforward comparison between kerosene and SHS .
+
+(3) The current survey was conducted in Tibet and Gansu provinces . Among the targeted 6 provinces, the two
+provinces rank the lowest in terms of per capita income . There is also large heterogeneity in life style and energy
+supply conditions across the regions . Hence, results from the survey may not represent the conditions of the whole
+project. The survey could have covered a larger geographical area with a wider variety of fuel consumption patterns,
+incomes, and system sizes and prices .
+
+(4) Household incomes do not stay the same . In some cases, electrification directly contributed to the growth of
+income. As income increases over time, households are willing to pay more for their lumens at all levels of
+consumption. Therefore, a demand curve based on one -time survey is not sufficient to capture the entire benefit
+gains.
+
+(5) The study spreads total TI costs over all verified sales and takes the average number as an incremental cost for
+each system sold. Such an approach may be misleading since TI funds were disbursed over many years . The stream
+of costs should be discounted in order to express them in present -value terms.
+
+In the context of a field based project performance assessment for this project, IEG estimated a demand curve for
+lighting is re -estimated based on consumption for lumens from two observable bundles of fuel used before and after
+a SHS. The welfare gain based on the “bundle�? approach is larger than the ICR estimate . And the corresponding
+ERR from the consumers’ perspective is 115%.
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                                 Rate Available?                             Point Value                         Coverage/Scope*
+
+    Appraisal                         No
+
+    ICR estimate                     Yes                                        93.4%                                    88%
+                                           * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+ 6. Outcome:
+   Based on ratings of Substantial for relevance, Substantial for efficacy, and High for efficiency, the overall project
+outcome is rated Satisfactory .
+  a. Outcome Rating : Satisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+
+Wind Component : The component’s risk to development outcome is expected to be low . At the policy level, the
+government has showed strong commitment to developing wind energy . The 2005 Renewable Energy Law (REL)
+was specifically established to address the institutional and policy barriers that led to the need to restructure REDP .
+At the project level, the satisfactory technical and financial capacity of SWTP ensures that the windfarms will
+continue being maintained and operated in a safe and efficient way . In addition, a series of Bank follow -up projects,
+including CRESP and the follow-up to CRESP, has been developed to scale up grid -connected wind power, including
+the development of Huitingxile and Pingtan wind farms from the original REDP .
+
+Solar PV Component : The market is promising for larger household PV systems with more end -use applications.
+The market for small SHS systems is now largely saturated in many areas, notably much of Qinghai , and in the
+government sponsored contract market for street lighting and grid -connected PV systems. Given the continued
+government commitment to develop RE, the contract market is likely to grow in strength . The REDP SHS companies
+also began to make sales in export markets . At least two of the companies have each made contract exports for an
+estimated US$2.0-3.0 million over 2006 to 2007, including for World Bank supported projects in Lao PDR, Mongolia
+and Papua New Guinea.
+
+   a. Risk to Development Outcome Rating : Negligible to Low
+
+ 8. Assessment of Bank Performance:
+
+Quality at Entry : The Bank team conducted a rigorous and holistic market study early in the preparation stage .
+The study identified pre-existing barriers in the PV market and provided information on potential market size and
+characteristics. It proved to be important for the Bank team in adopting effective instruments to achieve the
+project development objective and global environment objectives . The project used novel designs and
+techniques, particularly in its emphasis on market -driven approach. Considerable capacity building for PV
+companies during project preparation prepared future development of the market . A wind tariff covenant was
+included in the Project Agreement to mitigate risks to cost recovery should tariff disagreements arise . Although
+the scale of the project was substantially reduced after a two and one -half year postponement in the signing of
+the legal documents, factors leading to the delay and restructuring of the project appear to have been out of the
+control of the project team.
+
+Quality of Supervision : In linking REDP with international PV expertise and best practices for PV market
+development projects, the Bank team ensured that REDP benefited significantly from international as well as
+Chinese knowledge and experience . The core team remained the same throughout the project design, appraisal,
+and implementation period, facilitating consistency of dialogue . The Bank has also shown good judgment,
+persistence, and flexibility in resolving important issues raised during project implementation . For example, after
+the delay in securing power purchase agreements, the Bank team effectively adjusted the design of REDP and
+the follow-up projects to continue to achieve the main development objective and global environmental benefits .
+After discovering that the use of SWPC ’s expertise to integrate the wind farms was not in line with wind industry
+practice, the Bank team successfully convinced the implementing agency to adopt the single responsibility
+procurement approach. Finally, the Bank team changed the verification method of PV sales that was adopted
+originally at appraisal after realizing its inappropriateness to the semi -nomadic local market.
+
+                      at -Entry :Satisfactory
+ a. Ensuring Quality -at-
+
+b. Quality of Supervision :Satisfactory
+
+ c. Overall Bank Performance :Satisfactory
+
+
+ 9. Assessment of Borrower Performance:
+The government performance is rated moderately satisfactory . During project implementation, project
+supervision records show that the government was weak in supporting the rationalization of the wind power tariff
+and in coordinating various agencies involved . The inability to finalize power purchase agreements led to the
+cancellation of three wind farms in the original project design . The generally unsatisfactory performance was
+tempered by the government’s strong support for RE and rural electrification . The Renewable Energy Law
+ensured a sustainable commercialization of RE based on cost -recovery principles and on ensuring greater
+access for the poor. The opportunities presented by the government policy in the western rural market
+encouraged the entry of many new companies during 2004-06.
+
+The implementing agency performance is rated satisfactory . During the early stages of project implementation,
+the PMO effectively explained to stakeholders the project design and their role in it and mobilized their interest
+and cooperation. PMO staff also undertook frequent field visits and other monitoring responsibilities to verify
+physical progress. They managed to finalize a large number of contracts for subprojects scattered in
+mountainous rural areas with difficult access . PV companies interviewed considered the dedicated support from
+the PMO as being crucial to the project success and have expressed their appreciation .
+
+ a. Government Performance :Moderately Satisfactory
+
+b. Implementing Agency Performance :Satisfactory
+
+ c. Overall Borrower Performance :Moderately Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+Design : The causal chain in the design of M&E system was not clear or explicit . For physical investments, the
+indicators selected were too broad to be used for measuring progress and outcome . For TI, M&E has been focused
+on the number of proposals selected for support and the number of approved TI grant, less attention was given to
+M&E on whether TI activities have actually led to cost reduction or quality improvement .
+
+Implementation : Although the weakness in the M&E design was not addressed during project implementation, the
+M&E on PV system price and quality and on PV companies' financial management was timely and rigorous . The
+PMO developed management information system software to cross -check company sales reports for completeness
+and internal consistency. It also contracted with consultants to regularly review the accounting systems and records
+of purchases, inventory, sales , and cash movements at company offices . The PMO also commissioned reviews on
+the cash sale model, MDSF and TI grants, and impacts in areas such as jobs, education, health , and quality of life.
+For the wind farm component, progress in construction of the wind farms and subsequent electricity production were
+monitored and reported regularly.
+
+Utilization : The comprehensive and strict market monitoring administered by the PMO provided the incentive for
+companies to improve financial management and product quality and supported quality audits and transparent grant
+release. It also informed decision making, for example , on determining the best time to toughen quality
+requirements. The two wind farms themselves generated valuable data on the performance of the installed turbines;
+these data were used to inform the development of wind farms in the follow -up projects.
+
+The overall quality of project M&E is rated substantial , based on a modest rating for design, and substantial ratings
+for implementation and utilization.
+
+a. M&E Quality Rating : Substantial
+
+
+11. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts):
+ The project had the following unintended Impact :
+1. The cancellation of the Inner Mongolian windfarms highlighted the need for a national policy framework to
+    support the development of wind power and renewable electricity, and to spread incremental costs as broadly as
+    possible. Project staff who were involved in the PPA negotiation promoted strongly a mandated market share
+    (MMS) policy during the drafting of REL .
+2. REDP increased the visibility and viability of PV technology for rural electrification . As a result, it contributed to
+    the increased deployment of PV technology in government rural programs .
+
+
+
+
+12. Ratings :
+12.                                       ICR                 IEG Review                     Reason for
+                                                                                      Disagreement /Comments
+                    Outcome : Satisfactory               Satisfactory
+         Risk to Development Negligible to Low           Negligible to Low
+                    Outcome :
+
+           Bank Performance : Satisfactory               Satisfactory
+
+       Borrower Performance : Satisfactory               Moderately             Moderately satisfactory Government
+                                                         Satisfactory           performance and satisfactory
+                                                                                implementing agency performance lead
+                                                                                to an overall MS borrower performance
+                                                                                rating in line with harmonized
+                                                                                evaluation criteria
+                Quality of ICR :                         Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank for IEG to
+arrive at a clear rating, IEG will downgrade the relevant ratings as
+warranted beginning July 1, 2006.
+- The "Reason for Disagreement/Comments" column could
+cross-reference other sections of the ICR Review, as appropriate .
+
+13. Lessons:
+ The lessons emerging from this review are as follows :
+    For interventions in rural PV markets, it is important to conduct a rigorous and extensive market study early in
+    the preparation stage to provide information on market characteristics and barriers and to lay a solid
+    foundation for effective project design .
+    Linking subsidies to quality improvements has proven effective in situations where consumer perception of
+    and feedback on quality was limited .
+    A technology-neutral and bottom-up approach that avoids prescribing designs and sizes can be critical in
+    unleashing the creativity of business in developing products that meet local needs .
+    Clear policies regarding feed-in tariffs are critical preconditions for private sector -led renewable energy
+    development.
+    A market-based approach to PV dissemination requires a consistent and well -coordinated approach by all PV
+    project supporters. Market-based approaches risk limited uptake if they compete with heavily subsidized
+    approaches.
+
+14. Assessment Recommended?                 Yes     No
+
+ Why?
+1. To serve as an input to IEG's Climate Change Evaluation (Phase II).
+2. The project delivered impressive results in accelerating the diffusion of PV technology in rural market . To learn
+lessons and innovations from the implementation of the project would inform World Bank Group's future engagement
+in promoting renewable energy and rural electrification .
+
+
+
+
+15. Comments on Quality of ICR:
+
+The quality of the ICR is rated satisfactory . The ICR presents a candid and comprehensive description of a rather
+complex project. The discussion relies on substantive evidence and data, and supported with detailed annexes and
+comments from the Borrower. One shortcoming is that the ICR stated restructured PDO is different from the PDO
+described in the loan agreement . The ICR could have given more information regarding the origin of the restructured
+PDO stated in the ICR.
+
+a.Quality of ICR Rating : Satisfactory
+

DataSource/000180307-20141120032100.txt

@@ -0,0 +1,885 @@
+                                                                                                              ICRR 14357
+                                                                                              Report Number : ICRR14357
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                      Date Posted : 06/30/2014
+
+               Country : Sri Lanka
+             Project ID : P076702                                                 Appraisal                Actual
+        Project Name : Renewable Energy                           US$M ):
+                                                   Project Costs (US$M):                      231.9                 253.9
+                          For Rural Economic
+                          Development
+  L/C Number :            C3673                      Loan/         US$M):
+                                                     Loan /Credit (US$M):                     115.0                 120.7
+      Sector Board :      Energy and Mining          Cofinancing (US$M):
+                                                                   US$M ):                      8.0                   7.9
+
+           Cofinanciers : GEF                          Board Approval Date :                               06/20/2002
+                                                                Closing Date :          06/30/2008         12/31/2011
+          Sector (s):     Renewable energy (99%); Energy efficiency in power sector (1%)
+          Theme (s):      Infrastructure services for private sector development (23% - P); Climate change (22% - P);
+                          Rural services and infrastructure (22% - P); Participation and civic engagement (22% - P);
+                          Other financial and private sector development (11% - S)
+
+
+Prepared by :             Reviewed by :          ICR Review                  Group :
+                                                 Coordinator :
+Ramachandra Jammi         Christopher David      Christopher David           IEGPS1
+                          Nelson                 Nelson
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+ According to the Project Credit Agreement (June 12, 2002), the project development objectives were to (i) improve
+the quality of rural life by utilizing off -grid renewable energy technologies to provide energy services to remote
+communities; and (ii) promote private sector power generation from renewable energy resources for the main grid .
+
+The global environment objective as stated in the Project Appraisal Document was to reduce atmospheric carbon
+emission by removing barriers and reducing implementation costs for renewable energy and removing barriers to
+energy efficiency. There is no statement of the global environment objective either in the Project Credit Agreement
+or the GEF Project Agreement documents .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+ c. Components:
+ Component 1. Grid-Connected Renewable Energy Power Generation (At appraisal: US$150.3 million; At
+completion: US$204.9 million): Continuation of refinancing support for mini -hydro projects provided under the
+preceding Energy Services Delivery Project, and support for two other commercially available renewable energy
+sources - wind and biomass, to result in an increase of nearly 85 MW of grid-connected small-scale renewable
+energy capacity.
+
+     Mini Hydro Projects: In addition to a pipeline of eight projects, totaling 39 MW, in an advanced stage of
+     development, an additional 20-25 MW.
+     Wind Projects: Commercialization and up-scaling of wind development, including exploring the possibility of
+     off-shore development. Technical assistance would be provided for business development, feasibility studies,
+    and off-shore resource assessment .
+    Biomass: Support the marketing of viable grid -connected biomass projects . Focus initially on small-scale
+    co-generation/gasification projects in the coconut and tea -industry and on larger scale projects with potential
+    biomass plantations. Technical assistance for business development, feasibility studies, and regional trade
+    shows, as well as longer term financing for developers through the Participating Credit Institutions (PCIs).
+    Additional support for pilot biomass gasification investments was to be determined and implemented during the
+    life of the project. Subprojects anticipated were one 8 MW project (coconut-based) and about 4-5 smaller
+    biomass generators in the range of 1-2 MW based on wood waste (from saw mills) and/or new plantations.
+
+Component 2. Solar PV Investments (At appraisal: US$63.7 million; At completion: US$43.7 million): Credit and
+grant support for solar PV investments for household, commercial, and institutional use to enable the market to
+become fully commercial. In particular, the Project's proposed refinance, grant, and technical assistance support
+would seek to solidify the existing middle -range solar home system market and expand service to other applications
+such as: (i) smaller systems accessible to poor households; and (ii) community applications for health clinics,
+schools, street lighting, etc . Further capacity building would be provided in respect of micro -finance institutions and
+other household financing organizations serving limited communities to expand credit access . These measures
+would enable Sri Lanka to achieve the indicated target of 85,000 solar systems.
+Component 3. Independent Grid Systems (At appraisal: US$5.3 million; At completion: US$2.6 million): Support
+further commercialization of village hydro and other community -based independent grid systems through refinancing
+and grant support for investments and project preparation support . Additionally, technical assistance would address
+such issues as daytime electricity use for income generation activities and mechanisms for disposal of assets once
+an area served by an independent grid is connected to the national system (stranded assets). The status of
+independent grids within the sector reform agenda would also be emphasized in the broader sector technical
+assistance. The indicative target was access for 15,000 new households and enterprises through independent grids -
+village hydro projects, as well as projects based on biomass and other technologies, where feasible .
+Component 4. Energy Efficiency and Demand Side Management (DSM) (At appraisal: US$2.0 million; At
+completion: US$0.3 million): Provide TA and limited credit support for further private sector development for provision
+of energy efficiency services, including a framework for integrating sustainable implementation of such programs into
+sector reforms. It was envisioned that responsibility for energy efficiency /demand-side management (DSM)-related
+policy and regulatory issues, as well as implementation of public -policy type DSM programs would rest with the
+Government, regulator, or utility, while private sector enterprises such as Energy Service Companies (ESCOs) would
+implement commercially viable energy efficiency projects .
+Component 5. Cross-sectoral Energy Applications (At appraisal: US$4.9 million; At completion: US$0.04 million):
+Provide rural enterprises credit support for larger systems . Provide TA to service institutions for the development of
+energy, and standardized energy packages to create awareness and to integrate energy provision into improved
+service delivery. In addition, co-financing support would be provided for investments in selected areas .
+Commercial/institutional support would include TA aimed at mainstreaming productive applications in off -grid
+systems. The project sought to connect at least 1,000 institutional and commercial systems, spurring interventions
+that are critically important in restoring economic development in the country's northern and eastern areas .
+Component 6. Technical Assistance (At appraisal: US$5.7 million; At completion: US$2.3 million): In addition to the
+component-specific assistance described above, technical assistance under the Project was projected for the
+following activities: project administration/ promotion; subproject promotion/development support; technology / market
+introduction/ promotion/capacity building related to renewable energy and energy efficiency; cross -sectoral energy
+applications; sustainability; and monitoring and evaluation .
+
+Additional financing: Following a mid-term review in 2005, which noted an increase in demand for independent power
+projects, an additional financing of US$ 40 million was approved by IDA in 2007.
+
+Project Restructuring: The first restructuring (level 2, implying that project objectives were not changed ), which was
+carried out on October 18, 2010, revised the end-of-project target for component 2 (‘off-grid renewables) from
+161,000 households, small and medium enterprises and public institutions to 113,500 as recommended by the
+Ministry of Power and Energy. The Bank considered the reduced target was appropriate given the faster than
+anticipated pace of grid expansion, which reduced the demand for off -grid renewable solutions. A second
+restructuring (level 2; June 16, 2011) extended the closing date by 6 months. This was necessary to enable ongoing
+investments to be completed and to make up for the delay in effectiveness of the Additional Financing credit .
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+  The project cost at completion was US$ 254 million, about 10 percent higher than the planned US$ 232 million. The
+increase resulted from revised output targets during implementation, and also due to exchange rate variations .
+Almost all of the additional financing of US$ 40 million was provided to the grid-connected renewable generation and
+solar PV components. The two components accounted for about 97.5% of total expenditures. The grid connected
+hydro and wind power investments incurred about 36% more total costs and corresponding allocation than was
+envisaged at appraisal.
+
+The independent grid systems component was relatively small in terms of expenditures (approximately 1 percent).
+The expenditures under the remaining components were far lower than estimates . The component on cross-sectoral
+energy applications was not implemented as the greater than expected grid expansion during the project
+implementation period made these activities either less useful or unnecessary .
+
+The project was approved on June 20, 2002 and became effective as scheduled on October 7, 2002. The project
+was implemented through an Administrative Unit (AU) located in the DFCC Bank, a commercial entity, which
+continued the role that it had played under the prior Bank ’s Energy Services Delivery project . The project was
+ultimately extended by three and a half years and closed on December 31, 2011.
+
+A mid-term review was carried out in September 2005, which noted that the grid-connected renewable energy effort
+(component 1) was behind schedule, and that the independent grid systems (component 3) were facing constraints.
+The delays related to dealing with sub -stations that had reached their maximum capacities, obtaining required
+approvals from the Central Environmental Authority and other agencies, and acquiring land . The mid-term review
+made recommendations to overcome these constraints, which required the cooperation of the Ceylon Electricity
+Board and Central Environmental Authority .
+
+
+3. Relevance of Objectives & Design:
+
+a. Relevance of Objectives:
+Relevance of the project development objectives is rated High . The objectives of the project were highly relevant
+to Sri Lanka’s priorities, the Bank’s partnership strategy, and global energy and climate concerns, both at the time of
+project appraisal and project completion .
+
+The grid-connected renewable energy development under the project is in line with the Government ’s October 2006’
+National Energy Policy and Strategies of Sri Lanka ’ which sought to: (i) provide basic energy needs; (ii) improve
+energy security; and (iii) use indigenous resources for these purposes . It is also consistent with the Government ’s
+‘Mahinda Chinthanaya – Vision for the Future’ which commits to increasing generation from renewable energy
+(excluding large hydro) to 20 percent of total generation by 2020 corresponding to about 4,000 GWh/year (or
+approximately 1300 MW in installed capacity). The off-grid effort under the project remains highly relevant to the
+Government’s priorities: to achieve a 100 percent electrification goal, the Government has been investing
+significantly in network expansion, including off -grid means to electrify roughly 40,000 customers who are “beyond
+the last mile,�? and adding new generation capacity .
+
+While the foundations had been laid for sustainable growth of the renewable energy industry in Sri Lanka – to which
+the Bank‘s earlier Energy Services Delivery project had contributed significantly – critical barriers still needed to be
+addressed to maintain the momentum: the relatively small size of the market; lack of a level -playing field for private
+sector participants; limited access to long term financing with domestic fund mobilization being mainly short term;
+integrating renewable energy in the country ’s overall electrification strategy; and establishing a sustainable and
+transparent basis for subsidies for rural electrification .
+
+The project continues to be relevant to the latest Country Partnership Strategy (FY2013-16) that supports sustained
+private and public investment; and improving living and standards and social inclusion . The project was also
+consistent with the World Bank ’s Country Assistance Strategy (FY97-99) which included promotion of sustainable
+private-sector led growth; increasing efficiency in delivery of infrastructure, especially in rural areas; preserving the
+environment; and working closely with communities and non -Governmental Organizations (NGOs) to generate
+development solutions. The project objectives were also aligned with the GEF Operational Program 6 which covers
+promoting renewable energy by removing barriers and reducing implementation costs . The development of
+grid-connected renewables responds to the 2009 Country Assistance Strategy goals of improving infrastructure
+provision, improving the business environment for stronger entrepreneurship and knowledge -based economy, and
+improving economic opportunities in North and East of the country .
+
+b. Relevance of Design:
+Relevance of project design is rated Substantial . The Project had two distinct objectives, the first to improve the
+quality of life in rural areas through provision of off -grid electricity, and the other to augment generation capacity for
+the grid through promoting private sector involvement in renewable energy resources for the main grid . Both the
+objectives were united by the focus on renewable energy, and on augmenting the available generation capacity in
+the country. The global development objective of decreasing Greenhouse Gas (GHG) emissions derived from the
+use of renewable energy to displace fossil fuels .
+
+In tracing the results chain, provision of off -grid rural electrification was an appropriate choice based on the
+assessment – at appraisal – of the speed at which the grid was expanding to rural areas . The provision of off-grid
+electricity would give a jump-start to the rural areas distant from the grid, to experience the expected social and
+economic benefits from rural electrification . In retrospect, the pace of grid expansion turned out to be much faster
+than anticipated due to greatly increased emphasis on grid expansion by the Ceylon Electricity Board with the
+support of Government The AU pointed out that national integration was an important goal pursued by the
+Government, which also helped faster grid expansion . e.g. during 2008-12, the access increased by nearly 20%
+(from 75% to 94% of households) during the project implementation period .
+
+Given the limited options for expanding generation capacity (Sri Lanka has low indigenous fossil fuel resources and
+has exploited most of its large hydro potential ) the choice or pursuing new renewable sources (Mini-hydro, Solar,
+Wind, Biomass) to feed the grid was appropriate, as these would help replace higher cost liquid fuel based power
+plants. Also, because of the distributed nature of such resources, the potential for local development and savings in
+GHG emissions was significant.
+
+The inclusion of energy efficiency as a small component was expected to help consumers through reduced
+consumption and bills, and the utility by rationalizing load management and supply . In retrospect, this component did
+not fit into the overall design and objective, although a more broad -based intervention would still be necessary to
+effectively address the issues, institutions and processes for orienting consumer behavior towards energy efficiency,
+which is also borne out from experience with other Bank projects .
+
+
+4. Achievement of Objectives (Efficacy):
+  Objective 1: Improve The Quality Of Rural Life By Utilizing Off -Grid Renewable Energy Technologies To Provide
+Energy Services To Remote Communities . Rated Substantial .
+
+Outputs
+
+The original target formulated at appraisal was to provide 161,000 households, rural small and medium enterprises
+and public institutions access to electricity services through off -grid renewable energy schemes . In the following
+years, a greatly increased emphasis on grid expansion by the Government resulted in an increase of grid connected
+domestic customers from 2.82 million in 2004 to 3.96 million by 2010 – an increase of 1.14 million. Presently, grid
+electrification now serves 94 percent of households making off -grid less relevant than originally anticipated at Project
+Appraisal. In response to these developments, the target was reduced to 113,500 based on the forecast demand for
+off-grid electrification. The final accounting for off-grid electrification showed that the project had provided access to
+electricity to 110,575 households through the sales of SHS while 6,220 households were electrified through
+independent grid systems, mainly village hydro . In total the project provided 116,795 households access to
+electricity, which exceeded the revised target by a small margin .
+
+Of the 110,575 SHS sold to rural households an estimated 20,000 had to be repossessed because households
+defaulted on their loans. In general, the Participating Credit Institutions only repossessed the modules which were
+deemed as their only collateral. The value of the repossessed modules was insufficient to recover the outstanding
+balance. Further, a small number of SHS and village hydro systems are no longer used because the households
+have since been connected to the electricity grid . On the other hand, while several village systems have now been
+connected to the grid, under a net -metering scheme similar to a Standardized Power Purchase Agreement but for
+smaller systems, the off-grid village systems connected to the grid can now sell power to the utility at an agreed tariff .
+This is a win-win situation for the village-communities who have invested money and sweat equity into their off -grid
+systems as they can now benefit from the reliability of the national grid, while continuing to earn revenues from the
+sale of electricity generated by their village hydro schemes back to the utility at an agreed tariff . Following the pilot
+scheme adopted by a village hydro (21 kW at Athuraliya village in Ratnapura ), net metering spurred the growth of
+distributed renewable energy projects .
+
+Outcomes
+
+Feedback to the IEG mission from beneficiaries in the field confirms that access to electricity for the first time – both
+from SHS and the grid – has had a transforming effect on their lives . The more significant impacts on the quality of
+life appear to have come from better lighting and use of television, even though newly electrified households and
+small businesses activities have indicated little improvements in income .
+
+The Bank team attempted to capture outcome data for the project during implementation through surveying 1,500
+households, small/medium enterprises and public institutions targeted for electrification from the original IDA Credit
+(1,000) and the Additional Financing (500). The results of the surveys are summarized in the "Completion Report"
+which reports on achievements in the period September 2004 to September 2008. Resources Development
+Consultants (Pvt) Ltd.: Monitoring and Evaluation of the Renewable Energy for Rural Development Project .
+September 2004 - September 2008. Completion Report submitted to RERED AU.
+
+The surveys had found that even in small quantities, electricity consumption brings about significant lifestyle changes
+in families, mainly by making home life more convenient and housework easier . One finding from the surveys, which
+was confirmed by this mission’s conversations with beneficiaries, is that while access to electricity does not reduce
+the overall work load of women, it makes their work easier . Off-grid electricity is also extensively used for watching
+television, leading to more awareness of the outside world, in addition to providing entertainment . This is considered
+the next highest benefit of electricity as it serves to bring remote rural communities closer to the outside world .
+Further, the level of social interaction within households and communities increase with electricity, which contributes
+in numerous ways to social capital development . Men spent more time with the family (80 percent of the respondents
+in surveys) and reduced time spent outside of the house including alcohol consumption in the evening (20 percent of
+respondents).
+
+One home owner conveyed that the lighting has given a feeling of safety for her and her children . This point was also
+found in the survey when villagers reported that they feel safer (60 – 87 percent of the respondents of different
+surveys) and an increase in socio-cultural activities resulting from the presence of electricity at religious places in the
+villages (80 percent of the respondents ). The use of computers was also observed in a few houses electrified by
+village hydro schemes.
+
+Contrary to expectation, the availability of electricity did not stimulate the development of new enterprises . However,
+it improved operation of existing enterprises . According to reports from Participating Credit Institutions and
+consultants, access to electricity improved economic activities of 742 (household) enterprises or 0.6% of total
+number of electrified households . Economic activities that benefited from access to electricity include grocery shops,
+bakeries, battery-charging stations, communication centers, computer training centers, grinding /rice milling and
+cinnamon processing.
+
+Not all rural households using off -grid schemes have benefitted from the expansion of the national grid as
+approximately 40,000 households are expected to still remain without access to the national grid (including some
+who are on small islands.) This is in addition to thousands who are still using off -grid schemes or other means such
+as kerosene for lighting today . However, for those who have benefitted from faster than anticipated grid expansion
+this was a positive development as it provides a higher level of services and is more affordable for households .
+Off-grid electricity supply provided access to electricity several years before the arrival of the grid to their
+communities, and for those households who have yet to receive grid power; the off -grid schemes are still very much
+valued. On the whole, off-grid installations under the project have demonstrated that SHS and /or independent mini
+grids are a viable option for rural areas where the cost of grid extension would be prohibitive for the utility .
+
+Objective 2: Promote private sector power generation from renewable energy resources for the main grid . Rated
+High .
+High.
+
+Outputs
+
+The target for this objective was the installation of 135 MW of small-scale renewable grid-connected power
+generation capacity (85 MW at appraisal and 50 MW added under the Additional Financing ). At completion, the
+project had supported the installation of about 185.3 MW grid-connected renewable energy sub -projects. This
+included 2 wind projects (19.8 MW total capacity), 1 biomass project (1 MW capacity) and 68 mini hydro projects
+(164.5 MW of total capacity). All of these projects are reported to be functioning with the exception of the lone
+biomass project which stopped operations due to difficulties with fuel supply . All these projects were promoted by
+private sector developers, using loans provided by commercial banks participating in RERED . The Participating
+Credit Institutions extended loans totaling US$ 122 million (LKR 12.84 billion), which is on average 59.5% of total
+project cost. The total investment was about US$ 205 million (LKR 21.55 billion).
+
+As of end-2013, there were 146 non-conventional renewable energy projects commissioned . The total installed
+capacity from those was 367.3 MW of which about 271 MW (~74%) were mini hydropower based. In addition, there
+is a pipeline of about 73 projects for which a Standardized Power Purchase Agreement has been signed between
+private developers and the Ceylon Electricity Board, and are expected to add about 246 MW when completed. The
+total energy generated during 2013 from non-conventional renewable energy capacity was 1169 GWh, which is
+about 9.6% of total generation. Please see Annex C for details .
+
+Outcomes
+Since the close of the project, investments in new projects have continued as evidenced by the pipeline of projects .
+Developers have shown a continued desire to undertake private investment in renewable energy generation even
+after support from the project has ceased, since commercial banks continue to finance these investments . Sources of
+funds include private equity, funds raised through stock markets, foreign equity investors and support from a small
+IFC loan guarantee facility. The Participating Credit Institutions and IFC indicated to the mission that the project had
+helped create the momentum for non -conventional renewable energy projects in the country and that there is now
+competition among banks and investors to invest in these projects .
+
+Feedback to the mission from government officials, Participating Credit Institutions and developers suggests that the
+project was instrumental in developing a vibrant renewable energy industry in Sri Lanka . Greater demand for support
+services is noted, including project development, technical design, construction, equipment manufacturing, and
+financing, though no specific data was available in this regard . The project has contributed to the formation of
+several developer associations, including for solar, wind, village hydro and small hydropower . The IEG mission met
+with select developer associations that continue to be active today and play an important role in representing their
+industry in government, regulatory and other consultations . The collective feedback from government officials,
+Participating Credit Institutions and developers supports the claim that Sri Lanka now has a viable renewable energy
+industry. A significant number of developers, manufacturers, and financiers are venturing abroad to undertake
+investments in renewable energy projects in other countries in Asia and Africa . A few examples include: five Sri
+Lankan mini hydro developers are now active in East Asia; Lanka Ventures, an equity financier, is investing in mini
+hydro projects in East Africa; VS Hydro undertakes its own contracting and manufacturing of turbines in Sri Lanka
+and has investments in Uganda, Tanzania and Kenya . An 18 MW plant in Uganda uses three 6 MW turbines
+manufactured in Sri Lanka.
+
+The AU and the Sustainable Energy Authority noted the value added from several technical assistance initiatives
+under the project. The regulatory agency (Public Utilities Commission of Sri Lanka) noted that the project had
+enabled a better understanding of structuring Power Purchase Agreements . Across the stakeholder groups, the
+project is credited to have enabled knowledge sharing through periodic consultative meetings, which were reported
+to have helped many project sponsors and Participating Credit Institutions to fine tune their activities and
+interventions. One independent consultant and energy expert noted that this was effective because of the relatively
+higher level of skills and absorption capacity among institutions in Sri Lanka .
+
+As a result of increased renewable energy activity, rural communities have benefitted from both temporary and
+long-term employment opportunities from construction and operations of the sub -projects and overall improved
+infrastructure as Government has undertaken construction of new roads and /or repair of existing ones to facilitate the
+construction activities for some of these sub -projects. A number of villages benefitted from piped water supply,
+construction of houses, school facilities, community centers and improved facilities at places of worship . Developers
+carried out these improvements mainly to create goodwill among the villagers, while some were done as
+compensation payments to the villagers .
+
+
+Global Environmental Objective
+
+Global Environmental Objective : To reduce atmospheric carbon emission by removing barriers and reducing
+implementation costs for renewable energy and removing barriers to energy efficiency .
+
+The indicators for achieving the global environmental objective were : (i) avoiding emissions of 1.25 million tons of
+CO2; and (ii) promotion of the adoption of renewable energy by removing market barriers and reducing
+implementation cost.
+
+The team’s estimates of CO2 avoidance are straightforward and credible . Assuming an average carbon emission
+coefficient for Sri Lanka of 0.8 kgCO2/kWh This value is for marginal power plants which are diesel and fuel oil
+based, and can be displaced by the new renewables financed under the project . , the resulting avoided emissions of
+sub-projects commissioned to date is 1.84 million tons CO2; surpassing the target of 1.25 million tons of CO2 by 47
+percent (the quantifiable indicator was not increased with the additional financing ). By estimating the total expected
+generation from all plants commissioned in 2012 or those expected to be commissioned by year ’s end, the volume of
+avoided CO2 emissions would be 2.15 million. The avoided emissions are calculated from the actual renewable
+electricity production and conservative estimates for the total annual electricity generation over the lifetime of the
+sub-projects. The resulting reduction in carbon emissions can also be attributed to the off -grid schemes as well,
+though these are far smaller in volume than emissions avoided from the grid -connected sub- projects. The
+coefficients used for estimates of CO 2 evidence at appraisal continue to be valid at present . Ongoing activity in
+grid-connected renewables and off -grid renewables following project completion continues to add proportionately to
+CO2 avoidance.
+The design of the project also included an engagement on energy efficiency through a small component; however,
+the limited resources allocated for energy efficiency and demand -side management (DSM) (US$ 2 million equivalent
+or 0.9% of the total financing) made a significant impact unlikely . Moreover, a low interest credit line for energy
+efficiency extended by the Japan International Cooperation Agency (JICA) made RERED funds far less attractive .
+The project therefore did not result in any direct CO 2 reductions from the energy efficiency and DSM component .
+
+The removal of market barriers is evident from the additional installed capacity of grid -connected renewable energy,
+improved all-round sector capacity, and viable private sector activity in this area as describe in the discussion under
+objective 2 above. In contrast to the situation prior to the project there is now far greater familiarity and willingness to
+lend by commercial banks for grid -connected renewable energy projects and the Ceylon Electricity Board is far more
+oriented to purchasing electricity from grid -connected renewable energy plants .
+
+
+5. Efficiency:
+  The efficiency of the project in meeting its objectives is rated Substantial . The economic and financial analysis
+was based on representative stylized sub -projects from the feasibility study at appraisal, compared with actual
+projects’ data at close. Under the financial intermediary mode followed by this project, the verification of the financial
+viability of the sub-projects within the feed-in tariff regime was the responsibility of the lending commercial banks
+which also bore the full credit risk of the sub -projects.
+ Mini-hydropower plants. Grid-connected mini- and micro-hydropower plants were the dominant investment in the
+“grid-tied�? component. A mini hydro sub-project was used as a representative project for the economic and financial
+analyses. Post completion, the Economic Internal Rate of Return (EIRR) was 46 percent for a representative 2.5 MW
+mini hydro plant with an investment cost of US$ 1,445/kW, a plant factor of 38 percent and an avoided cost of
+US$0.252/kWh based on Short-Run Marginal Cost (SRMC) of highest cost thermal plants offset by the mini hydro
+generation. The economic analysis at Appraisal for a 1.5 MW mini hydro plant showed an EIRR of 24 percent. The
+higher EIRR is attributed to the higher avoided cost even though plant factor was lower and investment cost higher
+than at appraisal.
+
+Solar Home Systems . Households using a SHS save on kerosene for lighting and batteries and receive far superior
+and safer lighting services from electric lighting compared to kerosene lighting . Based on a 40 Wp SHS for a
+representative analysis, the ICR estimated the EIRR at 88 percent when consumer surplus (attributed to the far
+superior electric lighting) is considered and 13 percent if consumer surplus is disregarded . There was no EIRR
+calculated at appraisal for this component . However, since about 20,000 SHSs were not used by beneficiaries (which
+is about 18% of all SHSs), spreading the cost of these over the remainder of the SHSs should reduce the EIRR .
+
+Village hydro plants . A village hydro plant saves kerosene for lighting and batteries as well as providing far superior
+and safer electric lighting services compared to kerosene lighting . Beyond meeting households’ basic electricity
+needs, they have the potential to meet other electricity needs in the community such as ironing, water pumping, and
+power for small enterprises. The EIRR of a representative sub -project was calculated taking into account only
+savings due to avoided kerosene and battery use as well as consumer surplus gained from using superior electric
+lighting. The EIRR for a representative sub -project with a capacity of 8 kW and serving 30 households is 54 percent
+when consumer surplus is considered and 9 percent if consumer surplus was not considered . In comparison, the
+EIRR of a typical village hydro sub -project was reported as 12 percent at Appraisal.
+
+The project cost increase of 10 percent (US$254 million vs. the original estimate of US$232 million) is in line with the
+significant upward revision and achievement of targets for grid -connected renewable energy, while noting the
+decrease in targets and achievements for SHS . The time overrun of three and a half years on top of the originally
+planned six and a half years implementation period was due to the increased targets and achievements, and the
+adjustments that were appropriately made in response to intervening political, financial and market conditions . As
+noted in the mid-term review, there were also delays in activities relating to overloaded substations on the part of the
+Ceylon Electricity Board and granting required approvals by the Sustainable Energy Authority that also contributed to
+the delay. Taking all these factors into consideration, efficiency is rated substantial .
+
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                                  Rate Available?                           Point Value                         Coverage/Scope*
+
+     Appraisal                        Yes                                       46%                                     80%
+
+     ICR estimate                     Yes                                       24%                                     80%
+                                          * Refers to percent of total project cost for which ERR/FRR was calculated.
+ 6. Outcome:
+   Overall project development outcome is rated Satisfactory . Relevance of the project development objective is
+rated high because of Sri Lanka’ priority and the Bank’s supportive strategy to contribute to rural well -being through
+improved provision of electricity access and to reduce dependence on imported fossil fuels as a source of electricity .
+Relevance of the project’s design is rated high because of its logical approach of leveraging renewable energy
+sources for both off-grid and grid-connected provision of electricity to improve access and therefore positively impact
+beneficiaries, especially in rural areas, while displacing the use of fossil fuels . The Efficacy of the first objective of
+improving the quality of rural life through off -grid renewable technologies is rated substantial due to significant
+outcomes from the spread of SHS in unserved rural areas, though this process was overtaken to some extent by the
+parallel advance of the electricity grid . The second objective of promoting private sector power generation from
+renewable energy resources is rated high from the higher greater than expected achievements from various
+renewable energy sources. Efficiency of the project is rated substantial (rather than high) mainly due to the
+avoidable causes that contributed to the significant time overrun, even though the economic rate of returns are very
+favorable. Overall Development Outcome of the project is rated satisfactory based on the ratings for relevance,
+efficacy and efficiency.
+
+Global environment outcome . CO2 emission reductions were greater than expected due the significant lowering of
+market barriers to renewable energy development and the overall achievement of renewable energy under the
+project being greater than originally planned .
+
+ a. Outcome Rating : Satisfactory
+
+
+ 7. Rationale for Risk to Development Outcome Rating:
+   The risk to the improved quality of life from utilizing off -grid renewable energy technologies to bring electricity to
+remote communities is considered low . Also, the risk of communities no longer using the off -grid renewable energy
+technologies for reasons other than the arrival of the grid is low . Once the users have experienced the benefits of
+off-grid electrification they are seen to make considerable efforts to maintain this service . In many cases, the off-grid
+options may be maintained as a back -up or to reduce the grid electricity bill .
+
+At Appraisal, the Governments’ rural electrification policy envisaged that 20 percent of the population would remain
+reliant on off-grid electricity supply. At present, the Government expects to achieve full electrification by 2016, of
+which a relatively low number of 40,000 households would have to be served by off -grid means. The Government
+also targets a share in generation capacity for non -conventional renewable of 15 percent by 2015 and 20 percent by
+2020. By 2013, the generation from non-conventional renewable energy sources had reached about 9.6 percent.
+Apart from the numerical targets, further addition of non -conventional renewable energy is critical for managing the
+peak load demand as well as replacing expensive oil -based power plants, thereby lowering the average costs of
+generation. Hence the sustainability of the project ’s outputs and outcomes are very important to the sector ’s
+developmental priorities.
+
+Role and support of Ceylon Electricity Board
+
+Stakeholders expressed mixed views to the mission about the Ceylon Electricity Board ’s active support for
+grid-connected renewable energy, mainly attributing this to a lack of consensus among its key constituents and
+management. However, there are signs that the Ceylon Electricity Board has emerged from its earlier reluctance
+towards grid-connected renewable energy . For instance, the Ceylon Electricity Board has acknowledged that power
+purchased from small renewable energy plants had saved the utility LKR 2 billion in electricity generation costs in
+2010 through reduced expenditure on imported heavy fuel oil and other fossil fuels . Following the April 2013 tariff
+adjustments, the Ceylon Electricity Board estimates show that its average selling price could exceed the average
+purchase cost of energy from non -conventional renewable energy . Ceylon Electricity Board’s projections indicate that
+non-conventional renewable energy would be a viable option to pursue in supply cost reduction . Please see Annex C
+for details. Project developers and the Ceylon Electricity Board both have a mutual interest in maximizing renewable
+energy production, particularly to minimize use of imported fossil fuel as the alternative for electricity generation .
+
+Continuing financing for NCRE projects
+
+One major criterion for measuring the impact of this project is the continued lending for renewable energy projects by
+commercial banks and the initial findings post project completion are very encouraging . About 73 new projects are
+in the pipeline and would add another 246 MW to non-conventional renewable energy capacity in the country .
+Small hydro development is now considered a commercially viable activity by Participating Credit Institutions and
+developers. Sufficient technical expertise for this purpose exists within the country . All this is borne out by the large
+number of mini hydro projects in the pipeline . However, development of village hydro without the type of support
+provided by this project is unlikely while the need is also declining due to rapid grid expansion . Developers active in
+village hydro have moved to other areas and some are now providing consultancy services in India and Africa .
+
+Biomass generation, and to a lesser extent wind and solar power generation, are still facing a number of barriers and
+support to overcome these barriers would be useful . These barriers include technical (integration with grid issues),
+regulatory (feed-in-tariffs) and financing (suitable terms) barriers. The Asian Development Bank is providing technical
+assistance support in this regard, and indicated its readiness to follow with financial support for investments .
+
+The demand for SHS systems can be positively impacted by the net metering regulations introduced by the regulator
+(Public Utilities Commission of Sri Lanka) that allow individual SHS customers to offset their payments to the utility
+with electricity generated from their SHS systems at the retail tariffs . A few of these schemes (limited to 42 kWp per
+facility) are now in operation as residential tariffs have recently been increased to as much as LKR 50.4/kWh
+(including fuel adjustment surcharge for higher consumption category; currently about US$ 0.38/kWh). As the Ceylon
+Electricity Board and the Public Utilities Commission of Sri Lanka continue to fine tune the net -metering regulations,
+they need to ensure that the boost these have provided to the SHS industry is sustained .
+
+In respect of SHS, only two vendors are currently active out of the fourteen at the peak of sales . Some of the
+technicians trained under the Energy Services Delivery and the RERED projects are providing independent after
+sales services in their areas and the remaining SHS vendors depend on their services to fulfill their obligations . One
+vendor (Wisdom Solar) has shown resilience by marketing solar street lamps to municipalities, and capturing
+business in some remote areas in the northern part of the country, and indicated that their firm is well placed to
+implement the SHSs and off-grid solutions to the 40,000 homes identified by the Ceylon Electricity Board .
+
+Power plant operating risks
+
+There is a risk that some of the grid -connected renewable energy sub -projects might stop operating (mainly for
+projects where power purchase agreements will be expiring and the tariff offered might be too low to sustain
+operations). For instance, a 1.8 MW mini hydropower plant Daily Mirror, Sri Lanka, March 13, 2014, page A16
+“Private Hydropower Plant Closed Without Notice �? commissioned in 1989 was reported to have shut down from being
+unable to meet operating costs due to low tariffs . The Public Utilities Commission of Sri Lanka showed
+understanding in this situation and resolved this issue, after considering the impact it could have on the whole
+non-conventional renewable energy segment . The risk that the private sector ceases to seek and develop new
+projects is considered low unless tariffs decline substantially to the point where the economics become unviable . The
+Government has indicated its commitment to the participation of the private sector in electricity generation, especially
+from renewable resources. These projects are financially viable and commercial banks are continuing to lend, even
+without refinancing.
+
+Role and support of the Government
+
+Sub-projects refinanced by the project would continue to comply with the Government ’s environmental requirements,
+including the required monitoring. Some stakeholders from private sector and industry association however
+expressed reservations, but also the desire that the Sustainable Energy Authority needs to step up its efforts to meet
+the challenges, streamline bureaucratic requirements, and actually assist project developers to realize their projects
+and also contribute to national priorities of promoting non -conventional renewable energy . The Government’s further
+endorsement of non-conventional renewable energy and support for its development should be sufficient incentives
+for the Sustainable Energy Authority, though its ability to attract skills remains an issue as market pay scales are far
+higher.
+
+The activities supported by the project have transitioned from the AU to the Sustainable Energy Authority which will
+provide continuity for facilitating investments in the sector . Sustainable Energy Authority officials indicated to the
+mission that they are now maintaining documentation from the project, which includes a wealth of analysis, data and
+information on the subject of renewable energy and related initiatives in the developing country context .
+
+Based on the overall assessment of the key issues, the risk to sustainability of overall project development
+outcome is rated Negligible to Low .
+
+
+   a. Risk to Development Outcome Rating : Negligible to Low
+8. Assessment of Bank Performance:
+
+a. Quality at entry:
+    The design of this project is rate satisfactory . It benefited from the Bank’s experience with the earlier Energy
+Services Delivery project – which received a satisfactory outcome rating – as well as rural and renewable energy
+projects in South and East Asia and Sub -Saharan Africa. The guiding principles that emerged from the Energy
+Services Delivery project and other Bank projects were : (i) necessity of providing consumer choice; (ii) ensuring
+pricing which is cost-reflective; (iii) overcoming high start-up costs; (iv) encouraging local participation, tapping
+into private sector and civil society capabilities and potential; and (v) implementing sound sector policies .
+
+Design features of the project that derived from the above lessons contributed to effective project implementation,
+including: third-party administration of the credit and grant facility and overall project management; involvement of
+industry associations and advocacy groups in guiding industry growth and directions; the adoption of a
+standardized power purchasing agreement and ensuring tariff certainty; a bankable legal framework that assured
+availability of long term financing; and the importance of participation and commitment of the entire community on
+off-grid village electrification schemes for ensuring long term sustainability of these schemes, as well as adequate
+after sales service.
+
+In retrospect, the project design underestimated the pace at which the electricity grid would expand in the
+country. At the project preparation stage, the Bank in consultation with the Ceylon Electricity Board, estimated
+that existing technical and financial constraints would limit the coverage of the grid to 80 percent of the population
+leaving about 20 percent (or about 1 million households) reliant on off grid systems. Subsequently, the
+Government moved aggressively to increase generation (2,483 MW to 3,312 MW during 2003-12) and expand
+the grid, with the result that only 40,000 households remained to be covered through off -grid options by 2013. As
+the development of major hydro has remained stagnant at 1,207 MW since 2003, the growth in generation came
+mainly from an increase in thermal power (51%) as well as renewable energy (48%), the latter comprising small
+hydro, wind and biomass. The faster than anticipated growth of the grid, while a welcome development,
+necessitated changes in strategy and targets for off -grid electrification.
+
+The overall risk rating for the project at appraisal was substantial . This is reasonable for the type and scale of
+interventions proposed under the project . The demand for refinancing of loans for grid -connected renewable
+energy projects depends on a number of macroeconomic factors that are beyond the control of the project . For
+example, when interest rates were substantially higher at certain periods during the implementation period – most
+notably at the height of the military conflict – the demand for refinancing loans reduced significantly . Demand grew
+once more when interest rates dropped again . On the other hand, the risk of an insufficient market for SHS was
+identified and considered moderate . The impact of a saturated market for SHS or accelerated grid expansion was
+not analyzed in sufficient detail, which could have anticipated some of the challenges faced during
+implementation. This is an important lesson for other countries that are undertaking or planning aggressive
+off-grid electrification schemes.
+
+Again in retrospect, the inclusion of two relatively small components for energy efficiency /demand-side
+management and cross-sectoral energy applications did not fit well into the major thrust of the project . These
+components did not yield expected results, and may even have diverted some focus and effort from the larger
+project components.
+
+
+            at -Entry Rating :
+   Quality -at-                                   Satisfactory
+
+b. Quality of supervision:
+     he Bank ’s quality of supervision during the project is rated Moderately Satisfactory . The Bank’s
+   The
+supervision was characterized by a strategic management role rather than day to day handholding of the
+implementing agency’s activities. This was possible because of AU ’s capacity and competence, and contributed
+greatly to its sense of ownership of the project for both AU and the Government . Feedback from the AU and the
+Government suggests that the Bank responded adequately and in a timely manner to requests for clearances
+and participated regularly in meetings with all project stakeholders . Both AU The AU noted that despite the
+value-added of such an approach, other financiers like the European Investment Bank had not included technical
+assistance in their ongoing projects and financing . and other stakeholders credited the participatory approach
+and its approach to the Bank and the project .
+
+The role of the Bank was highly valued as indicated by the feedback survey conducted at the end of the project .
+This was confirmed by the mission from the feedback it received from the Government, AU, Participating Credit
+Institutions and other stakeholders . Most respondents recognize the Bank as a key catalyst for grid -connected
+and off-grid renewable energy and energy efficiency interventions . The Bank’s involvement increased the
+confidence of the Participating Credit Institutions to continue to provide long -term loans to private developers of
+renewable energy projects. This was of particular importance because increasing the access to energy services
+from renewable energy was at the heart of the RERED design .
+
+However, the Bank was less responsive in dealing with the implementation issues with solar PV, cross -sectoral
+energy applications and energy efficiency & demand side management components . Despite the early onset of
+problems from 2006 onwards, it was not until late-2010 when Bank revised output targets for solar PV
+component, and also it is unclear if the Bank proactively examined the implications of potential risks of
+non-payment by SHS customers on the vendors, creditors and the refinancing by the project . It is also unclear if
+the Bank enabled dialogue with Ceylon Electricity Board and the Government on these issues and possible
+coordination of grid expansion with off -grid options during this period. Similar lack of proactivity is apparent
+concerning the other two components, as also noted by the absence of such discussion in the additional
+financing documents.
+
+The Bank could have done more to encourage and assist the AU in making active use of the technical assistance
+component rather than relying on requests from the industry, beneficiaries, or other stakeholders . The Bank
+could also have insisted on better transition arrangements from the AU to Sustainable Energy Authority including
+the digitizing and transfer of documentation .
+
+Some stakeholders also pointed to the sometimes passive role of the Bank in critical issues (e.g. The Ceylon
+Electricity Board’s least cost development plan and implications for non -conventional renewable energy ); while
+most expressed that the Bank seemed to have exited the sector too soon since many policies formulated and
+adopted during the project period were showing signs of stress and the absence of the Bank ’s lead and
+convening forte was conspicuous . Interestingly, the Public Utilities Commission of Sri Lanka shared the view that
+local economic gains from non-conventional renewable energy projects could now be integrated into a broader
+theme of rural economic development, and that the Bank ’s presence could have facilitated this effectively .
+
+Overall Bank Performance is rated Moderately Satisfactory .
+
+
+
+   Quality of Supervision Rating :                Moderately Satisfactory
+
+   Overall Bank Performance Rating :              Moderately Satisfactory
+
+
+9. Assessment of Borrower Performance:
+
+a. Government Performance:
+    The government ’s performance is rated Satisfactory . The Government showed consistent support to the
+project objectives throughout appraisal and implementation . During the project implementation period, in October
+2007, the Government established the Sri Lanka Sustainable Energy Authority as an apex institution responsible
+promoting sustainability in energy generation and use through increasing the use of indigenous renewable energy
+resources and improving energy efficiency . This underlined the commitment of the Government to renewable
+energy and complemented the activities of the project .
+
+The Government ensured continuity in the implementation arrangements from the earlier Energy Services
+Delivery project by working through the same AU located in the DFCC Bank . The Government also appropriately
+took a hands-off approach to the day-to-day implementation of the project and generally limited its own role to
+creating an enabling environment and providing counterpart funding . It facilitated the implementation of the
+project by providing the required policy and regulatory support, and approving investments by the utility for
+upgrading substations. The Government also provided considerable grant support for renewable energy through
+the Ceylon Electricity Board, directly to beneficiaries for SHS, and through provincial councils for village hydro
+schemes. It established attractive tariffs for selling renewable electricity to the national grid and ensured that the
+Standardized Power Purchase Agreement terms and conditions were adhered to by all parties . The Government
+was very responsive to the routine refinance -linked disbursement requests from the AU and was supportive in
+addressing problems that arose during the process . The mid-term review noted that there were delays in some
+cases in granting necessary approvals on the part of the Central Environmental Authority (CEA), and in dealing
+with overloaded substations on the part of the Ceylon Electricity Board . On balance, the Government’s
+performance is rated Satisfactory .
+   Government Performance Rating                                Satisfactory
+
+ b. Implementing Agency Performance:
+   Implementing agency performance during the project is rated Highly Satisfactory . The AU situated in the
+DFCC Bank was the implementing agency for the project . The AU was well placed to work with the Participating
+Credit Institutions and private developers and administer the refinancing mechanism due to its experience in
+commercial banking transactions .
+
+ The AU displayed strong commitment and professionalism to the objectives of the project, and coordinated well
+with all major stakeholder groups including Participating Credit Institutions, MFIs, developers, SHS vendors,
+village hydro developers, industry associations, village electricity consumer societies, the Ceylon Electricity
+Board and other Government organizations . In coordinating with stakeholders, the AU consolidated the
+consultative process that had been developed under the Energy Services Delivery project . Feedback to the
+mission from stakeholders suggests that they generally hold favorable views about the AU and its helpful role
+during their interactions. Some developers were very complimentary of the neutral role played by the AU;
+especially as it is also one among peer Banks and Participating Credit Institutions . Other Participating Credit
+Institutions indicated that the AU was professionally staffed and managed .
+
+The AU was administratively separated from the lending arm of DFCC Bank to minimize conflict of interest in the
+eyes of the other Participating Credit Institutions that were competing with DFCC Bank for refinancing of their
+loans. Procedures were documented well in the AU, and detailed records of sub -projects were maintained well.
+In retrospect, the AU could have done better in identifying more opportunities for technical assistance activities to
+support the various components, and in planning for a smoother transition after project completion, especially in
+the development of Sustainable Energy Authority ’s readiness.
+
+Overall, Borrower performance is rated Satisfactory .
+
+
+   Implementing Agency Performance Rating :                     Satisfactory
+
+   Overall Borrower Performance Rating :                        Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+ a. M&E Design:
+    Monitoring & Evaluation Design . The M&E framework employed appropriate outcome and output indicators that
+were well-defined and largely measurable. The responsibility for collecting the M&E indicators lay mainly with the
+AU. The objective of improving the quality of rural life by utilizing off -grid renewable energy technologies was to be
+measured through: (i) increase in income generating activities in communities that gain access to electricity; and (ii)
+increased electricity connections to households, rural small /medium enterprises and public institutions . The number
+of households, small and medium enterprises and public institutions electrified was to be obtained from regular
+reporting under the project. The increase in income generating activities would be assessed through surveys, though
+it was noted that attribution to the use of renewable energy technologies might be difficult .
+
+The objective of promoting private sector power generation from renewable energy resources for the main grid would
+be measured by additional MW of small -scale renewable grid-connected power generation capacity . The global
+environmental objective would be tracked through reduction of greenhouse gas emissions and the adoption of
+renewable energy and the trend in implementation cost as proxies for reducing market barriers . The indicators were
+adequate to assess achievement of this objective .
+
+
+ b. M&E Implementation:
+   M&E Implementation . The AU contracted a consultant to monitor progress towards achieving objectives and
+meeting indicators. M&E reports were submitted initially every quarter and bi -annually from 2006 onwards. The AU
+collected the required information as part of its routine administration work and progress was monitored throughout
+the sub-project lifecycle. The task team reports that the information provided was current and reliable . The Bank also
+hired an expert consultant to help review the progress and issues with solar PV component, which was helpful in
+examining options to resuscitate this component .
+ c. M&E Utilization:
+   M&E Utilization . The M&E process helped in proposing and pursuing the various corrective actions that emerged
+during implementation. The AU also conveyed that it had replicated the M&E processes for this project in other
+ongoing donor supported projects .
+
+M&E Quality Rating : High
+
+
+
+
+11. Other Issues
+
+ a. Safeguards:
+Safeguards . The project was placed in Category B under the Bank ’s environmental and social safeguard policies .
+The proposed project was expected to yield net positive environmental effects . The off-grid electrification
+sub-projects would reduce use of kerosene and lead -acid automotive batteries. No significant negative impacts were
+expected from the run-of-river village-hydro projects, as demonstrated by the 20 existing village hydro projects .
+Because of their small size, the grid -connected mini-hydro sub-projects were also unlikely to cause significant
+environmental damage. No resettlement was envisioned because the project did not involve land acquisition with
+settlements.
+
+ IDA had required prior review of: (i) all biomass projects; (ii) mini-hydro projects with a capacity of more than 5 MW;
+(iii) wind projects with a capacity of more than 10 MW; (iv) all projects involving land acquisition and /or resettlement;
+and (v) the first two environmental assessments of each Participating Credit Institution for mini hydro, biomass and
+wind power projects. Mini-hydro subprojects would be reviewed by the Central Environment Authority for
+compliance with environmental policies . Participating credit institutions would ensure that project sponsors obtain
+GOSL and IDA-mandated environmental clearances, where necessary .
+
+ Discussions with the project’s task team during the PPAR mission confirm that the AU followed these procedures
+diligently. In addition, the AU contracted consultants to conduct environmental and social assessments of every grid
+connected sub-project before approval, and on a sample basis after commissioning, which also included site visits .
+Based on these assessments, two projects were denied refinancing because of non -compliance with environmental
+safeguards. An environmental review for a Pilot Wind Farm confirmed that it would have minimal environmental
+impacts, entailed no relocation of local population and would be located more than one mile outside the Bundala and
+Yala wildlife reserves. Overall, the task team reports that the project was in compliance with the Bank ’s
+environmental and social safeguards requirements .
+
+The discussions with the Participating Credit Institutions indicated that the project had enabled their institutions to
+develop knowledge, skills and approach to handling safeguards issues in energy projects . One wind project sponsor
+felt that the paper work involved due to specific requirements of World Bank over and above the government
+regulations and requirements was excessive .
+
+
+ b. Fiduciary Compliance:
+Financial Management . The AU had well-established procedures for approval of disbursements of loan and grant
+resources and adequate financial management (FM) staff with sufficient capacity to undertake those responsibilities .
+Participating credit institutions were required to submit refinancing application packages comprising a complete set of
+documents. The Refinance disbursements were made only after providing proof that Participating Credit Institutions
+had already disbursed their loans to developers and such funds were utilized for the stated purpose . Co-financing
+grants were disbursed on submission of proof of installation . Other grant payments were generally based on reaching
+specified verifiable milestones. Verification of installation of SHS was carried out on a sample basis . The Task team
+reports that these verifications did not find any indication of unjustified payment requests . The AU kept detailed
+records on all payments made. To ensure adequate fiduciary controls, IDA reviewed : (i) the first two refinancing
+requests, irrespective of size, submitted by each Participating Credit Institution; (ii) refinancing applications above
+US$ 3.5 million; (iii) each Participating Credit Institution ’s first solar home system refinancing request; (iv) each
+Participating Credit Institution’s first grid-connected hydro, wind and biomass refinancing request; and (v) each
+Participating Credit Institution’s first village based hydro, wind and biomass refinancing request . The task team
+confirmed that there were no qualified audits .
+
+
+c. Unintended Impacts (positive or negative):
+d. Other:
+
+
+
+12.
+12. Ratings :                              ICR                   IEG Review                    Reason for
+                                                                                        Disagreement /Comments
+                     Outcome : Satisfactory                 Satisfactory
+          Risk to Development Negligible to Low             Negligible to Low
+                     Outcome :
+
+            Bank Performance : Satisfactory                 Moderately            The Bank could have been more
+                                                            Satisfactory          responsive in dealing with the
+                                                                                  implementation issues with solar PV,
+                                                                                  cross-sectoral energy applications and
+                                                                                  energy efficiency & demand side
+                                                                                  management components.
+
+       Borrower Performance : Satisfactory                  Satisfactory
+
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+ 13. Lessons:
+  Local participation and involvement, suitably incentivized, is crucial to promoting distributed power generation
+activities . Active local participation drove the momentum and successful implementation of the 68 mini hydro
+projects and the 173 community-based micro hydro projects supported by the project . The participation came in
+the form of local political support and the newly -formed village level electricity consumer societies, which were
+incentivized by opportunities for selling a part of the generation to the grid through ‘net metering’.
+
+Involving the private sector effectively in a decentralized developmental effort requires flexibility in
+implementation arrangements and space for adapting to market conditions . In spite of past lessons informing the
+design of the project, almost all major aspects – financing and disbursement parameters, procurement policies and
+approach, SHS business model – had to undergo modifications to keep up the pace of implementation . Without
+such adjustments, the project would likely have stalled /failed.
+
+                       in -tariffs policy and its consistent and transparent application are crucial to spur growth of
+An appropriate feed -in-
+small scale and non -conventional renewable energy generation . The low transaction costs enabled by attractive
+feed-in-tariffs crowded in project developers and investors, as well as commercial /investment banks to develop
+and invest in a variety of distributed generation projects . Market confidence was enhanced by consistent and
+transparent application of the policy by the regulator / government.
+
+Investments in off -grid electrification could be underutilized or even abandoned in the event of a faster than
+expected arrival of the electricity grid . To mitigate this, the expansion of the grid should be coordinated with
+off-grid investments, and, where warranted, the off -grid facilities should be made grid -compatible to ensure
+off-
+their continued utility . In Sri Lanka, as the electricity grid expanded faster than expected, the decreasing
+necessity and relevance of off -grid electrification was not foreseen early enough, resulting in some off -grid facilities
+falling into disuse or neglect. This experience points to the need for planning ahead for a coordinated access
+rollout, and making policy and technical provision for making the off -grid facilities grid-compatible and economically
+viable.
+
+14. Assessment Recommended?                   Yes     No
+Why?     This ICRR reflects the Project Assessment conducted in March 2014 and published in June 201 as cited
+below:
+
+World Bank. 2014. Sri Lanka - Renewable Energy for Rural Economic Development . Washington, DC ; World Bank
+Group. Report No. 88547.
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is written in a clear, analytical manner and provides adequate evidence of outputs and outcomes . The risk
+to development outcome section in particular is well argued . The lessons follow logically from the project's
+institutional and implementation experience . The ICR document is concise, and well supported by more detailed
+information in the annexes.
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000180307-20141120032847.txt

@@ -0,0 +1,763 @@
+                                                                                                             ICRR 14359
+                                                                                             Report Number : ICRR14359
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                       Date Posted : 07/29/2014
+
+               Country : China
+             Project ID : P067828                                                  Appraisal              Actual
+        Project Name : Renewable Energy                            US$M ):
+                                                    Project Costs (US$M):                  361.24              440.59
+                          Scale-up Program
+                          (CRESP)
+  L/C Number :            L4792                       Loan/         US$M):
+                                                      Loan /Credit (US$M):                 213.55               201.59
+      Sector Board :      Energy and Mining           Cofinancing (US$M):
+                                                                    US$M ):
+
+          Cofinanciers :                              Board Approval Date :                                 06/16/2005
+                                                             Closing Date :             09/30/2010          12/31/2011
+         Sector (s):       Renewable energy (100%)
+         Theme (s):        Environmental policies and institutions (29% - P); Climate change (29% - P); Infrastructure
+                           services for private sector development (28% - P); Rural services and infrastructure (14% -
+                           S)
+
+
+Prepared by :              Reviewed by :          ICR Review                  Group :
+                                                  Coordinator :
+Surajit Goswami            Robert Mark Lacey      Christopher David           IEGPS1
+                                                  Nelson
+
+2. Project Objectives and Components:
+
+a. Objectives:
+ Program Objective and Phases:
+The projects under review supported the first phase of a three-phase Renewable Energy Scale Up
+Program, partly financed by a proposed Adaptable Program Loan (APL) series. The program objective
+was to enable commercial renewable electricity suppliers to provide energy to the electricity market
+efficiently, cost-effectively, and on a large scale. Phase 1 was to contribute to the program’s global
+objective through development and implementation of the legal and regulatory framework to create and
+gradually increase the share of renewable energy-based electricity generation. Phase 2 was to continue
+supporting the program’s global objectives through institutional development and capacity building to
+further decrease cost, and to improve the financing framework and provide assistance for implementation
+in about 10 provinces. Phase 3 was to contribute to the full achievement of the program’s global objective
+through support to the remaining less developed provinces.
+
+Project Objective:
+Two projects were prepared: (a) the First Phase of the Renewable Energy Scale-Up Program (termed as
+Project 1 in this Review); and (b) the Follow Up to the First Phase of the Renewable Energy Scale-Up
+Program (termed as Project 2 in this Review). The ICR does not distinguish between the two projects.
+
+According to the Project Appraisal Documents of Project 1 (page 5) and Project 2 (page 5): The
+objectives of the Projects were to: (i) create a legal, regulatory, and institutional environment conducive to
+large-scale, renewable based electricity generation; and (ii) demonstrate early success in large-scale,
+renewable energy development with participating local developers in two provinces, in one pilot
+autonomous region and one pilot province.
+
+According to the Loan Agreements of Project 1 (page 18) and Project 2 (page 15): The objectives
+were to assist the Borrower to initiate actions to achieve the Program’s objectives countrywide through: (i)
+developing a legal and regulatory framework for the Mandated Market Policy (MMP); and (ii) providing
+support for the implementation of said legal and regulatory framework in the Pilot Provinces, with
+participation of private sector developers.
+
+The Loan Agreement of Project 1 (page 4) defined MMP to mean a policy aimed at building demand by
+mandating electricity suppliers to meet some of their electricity needs from renewable sources. In addition,
+studies were expected to include (page 18): distribution of national renewable energy targets between
+provinces; setting the tariff level for renewable energy; sharing the MMP costs between provinces;
+developing trading schemes to minimize the MMP costs; linking the MMP to carbon trading mechanisms;
+and preparing a medium to long term plan for renewable energy development.
+
+The statements of Project objectives in the Loan Agreements are used as the basis for this Review.
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+c. Components:
+  The projects had two components: (a) an institutional development and capacity building component
+(Project 1); and (b) an investment component (Project 1 and Project 2).
+
+Component A: Institutional development and capacity building component (Project Cost: US$
+88.82 million estimated; US$100.22 million actual).
+The Institutional Development and Capacity Building component was designed to meet national priorities
+and the needs of the pilot provinces and was to include the following: (a) MMP research and
+implementation support. This included studies on further development of the MMP and its implementation,
+particularly on targets, tariff levels, policy development, sharing of incremental cost, trading and carbon
+trading, and long-term planning and preparation of implementing regulations. The main counterparts for
+these activities included government bodies, and the main anticipated outcomes included legislation and
+regulations leading to sustained scaling-up of renewable energy; (b) Technology improvement for wind
+and biomass. This included technology development based on important local investments leveraged by
+small grants, cost-shared grants or both, for wind and biomass. In addition, it covered preparation of
+standards, development of certification and establishment of a testing center. Beneficiaries included
+Chinese wind and biomass equipment and related service suppliers, government bodies dealing with
+standards, and testing and accreditation agencies; (c) Long-term capacity building. This included support
+to selected universities for twinning arrangements with leading international universities to develop
+postgraduate-level or specialist renewable energy engineering and other related courses and to offer
+fellowship programs to support senior specialists studying abroad.
+
+At the provincial level, the project was to provide TA for effective implementation of the Renewable Energy
+Law (REL), that included: (a) Implementation of the MMP by focusing on the tasks to make the REL
+effective in the pilot provinces, aimed principally at provincial government bodies and other stakeholders;
+(b) Support to ensure the success of the investment projects by providing assistance in design,
+procurement, construction, and operations and maintenance, as needed by each project
+Sponsor; (c) Pilot or demonstration projects to be carried out in the pilot provinces supporting technologies
+other than wind, biomass, and small hydro with potential for replication in the
+pilot provinces component; (d) Renewable resource assessments for each of the pilot provinces; (e)
+Capacity building for market participants; (f) Support for investment scale-up with the sponsors of the
+investment subprojects financed under the Support for Wind and Biomass in Pilot Provinces Component;
+and (g) Costs of the Project Management Office (PMO), Government of China, and donor coordination
+activities, monitoring and evaluation, and administration, including fiduciary duties.
+Component B: Investment component, financed by the (Project Cost: US$253.06 million
+estimated; US$338.37 million actual). This had four sub-components at four locations:
+In Fujian, Project 1 was to construct a 100 MW wind farm at Changjiang’ao, Pingtan Island. The
+investment consisted of wind turbines, associated civil and electrical works, an extension to an existing
+control room, a switchyard, and a 15 km, 110 kV transmission line from the wind farm to the Beicuo
+substation, which was to be upgraded to meet the evacuation needs of the wind farm.
+
+In Jiangsu, Project 1 was to construct a 25 MW straw-fired biomass power plant at Rudong with an 110
+ton per hour, high-temperature, high-pressure straw-fired boiler; one 25 MW steam turbine; and
+associated mechanical, electrical, and civil works.
+
+In Inner Mongolia, Project 2 was to develop a wind farm at Huitengxile. It was to install wind turbines with
+an aggregate capacity of about 100 MW and associated civil and electrical works; expand an existing
+switchyard and a control room; extend 110kV transmission line from the wind farm to the Desheng
+Substation; and upgrade the Desheng Sub-station.
+
+In Zhejiang, Project 2 was to carry out Small Hydropower Sub-projects (SHP). It was to rehabilitate about
+eleven (11) small hydropower plants to increase the aggregate capacity from about 40MW to about
+52MW; and construct about seven (7) hydropower plants with an aggregate capacity of about 16MW.
+
+d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+  Project Cost:
+Actual project costs were US$440.59 million (about 22 percent more than the appraisal estimate). There
+were no revisions of the project components. However, reallocations were made within the component
+financed by the GEF grant, on 08/28/07 and 09/24/10. These reallocations were to meet changing
+priorities, and requests from the Borrower/Local Authorities. For example, at the request of the
+Government, the project supported a component (of turbine) manufactures in addition to the support
+provided to the turbine manufacturers. Similarly, at the request of pilot provinces, part of the provincial
+budget was transferred to the demonstration projects for offshore wind projects.
+
+External Financing:
+The World Bank Group provided US$161.68 million in the form of an IBRD loan (about 6.7 percent less
+than envisaged at appraisal), and the GEF provided US$40.22 million of grant financing (in line with the
+appraisal estimate). There were no other external sources of financing.
+
+Borrower Contribution and Local Sources of Borrowing Country:
+The Borrower contributed US$69.34 million (about 11 percent more than envisaged at appraisal); and
+Local Sources of Borrowing Country (including Local Financial Intermediaries) provided US$101.26 million
+(about 57 percent more than envisaged at appraisal).
+
+Dates:
+The closing date of the projects was extended twice: (a) from September 20, 2010, to September 30,
+2011,, to reallocate the grant proceeds to high-priority activities indicated above; and (b) from September
+30, 2011, to December 31, 2011, to enable the Project Management Office (PMO) to disseminate lessons
+through, among other things, a project closing workshop.
+
+3. Relevance of Objectives & Design:
+
+a. Relevance of Objectives:
+High
+
+Project objectives are highly relevant at appraisal and currently. China's emissions from coal fired power
+plants have risen sharply in recent years due to rapid industrialization, and analysis had indicated that the
+greatest potential for displacing coal by renewable energy (RE) was in the power sector. Recognizing the
+potential, the Government passed the Renewable Energy Law, which became effective January1, 2006,
+almost immediately after this project was approved by the Board. As indicated by the ICR, China is
+currently committed to increase the share of non-fossil fuel in its primary consumption to 15 percent by
+2020, with RE accounting 80 percent of that amount. Lastly, project objectives also contributed towards
+the CPS (FY13-16) Strategic Theme 1: Supporting Greener Growth (Outcome 1.1 Shifting to a
+sustainable energy path.
+
+b. Relevance of Design:
+Substantial
+For the first objective, that of developing a legal and regulatory framework, the design was conceptually
+adequate to deliver on the various aspects of the Mandated Market Policy (MMP). For example, in terms
+of developing (through studies) trading schemes to minimize the MMP costs, a single national quantity
+target was set and it was required that every province meet a corresponding percentage of its total
+consumption from new renewable energy resources. Trade in green certificates was to then enable the
+provinces to attain their quantity targets at least cost. In the early years of development, the system was
+expected to work without a centralized market. Bilateral deals between producers and power companies
+who need to meet their renewable energy targets was expected to lead to attainment of quantity targets at
+least cost.
+
+For the second objective, that of providing support for the implementation of the said framework in the
+Pilot Provinces, for generation the design was adequate. In addition, the project did plan studies on
+connection of wind farms to the grid and their impacts on grid stability to raise awareness of power grid
+operators and wind developers of interconnection requirements and transfer international best practice
+and knowledge. However, there was no plan to ascertain in depth the incentives of the grid companies.
+Specifically, the project did not have pilots for transmission pricing at grid companies for them to make
+adequate investments in additional transmission facilities and to cover costs of dispatch activities required
+to accommodate more intermittent renewable resources (such as wind). The organization of the projects
+(see PAD page 47) had a distinct generation focus at least for piloting in the provinces.
+
+4. Achievement of Objectives (Efficacy):
+   (a) Develop a legal and regulatory framework for the Mandated Market Policy (MMP):
+Substantial.
+
+Outputs
+
+•         Reviewed and updated national renewable energy (RE) objective and target with
+recommendations for management regulation for quota system of RE power generation
+•         Study on pricing mechanism for RE and proposed management regulations on renewable
+electricity tariffs
+•         Analysis and recommendations on cost sharing mechanism for RE and proposed management
+regulation on sharing RE generation cost
+•         A one-week study tour on pricing mechanism and cost sharing system for RE electricity in Italy
+and Denmark along with a summary report for the study tour
+•         Various studies, such as the RE industry development report and the analysis, evaluation of
+energy sources development status in rural China, as well as proposed sector development of specific
+technologies (such as biomass, ethanol, and solar) that could contribute to the country’s long-term plan for
+RE development were prepared but no specific medium to long-term plan for RE development was
+prepared (to be checked w/ TTL).
+
+Some of the studies crucial to the development of MMP (as envisaged in the PAD), such as those for
+developing trading schemes to minimize MMP costs and linking MMP to carbon trading mechanisms,
+were not reported in the ICR.
+
+Outcomes
+
+The RE Law, the main legal framework for MMP, became effective on January 1, 2006, just after Project 1
+became effective on 11/30/05. China committed to 15% non-fossil fuel in primary energy mix by 2020, and
+targets were allocated to all provinces with national and provincial incentives for RE development
+established. Key amendments to the RE Law and regulations that were adopted can be partly attributed to
+the Project 1. These include:
+
+On targets, and subsidies:
+•      Notice on Measures for Renewable Electricity Surcharge Subsidies and Quota Trade System from
+October 2007 to June 2008 – Ordinance Code NDRC Price No. 3052 (2008)
+•      Interim Management Regulation on Subsidy for Energized Biomass, MOF Economic Construction
+No. 735 (2008) and the follow-up, Notice on Management Regulation of Agricultural and Forestry
+Biomass Combustion Power generation
+•      Interim Management Regulations on Financial Subsidy for Solar PV on Buildings, MOF Build No.
+129 (2009)
+•      Notice on Implementation Plan of Promoting Renewable Energy in Infrastructure, MOF Economic
+Construction No. 306 (2009)
+
+On setting tariff levels:
+•        Notice on Improved Price Policy for Grid-Connected Wind Power, NDRC Price No. 1906 (2009)
+•        Notice on Improved Price Policy for Agricultural and Forestry Biomass Generation, NDRC Price
+No. (2010) 1579 :
+•        Because of the studies undertaken by the project, the prices of biomass fuels (straw from
+agriculture residues) turned out to be much higher than originally anticipated for many biomass-fired
+power plants. As a result, the feed-in tariffs for biomass have been adjusted upward to factor in the
+fluctuations in biomass fuel prices.
+
+In terms of technology strategies and roadmaps for key RE technologies, the small hydro-power (SHP)
+policy studies and Zhejiang SHP investments put SHP back on the national agenda.
+
+Some regulations, also partly attributable to the Project 1, supported MMP indirectly. These, for example,
+included demand management initiatives such as the Notice on Recommendation of Green Energy
+County NEA New Energy No. 343 (2009), and management of supply chain, such as the Notice for
+Collection and Management of Livestock and Landfill Biogas for Power generation.
+
+However, no notices to support MMP cost-minimization or to link it to carbon trading appear to have been
+developed using project support.
+
+(b) Provide support for the implementation of said legal and regulatory framework in the Pilot
+Provinces, with participation of private sector developers: Substantial
+
+The projects provided support at the National level as well as in Pilot Provinces through:
+•         National Level Institutional Development and Capacity Building: (a) Technology Improvement
+Wind; and (b) Technology Improvement Biomass
+•         Provincial Level Institutional Development and Capacity Building: (a) Support Implementation of
+the RE Law; and (b) Pilot Demonstration Projects;
+•         Building a pipeline of RE projects at the Pilot Provinces through Investors Scale-up Support
+Facility (ISSF); and
+•         RE investment projects at four locations.
+
+Outputs
+
+National Level Institutional Development and Capacity Building
+Technology improvements for wind:
+•       Wind turbines design and type certified according to international standards
+•       Standards developed for wind turbines based on and in compliance with international standards
+•       Accredited wind turbine testing centers and certification bodies according to ISO/IEC Guide 65
+requirements
+•       Short-term wind forecasting capabilities internationally benchmarked
+•       Developed academic and post-academic wind training courses.
+
+Technology improvements for biomass:
+•       Supported ten biomass equipment manufacturers through cost-shared sub-grants to improve
+biomass gasification technologies and address biomass fuel management issues. In nine of these
+projects, new or improved equipment were developed. These included biomass briquetting and gasifier
+equipment, and equipment to collect crop residues.
+
+Provincial Level Institutional Development and Capacity Building
+Support Implementation of the RE Law:
+•      Five policy related tasks were carried out in Fujian, ten in Jiangsu, ten in Zhejiang, and eight in
+Inner Mongolia. These were related to targets, quota, financial incentives, and cost sharing mechanism of
+incremental costs, specific to that location.
+
+Pilot Demonstration Projects:
+•       Under the Competitive Grant Facility—Pilot Demonstration Project (CGF-PDP), the projects
+supported the identification and preparation of renewable energy demonstration projects in the pilot
+provinces. Eight projects were selected on a competitive basis. They included biomass gasification,
+biogas, biomass-fueled CHP, PV, ecological buildings and heat pumps. One project (heat pump in Inner
+Mongolia) had to be cancelled, since required approvals could not be obtained.
+•       In addition to the above projects, five additional demonstration projects were supported using the
+reallocated funds from the provincial policy support. These included tidal power in Zhejiang, biogas in
+Inner Mongolia, and offshore wind in Jiangsu, Zhejiang, and Fujian.
+
+Building a pipeline of RE projects at the Pilot Provinces through Investors Scale-up Support
+Facility (ISSF)
+•        Under the facility, 14 projects were approved: three for Jiangsu Guoxin, 9 for Zhejiang, 1 for China
+Long Yuan Power Group, and 1 for Inner Mongolia North Longyuan Wind Power Corporation.
+
+RE investment projects at four locations
+The following RE investment projects were undertaken under CRESP: (a) Fujian Wind, (b) Jiangsu
+Biomass, (c) Zhejiang SHP, and (d) Inner Mongolia Wind.
+
+•        Fujian Wind: The China Long Yuan Power Group Corp. installed 50x2.0 MW Vestas wind turbines
+on Pingtan Island in Fujian (total capacity 100 MW). All 50 units were operational by December 31, 2007.
+•        Jiangsu Biomass: Jiangsu Guoxin installed a 25 MW straw-fired biomass power plant at Yinxing
+Village, Rudong County, Jiangsu. It was operational by July 1, 2008.
+•        Zhejiang SHP: Zhejiang Hydropower Management Center (ZHMC) oversaw the implementation of
+the 16 SHP projects. The total capacity of the 6 newly constructed SHP projects was 13.6 MW and the
+incremental capacity of the 10 rehabilitated SHP plants was 9.91 MW (the total capacity of the
+rehabilitated SHP plants increased from 26.38 MW to 36.29 MW). The total incremental capacity was
+23.51 MW, which was 4.49 MW below the target (28 MW) and was due to cancellation of one new and
+one rehabilitated plants. They (new and rehabilitated plants) were operational by December 31, 2010.
+•        Inner Mongolia Wind: The Inner Mongolia North Longyuan Wind Power Company installed
+80x1.5MW Suzlon wind turbines at Huitengxile, Desheng County, Inner Mongolia. All turbines were
+operational in September 2011.
+
+Outcomes
+
+National Level Institutional Development and Capacity Building
+Technology improvements for wind:
+•       Fully achieved as (a) all the eight Chinese wind standards developed under the project were
+approved by the Standardization Administration of China (SAC); (b) two wind turbine testing centers were
+accredited and carried out 15 and 21 wind turbine tests respectively; (c) two certification bodies were
+accredited for wind turbine certification. The Standards Committee, testing centers, and certification
+bodies are expected to continue their work in the future. The Standards Committee will operate with
+support from the government (Ministry of Science and Technology, MOST) and the private sector (wind
+turbine manufacturers), and the testing centers and certification bodies will operate on a commercial
+basis.
+•         Chinese RE equipment, especially wind turbines, has improved greatly, with exports, even to
+developed countries, increasing significantly. Four out of the top 10 global wind manufacturers are now
+Chinese wind manufacturers. The increased demand for wind power related equipment in China has led
+to all internationally recognized international manufacturers establishing manufacturing capacity in China,
+which in turn has led to quality improvements by the domestic manufacturers.
+•         Technology improvements for biomass:
+•         The country has become the world’s number 3 in installed capacity for production of electricity
+from biomass, although the role of the projects was limited compared to that for the technology
+improvements for wind.
+
+Provincial Level Institutional Development and Capacity Building
+Support Implementation of the RE Law:
+•       The pilot provinces used the outputs to prepare wind, PV, and biomass development plans and to
+support the preparation of the 12th Five Year Plan for renewable energy.
+
+Pilot Demonstration Projects:
+•       The total renewable electricity capacity of the seven projects is 7.5 MW. Particular noteworthy is
+the 5 MW fixed bed biomass gasification plant in Jiangsu. This is the largest gasifier in China. The total
+capacity of the five demonstration projects is 370 MW (to be checked w/ TTL), although it is not yet known
+how much will actually be built.
+
+Building a pipeline of RE projects at the Pilot Provinces through Investors Scale-up Support
+Facility (ISSF)
+•        The 14 projects resulted in an additional renewable electricity capacity of 149 MW (actually built)
+and may lead to an additional 918 MW renewable electricity generation capacity (envisaged). The ICR
+also indicates that, by the end of 2008, 1,329 MW of RE projects were planned and developed in pilot
+provinces, which was more than double the target.
+
+RE investment projects at four locations
+•         Fujian Wind: The installed 100 MW units sold 280 GWh to the grid in 2008, 301 GWh in 2009 and
+2010. The capacity factor increased from 33.0 to 35.5% (one of the highest in China). The annual
+electricity generation at 294.1 GWh/year (average over the last 3 years) is 113% of target.
+•         Jiangsu Biomass: The installed 25 MW straw-fired biomass power plant sold 141.2 GWh of
+renewable electricity into the grid in 2010 (87% of target).
+•         Zhejiang SHP: The incremental (to be checked w/ TTL) installed capacity of 23.51 MW sold
+103.78 GWh of additional electricity into the grid in 2010 (109% of target).
+•         Inner Mongolia Wind: The installed 100 MW units sold 79.71 GWh to the grid in 2011 (33% of
+target).
+
+
+5. Efficiency:
+    Modest
+The ICR calculated traditional measures of efficiency (economic and financial internal rates of return - EIRR
+and FIRR) for the RE investment projects, which cost 77 percent of total project cost. These measures were
+then compared with those in the PAD. The PAD had also attempted to calculate the regional development
+impacts (a distributional measure) of the RE policies but neither the PAD nor the ICR calculated the
+efficiency of anything other than the investment projects.
+
+The table comparing the EIRRs and FIRRs of the four investment projects, as presented in the ICR, is shown
+below for easy reference. Economic benefits include both direct benefits from the sales of electricity as well
+as emission reduction benefits based on a model. No weighted EIRR or FIRR for the projects combined was
+calculated in the ICR or in the PAD.
+
+                                  EIRRs and FIRRs at ICR and Appraisal
+  Project                     EIRR (%)              FIRR (%)        Brief Explanation:
+                          ICR      Appraisa    ICR       Appraisa
+                                       l                     l
+  Fujian Wind             16.1       13.6      10.9         6.5     - Higher annual generation
+  Power                                                             - Higher power purchase tariff
+  Jiangsu                 11.6       20.8       5.0        10.6     - Operational problems 2008–10
+  Biomass                                                           - Higher fuel price
+  Power
+  Inner                    9.3             12.5                5.1               7.0            - Overrun of investment cost
+  Mongolia                                                                                      - Delayed project commissioning
+  Wind Power                                                                                    - Less power generation
+  Zhejiang               10-195           10-33              6-102              7-16            - Increase of investment costs
+  Small                                                                                         - Rehabilitation not affected
+  Hydropower
+
+The PAD assumed an “Opportunity cost of capital�? of 12% (page 79), and the various investment project
+returns were expected to be above this hurdle rate. Ex-post, except for wind power and some of the small
+hydro power projects, the investment project returns were below this rate. For wind power and small hydro
+power investment projects, if a capacity penalty (the penalty for not having continuous power available for
+dispatch to the grid) is included, the EIRR would decrease and could be below the hurdle rate. On the other
+hand, if the opportunity cost of capital (which in turn is a weighted average of equity and debt costs) is lower
+(say 8%, currently used by China’s National Development and Reform Commission according to the ICR),
+returns from all investment projects would be above the hurdle rate. There were also some operational and
+administrative inefficiencies from organization of the project (see section 9), which contributed to
+postponement of various activities particularly those related to policies. The implementation period was
+increased by roughly 25 percent and the project closing date was postponed by a little more than a year.
+
+Based on the above figures and analysis, the efficiency of the project is rated Modest .
+
+
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                 Rate Available?                            Point Value                         Coverage/Scope*
+
+    Appraisal                        No
+    ICR estimate                     No
+                                          * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+   The relevance of the project objectives was high, while the relevance of project design was substantial,
+with some shortcoming from not having the incentives of the grid companies taken into consideration.
+Achievements of the two objectives are substantial. Lastly, Efficiency of the project based on the
+efficiencies of the investment projects (77 percent of the total cost) was modest, which was a moderate
+shortcoming. A Moderately Satisfactory outcome rating is assigned.
+ a. Outcome Rating : Moderately Satisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+  •     Technical: Significant. The technical problems of continued development of various RE
+technologies remain challenging. While considering the risks, the ICR mentions only wind power, and
+even that faces obstacles from not being able to supply continuously. For other REs, such as biomass, the
+situation is even more challenging technically. While the cost-shared sub-grants for improvements in
+biomass technology did bring success, the Renewable Energy Scale Up Program did not support any
+university program for biomass and post-academic training for biomass was not available. Consequently,
+over the medium-term, development of solutions in biomass can be expected to be less forthcoming than
+for wind power.
+•        Financial: Moderate. The Government’s strong commitment to the ambitious targets can be
+expected to wane as consumers complain more and more about the higher prices that would have to be
+paid for RE. When the amount of electricity generated from RE units is small, the burden on consumers is
+relatively small and consumers do not complain. However, as the electricity from RE units reaches a
+certain level, the blend price that the consumer has to pay may start to be perceived as onerous. In some
+European countries, such as Germany and Spain, because of costs, there has been already a backlash
+against electricity from wind power.
+•        Other stakeholder ownership: Significant. The whole system of development of a pipeline of
+projects could come to a halt as a result of relatively small changes in investment incentives. As the ICR
+points out, the phase 2 project will continue to support initiatives started under this one, including the
+cost-shared grant scheme for pipeline development. Beyond the phase 2 project, however, sustainability
+of these schemes is questionable. Should an economic downturn occur, China would likely reevaluate
+these subsidies. In addition, there are competing incentives to develop clean coal, and private sector
+interest may easily switch out of developing RE technologies to these other technologies where
+government support may lead to higher profits. Should the support for RE falter because of technological
+or, financial reasons, or because of waning private sector interest, the goals for RE output would likely be
+lowered, probably implying rule changes for the MMP. Over the assumed 20-year lifetime of investments
+supported by this project, such a risk is significant.
+
+   a. Risk to Development Outcome Rating : Significant
+
+8. Assessment of Bank Performance:
+
+a. Quality at entry:
+   The ICR stressed the parts of the project where the Quality-at-entry (QAE) was indeed satisfactory
+but it did not point out where there were shortcomings. Regarding strategic relevance and approach,
+QAE was highly satisfactory particularly with the passage of the RE Law. On Technical Aspects,
+because of the project that preceded this one, QAE was satisfactory on wind power related items
+including manufacturing, testing, and certification, and the investment project Fujian Wind. However,
+QAE had significant shortcomings with regard to biomass technology. There were, for example, issues
+related to moisture content of the feed and the feeder system. In terms of institutions, there were some
+unresolved issues at entry such as the location of the biomass plant which was resolved later. In terms
+of M&E design, separating unproven Biomass from Wind technology for the PDO Indicator 3
+(Improved quality and reduced cost among manufacturers and service providers), and similarly for
+Intermediate Outcome Indicators, could have permitted better management of risks.
+
+
+            at -Entry Rating :
+   Quality -at-                               Moderately Satisfactory
+
+b. Quality of supervision:
+      The Bank supervision team focused on Development Impact satisfactorily as indicated by its
+reallocating of project resources as and when the Government allocated resources (outside the
+project) to original project priorities, for example, wind resource assessment. The supervision team
+also reallocated resources effectively when progress at the provincial level was insufficient. The team
+also addressed satisfactorily project shortcomings due to divergences among public agencies, and
+inexperience of the Project Management Office (PMO). For example, when it was observed that the
+follow-up of consultant contracts by the PMO was insufficient, the number of expert consultants was
+increased while reducing the number of inexperienced PMO staff. Continuity could have been
+undermined by the fact that there were six Task Team Leaders (TTLs) in five years. However, this
+turnover of TTLs was mitigated by having as a consultant the first TTL and a core project team, which
+with the changing TTLs, developed detailed aide-memoires and mission reports and kept the focus on
+implementation issues as they arose. The Bank was less diligent in adjusting M&E indicators when
+project funds were reallocated. For example, although pilot demonstration projects received additional
+funds, the target for the Intermediate Outcome Indicator 5 (Pipeline of renewable energy projects
+under development in the provinces) was not adjusted upward.
+
+
+   Quality of Supervision Rating :            Satisfactory
+
+   Overall Bank Performance Rating :          Moderately Satisfactory
+
+
+9. Assessment of Borrower Performance:
+
+a. Government Performance:
+    Government ownership and commitment to development objectives were Highly Satisfactory. The
+supportive institutional policies were achieved. Not only was the RE Law approved faster than
+anticipated, but important actions on setting the tariff and subsidy levels were achieved rapidly as well.
+However, as the ICR on page 11 indicate, unwarranted delays were experienced during the first year
+after effectiveness, from institutional divergence among government agencies.
+
+   Government Performance Rating                             Satisfactory
+
+b. Implementing Agency Performance:
+   The main implementing agencies were: National Development and Reform Commission (NDRC);
+Long Yuan Pingtan Wind Power Company Ltd.; Jiangsu Guo Xin New Energy Development Company
+Ltd.; Inner Mongolia North Long Yuan Wind Power Company; and Zhejiang Small Hydropower
+Development and Management Center. The PMO was within the Energy Bureau of NDRC.
+
+The ICR indicates that unwarranted delays arose in the first year from (a) inexperienced PMO staff
+and inadequate alignment of PMO staff skills with the project focus areas; and (b) coordination
+difficulties between PMO (national level) and provincial Development and Reform Commissions
+(DRCs). After the first year, further delays were encountered because of (a) the long time
+required to put contracts in place; (b) large number of small contracts; (c) consultants not meeting
+agreed deadlines and insufficient follow-up from the PMO; (d) implementation of the sub-grant
+projects much more difficult than anticipated and requiring more time; and (e) insufficient
+initiatives at the provincial levels, They were addressed after the mid-term review.
+
+
+   Implementing Agency Performance Rating :                  Satisfactory
+
+   Overall Borrower Performance Rating :                     Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+a. M&E Design:
+   •     Detailed M&E indicators were developed for both institutional aspects and investment projects. A
+results framework was prepared (see PADs: Annex 3 on pages 27-33 and pages 28-29). In the
+framework, objectives were specified clearly (but not exactly as in the loan-agreements), with the outcome
+indicators, including intermediate ones, that reflected the objectives in the loan-agreements. The
+indicators were measurable for project end in terms of numbers and location, with some targets set for the
+mid-term review as well.
+•        Because this is a Phase 1 project, most of the baselines, such as those for institutional
+development or emissions reduction were set to zero. There were three sets of indicators where the
+project had non-zero baselines. For one of these non-zero baseline indicators, on costing of various
+renewable technologies, the baseline data was not collected. For another set, on standards for wind
+turbines and availability of testing facilities, the baseline was just indicated as “partial�?. Only for one set of
+indicators, the one on renewable electricity generation and capacity, the project had numerical baselines.
+•        For evidence on the “environment�? for development of renewables at the pilot provinces, technical
+and social surveys were to be used. Similar surveys were proposed for data collection on improvements in
+quality and reduced cost among manufacturers and service providers.
+•        Data collection was proposed on increased renewable electricity in TWh/year, renewable capacity
+in GW, and reduced emissions (for carbon, oxides of nitrogen, oxides of sulphur, and particulates).
+However, no measures were proposed relative to the overall electricity generation or emissions.
+Consequently, the amount of renewable electricity generated could be going up with renewable electricity
+generation as a percentage of total electricity generation going down. Similarly the project could be
+reducing emissions through this project but total emissions due to electricity generation in China could be
+going up.
+
+b. M&E Implementation:
+   •     Development of capacity to enable the Government to monitor and evaluate the impact of the
+project was an integral part of the Institutional Development and Capacity Building Component and was to
+be undertaken by the PMO.
+•        Based on the PAD, the project measured five project development objective indicators and nine
+intermediate outcome indicators. However, the project did not carry out the technical and social surveys
+indicated in the PAD, neither gathering evidence on “environment�? for development of renewables or of
+improved quality and reduced cost,. For the evidence on the provincial environment for renewables, the
+project sidestepped the lack of surveys with targets set for each province of substantial increases in
+renewable electricity generation along with approval of supporting regulations, which were being
+measured also for another indicator. For evidence of improved quality and reduced costs, the project
+chose qualitative and softer measures, for example, diminishing operational problems with biomass units
+and increase in certifications of wind turbines. While these may indicate to some extent quality
+improvements, they were inadequate to measure reduction in costs of renewable technologies.
+•        The M&E was owned fully at the national level. However, when it came to getting data that
+required participation at the provincial level or the industry in general (for example, to get costs), the
+ownership was weak.
+
+c. M&E Utilization:
+   •     The project carefully measured RE generation and capacity along with the implied reduction of
+emissions. When the generation was not forthcoming, the project took corrective actions such as
+changing the closing date by one year.
+•        Because certain crucial feedbacks at the provincial level and from the manufacturers were
+dropped, the program’s direction possibly did not benefit enough from M&E. Instead, the project relied on
+the cost-shared grant mechanism to find out what interests the private sector. Without detailed cost data,
+the project had no reliable way to find out if a certain process promoted by the private sector could actually
+work (and be replicated) without the subsidies. At the end, much of the work related to sustainability was
+transferred to the next phase.
+
+M&E Quality Rating : Modest
+
+
+
+
+11. Other Issues
+
+a. Safeguards:
+Three Safeguard Policies -- Environmental (OP 4.01), Involuntary Resettlement (OP 4.12), and Safety of
+Dams (OP 4.37) -- were triggered by the Project. The project was classified as safeguard screening
+category S2, and environmental screening category B. No major safeguards issues were identified at
+appraisal and no exceptions to Bank policies were requested. For each of the four investment projects,
+the Borrower and implementing agencies agreed to implement environment management plans (EMPs),
+acceptable to the Bank.
+The ICR found overall Environmental performance of all four investment projects satisfactory. In three
+locations, Fujian, Jiangsu, and Zhejiang, there were no significant issues with implementation of the
+environmental aspects of the project or environmental management activities. There was no reporting
+specifically that the project completed the planned mitigation activities In the Inner Mongolia wind farm, the
+ICR reports that “one significant environmental issue was experienced. Early on during construction, poor
+access to roads had led to trucks driving through grassland, which caused unacceptable impacts.
+Corrective efforts were made at the request of the Bank’s supervision teams. In addition, the external
+environmental supervisor was engaged by Inner Mongolia North Long Yuan Wind Power Company only in
+2010 to strengthen the Environmental Management Plan (EMP) implementation�?.
+
+On Resettlement, the ICR reports that land acquisition and resettlement for all investment projects were
+satisfactorily implemented. Compensation was paid to the affected people based on the Resettlement
+Action Plan (RAP), replacement houses were constructed for all relocated households, and all proposed
+rehabilitation measures indicated in the RAP were implemented for the affected villages. The income and
+livelihood of the affected people were restored and even increased compared with that before
+resettlement..
+
+On Safety of Dams, the ICR reported that in Zhejiang SHP one of the subprojects identified at appraisal
+was dropped because of dam safety issues and no mitigation was required for the 16 sub-projects
+financed under the project.
+
+b. Fiduciary Compliance:
+Financial Management
+The Project Management Office (PMO) produced financial reports in line with World Bank reporting
+requirements and summary reports for internal use and use by the World Bank supervision team. Over
+the years, the projects were audited regularly and no problems were found. In the most recent financial
+audit results, they received the highest ranking by the National Audit Office. This highest ranking was
+received by 11 of the 49 World Bank projects/programs in China. The National Audit Office also praised
+the verification mechanism for the financial sub-grants which had been introduced. Based on the above, it
+is assumed that the financial covenants were complied with and there were no audit recommendations
+
+Procurement
+At Appraisal, the procurement capacity of the PMO was assessed as adequate. For the investment
+subcomponent, the implementing company at Fujian was found to have previous experience with Bank
+procurement. At Jiangsu and Inner Mongolia, the implementing companies were found to have extensive
+experience with power sector projects, but not with Bank procurement. At Zhejiang, implementing
+company was found to have extensive experience of small hydro projects. All companies were to use
+procurement agents familiar with Bank procedures.
+
+Even with the above capacity, because of diverging opinions between the PMO and the Bank/GEF team,
+some major procurement issues delayed implementation until they were resolved following the midterm
+review of the project. These issues included procurement procedures and fragmentation of contracts,
+cost-sharing bidding procedures and their alignment with Chinese decision making, and the choice of
+provincial pilot projects.
+
+Disbursement
+The project had no issues with eligibility of expenditures and once the procurement issues (see above)
+were resolved, disbursement followed, particularly during the last 18 months of the project.
+
+
+c. Unintended Impacts (positive or negative):
+None
+
+d. Other:
+None
+12.
+12. Ratings :                              ICR                   IEG Review               Reason for
+                                                                                   Disagreement /Comments
+                     Outcome : Highly Satisfactory          Moderately        The shortcoming in design in not
+                                                            Satisfactory      having considered the incentives of
+                                                                              grid companies was not
+                                                                              acknowledged in the ICR. The
+                                                                              relevance of the project objectives
+                                                                              was high, while the relevance of
+                                                                              project design was substantial, with
+                                                                              some shortcoming from not having
+                                                                              the incentives of the grid
+                                                                              companies taken into
+                                                                              consideration. Achievements of the
+                                                                              two objectives are substantial.
+                                                                              Lastly, Efficiency of the project
+                                                                              based on the efficiencies of the
+                                                                              investment projects (77 percent of
+                                                                              the total cost) was modest, which
+                                                                              was a moderate shortcoming.
+         Risk to Development Negligible to Low              Significant       The technical challenges of various
+                    Outcome :                                                 RE technologies are significant,
+                                                                              particularly because cost aspects
+                                                                              have become important.
+           Bank Performance : Satisfactory                  Moderately        QAE has moderate shortcomings
+                                                            Satisfactory      with biomass technology. Unlike
+                                                                              wind technology development, there
+                                                                              was no preceding Bank project that
+                                                                              had developed this technology,
+                                                                              which undermined performance in
+                                                                              this area.
+       Borrower Performance : Satisfactory                  Satisfactory
+
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+13. Lessons:
+  •       Long-term engagement with the government at the national level is important to the success of
+an initiative such as the Chinese Renewable Energy Scale Up Program (CRESP). The CRESP program
+is the only window in the Bank’s China energy portfolio that engages long-term RE policy dialogues and
+partnership with the National Energy Authority(NEA). The long-term engagement has built trust between
+the Bank team and NEA, which often turns to the Bank team and the CRESP program for support and
+inputs to key policy decisions. However, at the provincial or industry level, trust building has been slow.
+
+•        Combining policy support and technical assistance through a GEF grant with large-scale
+long-term financing for RE investments through IBRD loans in one package may be the most
+cost-effective tool to enable transformational changes to scale up renewable energy. Conceivably, such
+a combined GEF grant and IBRD loan approach could be substituted by projects that blend bilateral
+grants or concessional loans (from Clean Technology Fund for example) with IBRD or even IFC lending.
+
+•       A core project management team, with contributions from world-class international and local
+experts, is a cost effective method for carrying out the studies under a project such as this one. Relying
+on the recruitment of a large number short-term staff is less conducive to high-quality work.
+
+•        The project showed strong agenda setting role of the Government for renewable energy.
+However, it also showed inability of the industry to respond when technological solutions are unavailable
+at the cost supported by the Government/customers. While generation from wind energy progressed
+well under the MMP, that from biomass was limited. The lesson is it takes more than strong agenda
+setting and subsidies by the Government to generate solutions from the domestic industry.
+
+14. Assessment Recommended?              Yes    No
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR demonstrated a good understanding of a complex project, particularly on the required
+organization to address both policy issues and investments in a large country. Analysis and presentation
+were generally satisfactory. However, the ICR could have presented the project in a more a systematic
+and balanced way. For example, it could have provided more details on activities envisaged in the PAD
+but not undertaken, such as the technical and social surveys that were to provide the data on environment
+for development of renewable and on quality and cost among manufacturers and service providers.
+Because certain shortcomings did not receive the attention they warranted, some ratings were
+over-positive.
+a.Quality of ICR Rating : Satisfactory
+

DataSource/000180307-20141202111156.txt

@@ -0,0 +1,971 @@
+                                                                                                               ICRR 14373
+                                                                                               Report Number : ICRR14373
+
+
+ IEG              ICR Review
+                  Independent Evaluation Group
+
+
+
+
+       1. Project Data:                                       Date Posted : 06/30/2014
+
+               Country : Bangladesh
+             Project ID : P071794                                                  Appraisal                Actual
+        Project Name : Rural Electrification                        US$M ):
+                                                     Project Costs (US$M):                      781                  759
+                          And Renewable
+                          Energy Development
+  L/C Number :            C3679; C4643                Loan/         US$M):
+                                                      Loan /Credit (US$M):                      493                  431
+      Sector Board :      Energy and Mining           Cofinancing (US$M):
+                                                                    US$M ):
+
+          Cofinanciers :                                Board Approval Date :                                 06/25/2002
+                                                                 Closing Date :             06/30/2008        12/31/2012
+          Sector (s):      Power (91%); Renewable energy (9%)
+          Theme (s):       Climate change (29% - P); Participation and civic engagement (29% - P); Rural services and
+                           infrastructure (28% - P); Infrastructure services for private sector development (14% - S)
+
+
+Prepared by :              Reviewed by :           ICR Review                 Group :
+                                                   Coordinator :
+Ramachandra Jammi          Christopher David       Christopher David          IEGPS1
+                           Nelson                  Nelson
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+ According to the original Development Credit Agreement Dated July 16, 2002, the project development objective for
+this project was “to support the Borrower’s vision of attaining a higher level of social development and economic
+growth by increasing access to electricity in rural areas .�?
+
+Following additional financing and formal restructuring approved by the Board in 2011, the development objective
+was restated in the Financing Agreement Dated November 24, 2011 as “to increase access to electricity in rural
+areas of the Recipient’s territory and help promote more efficient energy consumption .�?
+
+Following the World Bank’s Harmonized Operational Policy and Corporate Services (OPCS)-IEG Evaluation
+Guidelines for restructured projects, the project development outcome is rated based on the outcome ratings before
+and after restructuring, and weighted by amount of disbursement in the two stages .
+
+The Global Objective of the Project, which remained unchanged, was to reduce atmospheric carbon emissions by
+overcoming market barriers for renewable energy development, including high implementation costs .
+
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+Yes
+ If yes, did the Board approve the revised objectives /key associated outcome targets?
+Yes
+ Date of Board Approval: 11/24/2011
+
+c. Components:
+2.1    The project’s original components and the activities introduced by additional financing in 2009 and 2011 are
+listed below:
+A1: Rural Electrification System Expansion, Intensification, and Rehabilitation    (at appraisal: US$264.6 million; at
+completion: US$306.0 million): To facilitate the handover of Bangladesh Power Development Board
+(BPDB)-operated power systems to Rural Electrification Board (REB) to increase the efficiency of supply and reduce
+overall costs of electrification .
+Added through Additional Financing in 2009 (US$19.0 million):   : Provide financing to REB to close the funding gap
+that arose due to exchange rate fluctuation that occurred between the time REB issued contracts for renovation of
+taken-over lines in 2008 and the time those contracts came due in 2009.
+A2: REB Technical Assistance (included in component A1 above): To address REB and 45 Palli Bidyut Samitis’
+(PBS or Village Electricity Co-operatives) institutional capacity needs for socio -economic impact monitoring and
+evaluation, financial restructuring, environmental safeguard compliance, and poverty reduction aspects of electricity
+provision.
+B1: REB Solar Program (at appraisal: US$8.8 million; at completion: US$4.5 million): To help establish a
+commercial framework for the off-grid lighting market in Bangladesh by supporting REB and PBS to develop a
+fee-for-service SHS program supplied to 14,000 off-grid households.
+B2: REB Solar Technical Assistance (included in component B1 above): To support the REB Solar Program, for a )
+market development and capacity building for PBSs, helping them to market, sell and service SHSs b ) development
+of a quality assurance program to establish and monitor technical standards for SHS components and systems and
+c) monitoring of the SHS program.
+C1: IDCOL Renewable Energy Sub -loans (at appraisal: US$24.9 million; at completion: US$473.5 million): To
+provide the Infrastructure Development Company Limited (IDCOL) with project development support and financing to
+offer loans and grants for renewable energy development . This component aimed to provide SHS to 50,000
+households through SHS employing a micro -finance-based, direct sales program. The SHSs would be supplied and
+serviced by private companies in partnership with multilateral financing agencies and NGOs .
+Added through Additional Financing in 2009 (US$196.0 million) and in 2011 (US$253.0 million): Scale up SHS
+program, and provide technical assistance to support a ) quality assurance of SHS though photovoltaic (PV) and SHS
+lab and field testing / inspection.
+C2: IDCOL Technical Assistance (included in component C1 above): This component was designed to support
+IDCOL's internal capacity and broaden its scope of activities by a ) supporting technology promotion and market
+development activities b) building administration capacity with a focus on fiduciary and safeguard compliance; c )
+increasing monitoring and evaluation capacity and activities; and d ) supporting renewable energy development of
+wind, hydro and biomass.
+D: Energy Efficiency Compact Fluorescent Lamps (CFLs)  CFLs ) (at appraisal: US$15.0 0 million; at completion:
+US$14.2 million): This new component was introduced through Additional Financing in 2009 to deploy 10.5 million
+energy-efficient CFLs in exchange for incandescent lamps to help reduce peak demand under the first -phase of the
+Efficient Lighting Initiative of Bangladesh Program .
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ The RERED project was approved on June 25, 2002, became effective on December 31, 2002, and closed on
+December 31, 2012, nearly four and a half years after the planned closing date of June 30, 2008. The total project
+cost was US$759 million, about two and a half times the original project cost of US$ 298 million. Of this, the original
+IDA contribution was US$191 million supplemented by two rounds of additional financing in December 2009 and
+August 2011 of US$130 million and US$172 million respectively. Of this US$431 million was disbursed, and the
+remaining US$61 million was cancelled from the credit. The project was restructured with Board approval on August
+28, 2011, by which time US$346 million were disbursed, amounting to 80 percent of the final disbursement of
+US$431 million. Two other restructurings were carried out on July 6, 2009 and December 20, 2012 that related to
+changes in output targets and cancellation of unused funds .
+
+3. Relevance of Objectives & Design:
+
+a. Relevance of Objectives:
+Relevance of the original project development objectives is rated High      . The original project and global
+development objectives are in line with national priorities as well as the Bank ’s partnership strategy for the country at
+project appraisal as well as at completion . The Government’s 2002 Vision and Policy Statement on Power Sector
+Reforms aimed to provide the entire country with electricity service by 2021, commercialize the sector, attract private
+investment, and improve financial viability . These goals are also emphasized in the country ’s Three-Year Roadmap
+for Power Sector reform.
+
+The Bank’s 2000 Country Assistance Strategy emphasized the importance of rapidly increasing electricity access,
+undertaking reforms in the electricity sector and leveraging community institutions and micro -credit. The project’s
+original objectives remain consistent with the Bank ’s current Country Partnership Strategy for FY 11-14, which
+emphasizes increased infrastructure provision, and access .
+
+Relevance of the project development objectives after restructuring is also rated High     . The restructured objective
+effectively retained the original objective, and added the objective of promoting more efficient energy consumption .
+The relevance of the new objective is underlined by Bangladesh ’s Energy Conservation Act of 2008 which placed
+emphasis on improving energy efficiency, as well as the Bank ’s current Country Partnership Strategy for FY 11-14,
+which stressed the need to increase efficiency in the energy and other infrastructure sectors .
+
+
+b. Relevance of Design:
+Relevance of the original project design is rated High . Rural electrification greatly improves the quality of life . IEG.
+2008. The Welfare Impact of Rural Electrification : A Reassessment of the Costs and Benefits
+
+An IEG Impact Evaluation. Lighting alone brings benefits such as increased study time and improved study
+environment for school children, extended hours for small businesses, and greater security . Its second most
+common use is for television, which brings both entertainment and information . The original project design
+appropriately sought to improve electricity access through additional connections while reducing system losses to
+increase available power in the system, so as to deliver the outcomes of improved social development and economic
+growth. Providing additional connections was pursued through expanding and rehabilitating the grid network; as well
+as providing off-grid SHS and mini-grids in targeted rural areas where the grid was not likely to reach in the near
+future, or in areas that are economically unviable or inaccessible to the grid such as hilly areas or islands .
+
+The project design tapped the existing capacity and experience of the REB and the PBSs primarily for extending the
+grid to rural areas, while leveraging the country ’s vibrant network of NGOs and microfinance institutions through the
+organizational strength of IDCOL. Therefore, REB/PBSs would engage primarily in implementing the grid -based
+components of the project, and secondarily the fee -for-service models for off-grid SHS systems. As discussed in
+detail under ‘implementation experience’ below, the responsibility for off -grid SHS was shifted almost exclusively to
+IDCOL operating through its partnership organizations, using an ownership model . There were no exogenous
+factors that were likely to affect the project design .
+
+Relevance of the restructured project design is rated Substantial        . The revised project design resulted from the
+introduction of the objective (with the additional financing in 2011) of improving the efficiency of electricity
+consumption in the country. Besides being desirable by itself, this objective complemented the effort for improving
+supply side efficiency through reducing systems losses that was already included as an element at appraisal .
+Increased efficiency in use of electricity can release some generation capacity that can potentially improve the
+availability of electricity for greater use in rural areas, which are typically more likely to experience power shortages .
+Therefore the new electricity efficiency objective was also consonant with the larger objective of improving social
+development and economic growth by increasing access to electricity in rural areas . The electricity efficiency drive
+was not a broad sector-wide effort, and was limited to the distribution of Compact Fluorescent Lights (CFLs) to
+replace incandescent bulbs as a means of delivering quick savings in electricity consumption . A more integrated
+approach at the appraisal stage might have enhanced the complementarity of the new objective and – in retrospect –
+earlier planning may have helped avoid the difficulties that were faced during implementation in this respect .
+
+
+ 4. Achievement of Objectives (Efficacy):
+   Original Objective . Raise levels of social development and economic growth by increasing access to electricity in
+rural areas. Rated High .
+The project resulted in several significant outputs in respect of grid extension, provision of SHS on a fee -for-service
+as well as an ownership basis, and to a lesser extent, mini -grids. Technical assistance under the project contributed
+to building capacity in technical and administrative areas in entities engaged in the electricity access effort .
+Favorable economic and social outcomes for the beneficiaries can be attributed to these outputs to a significant
+extent on the basis of impact studies carried out during the project as discussed in the following sections on
+outcomes and outputs under this objective .
+
+Outputs
+
+Grid extension . Between 2002 and 2009, REB made 656,802 new grid connections, against an original target of
+700,000. REB fell somewhat short of the target due to a moratorium on additional grid connections ordered by the
+Government in 2006, due to prevailing generation constraints and large -scale load shedding in the country .
+System Loss reduction in grid . Between 2002 and 2009, REB took over 11,295 km of lines from BPDB and carried
+out rehabilitation to reduce losses from an overall average of 59.9 percent in 31 PBS in 2002 to 13.7 percent in 2009,
+against an overall target of 20 percent. This loss reduction effectively increased availability of electricity at a time of
+wide-spread load-shedding and helped more reliable electricity access for PBSs ’ consumers.
+
+Provision of SHS on fee-for-service basis by REB . REB provided SHS to 11,796 households on a fee-for-service
+basis against an original target of 14,000 households, which accounted for about 3 percent of the initial project cost .
+It proved difficult for REB to provide maintenance services to these dispersed units in a cost -effective manner. This
+mission was informed that many of the installed units are expected to have fallen into disuse due to lack of interest
+on the part of users who had no ownership of the asset . Also, the REB effort for SHS was greatly overtaken by the
+promotion of SHS by IDCOL on an ownership model .
+
+Installation of SHS by IDCOL . A total of 1,231,720 million SHS were installed by IDCOL with support from this
+Project. At appraisal, the target for the distribution of SHS by IDCOL was 50,000, corresponding to only 8 percent of
+the initial project outlay. By taking advantage of the falling costs of solar PV and the un -utilized loan amount in the
+grid component, the number of SHS installed rose to 236,000 by 2009. Two rounds of additional finance helped
+increase the project target to 994,000 SHS, and this was exceeded at project completion through further cost
+savings. Together with support from the Bank and other development partners, IDCOL achieved installation of a total
+of 1.88 million by December 2012, bringing electricity to an additional 6 percent of the nation’s population. IDCOL
+management indicated to this mission that they were on stream to reach 3 million SHS installations by end-2013.
+
+Developing Partnership organizations . IDCOL has helped mentor and develop 49 partnership organizations.
+Technical quality assurance of installations is overseen by a committee headed by the head of department of
+electrical engineering in Bangladesh Institute of Engineering and Technology .
+
+Mini-grids by IDCOL . IDCOL’s experience with renewable energy mini -grids faced challenges both in terms of
+implementation and results. Of the three mini-grids that were attempted, only one was reported to be in commercial
+operation. The team was briefed by the owner of this mini -grid facility, the ‘Sandweep mini-grid’ which is a 100 KW
+solar-cum-40 KW diesel backup hybrid located on a battery have a lifetime of 20 years and 10 years respectively.
+Electricity is currently sold to 201 consumers including 158 commercial users. The tariff charged to consumers is
+BDT 32 (about 40 US cents) per kWh, six times higher than the average grid -based tariff of BDT 5.9 (about 7 US
+cents) per kWh in Bangladesh. The mini-grid operator informed the mission that the willingness and capacity to pay
+was high on the island on which this facility is situated due to established commercial activities as well as remittances
+as a source of income for many households in the area . Prior to this mini-grid, most of the island relied on individual
+diesel generators with higher operating costs relative to the mini -grid. Most of these generators are retained by the
+owners as a backup. Factors that worked in favor of the mini -grid were a 50 percent capital cost grant from KfW, and
+exemption from tariff control (which applies to units below 1 MW capacity as per current regulations ). If and when the
+grid is extended to the island, the mini -grid will no longer be commercially viable . In general, the viability of mini-grids
+in Bangladesh depends crucially on capital subsidy for entrepreneurs, and tariff subsidy for consumers where the
+capacity to pay is low. Also, mini-grid operators would require guaranteed off -take at remunerative prices in case the
+grid is extended to the area . Discussions with the concerned ministry officials do not suggest any new policy
+initiatives in this respect. In its memo dated June 19, 2014, the Task Team adds that “in the last couple of months,
+there has been progress in establishing a compensation mechanism where the mini -grid operator would be
+compensated if grid was extended to the mini -grid area within 5 years of establishment of the mini -grid.�? The
+follow-up RERED II project includes a component for mini -grids. But in the absence of a clear policy in this matter, it
+is unlikely that there will be much traction in the market for mini -grids.
+
+The issues raised by the mini-grid operator were corroborated by the mission ’s discussion with the task team . The
+team added that renewable energy mini -grids were implemented as a pilot for proof of concept under RERED, and
+the lessons learned from these pilots were incorporated in the design of RERED II, which includes a component for
+mini-grids. The implementation of such projects will be expanded under RERED II . The task team also stated that
+the Bank wanted both AC and DC technologies to be tested for mini -grids before committing a design. This process
+has taken some time and the tests of a DC pilot are awaited .
+
+A 2004 ESMAP study “Integrating Gender in Energy Provision Case Study of Bangladesh �? takes note of REB’s
+requirement for all PBSs to employ only women in their billing departments . In the power industry, traditionally
+dominated by men, employing women exclusively in the PBS billing departments provides a unique employment
+opportunity for rural women. Women receive training and improve their skillset as PBS billing departments
+transitioned from manual to computerized records .
+
+Technical assistance
+
+Under the project, both REB and IDCOL received technical assistance to help build administrative and project
+implementation capacity. The project team informed the mission that REB has built information technology
+infrastructure in the PBSs and streamlined environment management practices and procedures . REB has also
+developed a monitoring and evaluation framework and a methodology for evaluating socio -economic and gender
+related impacts on electrification projects and used this to measure the impacts under the RERED project .
+
+The project provided significant capacity building to IDCOL in financial management, planning, and technical issues,
+and the impact of this assistance was demonstrated by IDCOL ’s performance in successfully managing the growing
+renewable energy program. IDCOL management confirmed the added value from the Bank ’s support. Some
+technical assistance activities introduced during the additional financing in 2011 (establishment of SHS testing facility
+and commercial financing study ) were delayed and are being implemented under RERED II .
+
+There was no progress on a plan to establish a special unit in REB to provide continuous socioeconomic monitoring
+through surveys and measures of physical achievements and socioeconomic benefits . While it is noted that REB
+successfully commissioned impact evaluation studies in 2005 and 2010, the failure to mainstream socio-economic
+monitoring within the organization is a shortcoming that needs to be addressed .
+
+Outcomes
+
+Two impact evaluations were carried out for the REB grid components, one in 2006 and the other in 2010, and an
+impact evaluation was carried out for the IDCOL SHS component in 2012. The REB study found positive impacts of
+grid electrification on household incomes, use of technology in the home, women ’s empowerment, and study time for
+boys and girls. The SHS impact evaluation found a positive and significant impact on study time and a correlation
+between those households with a television, and health outcomes and impact on women ’s mobility, among others, as
+discussed below.
+
+As in all impact evaluations studies, there were some limitations faced in assessing the outcomes from project
+interventions. As noted in the 2010 impact study, the presence of electricity and a better quality of life does not
+automatically mean electricity as the cause and the quality of life as the outcome . To truly trace the effect of
+participation in a project on a participating individual or household one must compare the observed outcome with the
+outcome had the person/household not participated in the project or program . Much of the discussion contained in
+the impact evaluations is concerned with household level impact where grid and off -grid households are present in
+adequate numbers. For commercial and industrial households, and especially for the latter, the number of off grid
+units that could be used as control or comparison units was, unfortunately, few . Because electrified and
+non-electrified units are very different types of units, locating appropriate counterfactuals was inherently difficult .
+Another limitation arose from the difficulty in quantifying benefits in monetary terms . In most cases, such benefits
+had to be overlooked, resulting in an underestimation of the benefits . In other cases, benefits may have been
+exaggerated or dramatized by respondents and proponents, and therefore, overestimated .
+
+Social outcomes
+
+Study time in the evening went up by 21 minutes per day for boys and 12 minutes per day for girls in the grid
+connected households (REB 2010 impact analysis) and by 10-12 minutes for boys and girls in SHS households on
+average (2012 SHS impact assessment); all compared to households without any electricity access . The SHS study
+also found that boys and girls in SHS households have completed more schooling than those without any electricity
+access. REB’s impact analysis found that grid -connected households helped decrease illiteracy rates from 21
+percent to 14 percent between 2005 and 2010, and the average number of years in school increased from 6.43 in
+2005 to 6.86 in 2010.
+
+An increase in women’s mobility was reported and women reported feeling more secure when traveling to health
+complexes, clinics, schools, learning centers, NGOs and other places (REB 2010 impact analysis). The 2012 SHS
+impact analysis similarly found increased mobility and increased feelings of security among female respondents .
+
+Households with a new grid connection under the project began using electric fans, television sets, , cassette
+players, irons and charging mobile phone batteries . (REB 2010 impact analysis). Half of the households with SHS
+were found to have a television (2012 SHS impact assessment).
+
+The SHS impact study found that SHS homes had statistically better empowerment outcomes , specifically their
+mobility, general decision making and economic decision making, than those households without SHSs . The 2010
+REB study showed that women were able to get more information about home and abroad through watching
+television, and subsequently were more aware of reproductive health, children ’s health, family planning and other
+social (early marriage, dowry) and environmental (forestry) issues.
+
+Although there were no significant differences in health outcomes between the members of SHS households and that
+of non-SHS households, having a TV in the SHS households seems to make a significant difference in health
+outcomes for women. Among the SHS households with a television set, girls were about 4 percentage points less
+likely to suffer from respiratory and gastro -intestinal diseases than their counterparts from SHS households without a
+television set. The study also found that contraceptive prevalence was higher and recent fertility was lower among
+married women in households with SHS that own a black and white television . The 2010 REB study suggested that
+access to reliable mobile phone charging allowed women to communicate with doctors in the case of emergency .
+
+The project was expected to help provide access to arsenic -free clean water through installing pumps from new
+electricity connections. Some pumps were installed, but their impact was overtaken by alternative measures taken
+by the Government for a nationwide arsenic testing program that helped distinguish safe wells from
+arsenic-contaminated wells using color-coded markings.
+
+Economic Outcomes
+
+Increase in income of small commercial units . There were a total of 742,194 units connected to the grid under the
+project by 2008. The commercial units among these connections were predominantly in the service sector (shops,
+salons, restaurants). The REB impact evaluation survey found that income increased by about BDT 214.8 billion per
+annum for commercial enterprises in the project area that had benefited from grid electricity connections . For
+non-electrified commercial units, there was little change in income over time, while for grid -electrified units, gross
+incomes rose by over 2.8 times between 2005 and 2010. Overall, the impact survey suggests that electricity usage
+has resulted in a positive and significant impact on income and productivity .
+
+Increase in household incomes and decreased expenditures on fuel . The REB survey also showed that electrified
+households save money by using two liters less kerosene per month compared to un -electrified households,
+translating to an average monthly savings of BDT 136 (US$1.70). Users of SHS reported an average of 3.68 liters of
+lower kerosene consumption per month than households without SHS, saving an average of BDT 250 (US$3.15).
+Both grid and SHS users are able to save money by charging mobile phones from SHS .
+
+Employment creation in rural communities . IDCOL and each of its partnership organizations have created
+employment for rural communities through the establishment of the program . As of November 2012, IDCOL
+estimated that the SHS program had helped create about 30,000 direct jobs and 50,000 indirect jobs. As an
+example, one of the partnership organizations, Rural Services Foundation began in 2002 with one employee and a
+small office in Dhaka. In 2012 it had 75 offices across Bangladesh and employed over 300 people in rural areas
+while providing on-the-job training to households purchasing SHS . Grameen Shakti , the largest partnership
+organization, with a market share of more than 40%, is estimated to have created 10,000 jobs through their SHS
+program. These employees cover equipment sales, installation and service, and payment collection . A number of
+other partnership organizations including Grameen Shakti are providing training to village women on assembling
+some SHS components; some of these women are then becoming entrepreneurs, running their own units for
+assembling SHS and providing maintenance services . (SHS Impact Assessment 2012).
+
+Gender-related outcomes
+
+A 2011 ESMAP publication “Integrating Gender Considerations into Operations �? recognized gender best-practice
+projects from around the world and highlighted RERED project ’s gender-informed design, noting that it included
+analysis of the likely impact on women ’s security, income generation opportunities and knowledge via access to radio
+and television. The report also highlights the project ’s indicators for measuring outcomes for women and girls, such
+as the number of hours that girls study at night, access to news by women, improved reproductive health and
+increased HIV/AIDS information and awareness. This report is used to provide best practice in gender
+mainstreaming and gender informed design, and RERED is held as a model for other operations to follow
+
+Revised Objective 1a. To increase access to electricity in rural areas of the Recipient ’s territory. Rated High
+
+This objective is for all practical purposes identical to the original objective, and a discussion on the revised objective
+cannot be easily separated from that of the original . This is especially because the vast majority of the project cost
+attributed to these objectives had already been disbursed by the formal restructuring which occurred on November
+24, 2011, barely a year before project completion . Therefore, this objective is awarded the same rating as the
+original objective.
+
+Revised Objective 1b. To help promote more efficient energy consumption . Rated Substantial
+
+Outcomes
+
+At the beginning of the CFL program in 2009, there were only two CFL manufacturers in Bangladesh manufacturing
+about 9.6 million CFLs per year in the country . By 2012, there were 19 CFL manufacturers, producing over 30.64
+million CFLs per year. While some of this production is meant for export, it is also seen to reflect increased customer
+demand within Bangladesh, in contrast to low awareness and demand among potential customers before the project .
+The increased demand can be partly attributed to the publicity surrounding the large -scale CFL demonstration
+deployment supported by the project . In May 2014, the Government has cancelled a WB project to replace
+incandescent bulbs by energy efficient compact fluorescent lamps . According to the World Bank statement, ‘The
+need for a demonstration effect for a free distribution of CFLs is no longer apparent . Considering this, the
+government has decided to drop the second phase of CFL program ’. A Power department official was quoted as
+saying that ‘Now people are interested to invest over Tk 200 to replace an incandescent bulb by a CFL bulb and thus
+the purpose of the project was achieved ’. The current project was being referred to by the official .( “Free CFL bulb
+distribution project cancelled �? Article in New Age (Daily Newspaper) May 6, 2014.)
+
+Outputs
+
+Around 10.5 million CFLs were distributed across Bangladesh in a large -scale nationwide program. A one-day
+nationwide distribution and the awareness campaign associated with the program helped to increase public
+awareness about the energy saving benefits of CFLs . However, early lamp failure rates due to sub -standard products
+meant that the immediate expectation of reduction in peak demand through introduction of CFLs was not achieved .
+The task team informed the mission that a survey conducted by Infrastructure Development Company Limited
+revealed that about 34 percent of 10.5 million units were damaged.
+
+Global Environmental Objective . To reduce atmospheric carbon emissions by overcoming market barriers for
+renewable energy development, including high implementation costs .
+
+The GHG emissions reduction of the project until project completion (including IDCOL SHSs, system expansion and
+system loss reduction) was approximately 1.33 million tons, while the total GHG emissions reduction including the 15
+year life of the IDCOL supported SHS is estimated to be more than 4.14 million tons by 2027. The original target of
+displacing 250,000 tons of carbon was greatly exceeded as the SHS program was ramped up through additional
+financing.
+
+IDCOL has developed a competitive market for its 49 partnership organizations which are allowed to compete for
+customers without any geographic restrictions . It has been successful in developing supplies for SHS and batteries
+and related equipment. There are now 16 local battery manufacturers and 17 charge control suppliers in the country .
+IDCOL has managed to secure attractive warranties of 20 years duration for the SHS panels and 5 years for
+batteries, which are reported by the project team to be of longer duration than available in most other countries .
+Battery manufacturers have also made some inroads in some countries in Africa, indicating the acceptability of the
+products beyond Bangladesh . The outcomes related to overcoming market barriers are evident from the discussion
+on the outcomes from the IDCOL SHS program as discussed under Objective 1.
+
+
+5. Efficiency:
+   The efficiency of the original project objective is rated High . Each of the major activities covered by the project is
+estimated to produce higher economic rates of return relative to expectations at appraisal .
+Grid Expansion & System Loss reduction . The financial viability of grid expansion was calculated based on the
+average tariff. The tariff rate is administered and subsidized, and over the years the increase in the bulk supply tariff
+was not passed on to the consumers in time, leading to a low financial rate of return of 5.36 percent to the
+investment. Even at the appraisal stage, the estimated financial rate of return was low (5 percent). The main reasons
+for this were (i) administered tariffs that are not fully cost reflective (ii) the high capital cost of rural electrification; and
+(iii) the slow pick-up of loads in rural areas and the low intensity of electricity use .
+
+For the economic analysis of grid expansion and system loss reduction, three revenue streams were considered viz.,
+revenue from sale of power, the incremental revenue from system loss reduction which is valued at the cost of
+alternative generation (diesel-based power plants, new private generation, and island generation for grid quality ) and
+revenue from avoidance of GHG emissions from displaced kerosene . The economic rate of return of the investment
+with carbon benefit is 27 percent and without carbon benefits is 23.6 percent. In comparison, the economic rate of
+return of the grid expansion at the time of appraisal was 16 percent.
+
+SHS rollout. The estimated overall financial internal rate of return was 26 percent, lower than estimate of 34 percent
+made at the additional financing in 2011. The main driver of the difference was the increase in costs due to an
+increase in duties and operations and maintenance costs . The overall economic rate of return for SHS deployment is
+estimated at 42 percent at project completion. The benefits that were considered were better lighting services from
+electricity and savings from reduced expenditures on kerosene and battery charging . A separate economic rate of
+return was not estimated at appraisal for SHS because of the low scale of SHS roll out planned at that time .
+
+The efficiency of the revised project objective is rated Modest . The efficiency of the revised objective is related
+principally to the objective promoting more efficient energy consumption . The financial rate of return for the CFL
+component which pursued this objective was estimated at appraisal to be 44 percent and higher at 52 percent if CDM
+benefits were included. This analysis considered the lifetime savings of energy from using CFLs based on avoided
+generation costs as the only benefit . The cost comprised the procurement of the energy efficient and high -quality
+CFLs, the cost of CFL distribution, the cost of implementing consumer awareness programs, and the cost of
+monitoring and evaluation plans . After factoring in the Clean Development Mechanism benefits, the economic rate of
+return was estimated to be 60 percent. Clean Development Mechanism benefits were quantified at a validated
+economic value of $30/ton.
+
+Taking into account the large percentage of CFLs damages and rendered unusable (34 percent of the 10.5 million
+units), efficiency of the restructured objective is rated modest .
+
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re-
+    re -estimated value at evaluation :
+
+                                 Rate Available?                           Point Value                         Coverage/Scope*
+
+    Appraisal                        Yes                                       34%                                     90%
+
+    ICR estimate                     Yes                                       26%                                     90%
+                                         * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+    Outcome of the project prior to restructuring is rated Highly Satisfactory . The relevance of the original projects
+objective is clearly high given the large unfulfilled need for electricity especially in the rural areas of the country and
+the potential development benefits from increased electricity access especially for women and children . The
+relevance of the initial project design was high with its appropriate and logical reliance on the country ’s existing
+strengths for rural grid expansion while making a start with off -grid household SHS. Efficacy for the original objective
+is rated high given the favorable social and economic outcomes that can be attributed to the outputs that exceeded
+original targets. Efficiency of the original objective is rated high from the favorable economic rates of return and
+cost-effective nature of operations . Overall Development Outcome for the project prior to restructuring is rated
+highly satisfactory .
+
+Outcome of the restructured project is rated Moderately Satisfactory . The objective of improving energy efficiency –
+which was added at restructuring – was highly relevant to the country’s priorities as well as the Bank’s partnership
+strategy for Bangladesh. The project design following restructuring was appropriate for improving energy efficiency,
+but is rated substantial because the approach was narrow, and could have been better integrated with the original
+objective at appraisal. Efficacy is rated substantial , due to some shortcomings in meeting targets, and efficiency is
+rated modest due to the large share – approximately 34 percent – of unusable CFLs among the total number that were
+distributed.
+
+Overall outcome of the project is rated Highly Satisfactory . The overall outcome is derived using the harmonized
+OPCS-IEG evaluation guidelines for restructured projects . On a scale of 1 to 6 (from Highly Unsatisfactory to Highly
+Satisfactory), the outcomes prior to and after restructuring scores 6 and 5 respectively. At restructuring, 80 percent
+of the final IDA contribution had been disbursed . Weighting the outcome scores by 80:20 gives a weighted average
+outcome score of 5.6, which when rounded yields a score of 6 or Highly Satisfactory .
+
+ a. Outcome Rating : Highly Satisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+   The risk that the achieved development outcomes will not be sustained is rated Moderate . The risks facing the
+sustainability of installed SHS are low, though the large scale -up planned over the next few years may pose
+challenges in the future. REB and PBSs face significant capacity, financial, and governance constraints in sustaining
+the quality and pace of grid-based rural electrification. There is unlikely to be much progress in installing mini -grids
+without significant and clear policy signals from the Government . The CFL effort has helped nudge a trend that is
+likely to continue on its own momentum .
+Solar Home Systems
+
+IDCOL has created a sound system for financing, installing, and maintaining SHS with its access to and appropriate
+use of financial resources, fostering partnership organizations, and establishing effective frameworks for
+capacity-building, customer service, payment collection, monitoring, and quality assurance . IDCOL has expanded
+and upgraded its own capacity as it ramps up the SHS rollout .
+
+A remarkable achievement of the project has been to demonstrate the willingness -to-pay of even relatively poor
+consumers for electricity infrastructure and maintenance . Unlike grid electricity service, which is heavily subsidized,
+SHS users paid nearly the full cost of the equipment, as well as the full cost of replacement and repairs . A small
+subsidy and microfinance made the SHS affordable to even low -income households in rural areas . During the
+project, 99 percent of households purchased SHS on credit, paying between BDT 12,489 for a 20-Wp (watts peak)
+panel to BDT 40,911for an 85-Wp panel. The program was also able to decrease the subsidy from US$ 90 on the
+selling price of the SHS in 2002 to US$50 in 2009, US$28 by 2011, and further to US$25 by the end of the project.
+
+However, as IDCOL expands the reach of its SHS program towards its ambitious goal of a total of 6 million
+households by 2016, it will progressively face poorer and more dispersed customers . IDCOL has also set itself an
+end-goal of fully commercial sales. To keep SHS affordable in pursuit of these goals, IDCOL will need to gear up in
+terms of institutional capacity, reducing installation and service costs, as well as broad -basing access to finance .
+Even as solar panel prices have decreased over the years, this has been more or less compensated by the rise in
+battery prices and the premium applied to them for the relatively longer warranty period of five years .
+
+The mission was informed that IDCOL has established a separate renewable energy department and is in the
+process of hiring and training additional people to keep pace with the growing renewable energy program . The
+renewable energy department consists of divisions covering the following subject matter : household SHS, bio-gas;
+engineering; marketing and consumer awareness . RERED II is supporting a vocational training institute to help train
+trainers for imparting skills relating to renewable energy products . IDCOL’s commitment to the training is seen from
+its commitment to provide 70 percent of the training costs . IDCOL is also exploring innovative means to control
+installation and service costs such as routing payments through mobile phones . World Bank support for the IDCOL
+SHS program will continue to be supplemented by other agencies including KfW, the Asian Development Bank, the
+United States Agency for International Development, and the German Development Agency (GIZ). However, donor
+funds for either grants or credit will be insufficient to meet the government goals for off -grid electrification. For
+instance, RERED II supports 550,000 out of the additional 4 million SHS that are planned till 2016. A study is
+therefore being carried out under the RERED II project to find ways to leverage additional financing from commercial
+sources.
+
+Grid-related components
+
+Reductions in transmission losses . Physical targets under the grid component were largely achieved, but generation
+constraints continue to be a risk for optimum utilization of new /rehabilitated lines provided under the project . The
+Government has plans to address generation constraints, which includes awarding contracts for large scale
+Independent Power Producers (IPPs), and also adding short-term power plants (albeit at higher cost), but the time
+line for this additional generation coming on -line is not certain. The project achieved significant reductions in
+transmission losses which can be sustained if regular repairs and maintenance are carried out . This may not be
+possible if the tariff revisions do not keep pace with the cost of the supply of power .
+
+Financial sustainability and governance issues for REB /PBSs. PBSs - which operate under REB oversight - have
+now reached about 8 million rural households. However, shortcomings in institutional capacity, financial performance
+and governance of REB/PBSs threaten the sustainability of the progress achieved in rural electrification . The
+financial performance of PBSs has deteriorated significantly over the past ten years as the rapid expansion in rural
+electrification expansion has outstripped REB ’s capacity to monitor their performance . There has also been a
+gradual decline in the quality of management and governance which is partly attributed to the relatively new practice
+of appointing generalist civil servants without the requisite background and skills to run a specialized agency like
+REB.
+
+Aided by this project, a reform action plan was developed on three key broad areas : i) strengthening the REB Board
+with professionals; ii) establishing zonal offices of REB for managing the growing program; and iii ) greater delegation
+of authority to the PBSs. The action plan is currently under review by the Ministry and significant action has yet to be
+taken. In its memo dated June 19, the Task team notes that the REB board has been strengthened with professional
+members, zonal offices have been established and a revised organogram is currently under review at the Ministry of
+Public Administration for additional manpower for REB .
+Mini-grids
+
+Mini-grids may be the only option for providing electricity for household and commercial needs in remote and
+inaccessible areas, and as an intermediate arrangement before the electricity grid reaches such areas . Under this
+project, the mini-grid experiment yielded less than expected results, with only one mini -grid in successful commercial
+operation out of the sever that were originally planned, and the three that were actually attempted . Capital and
+operating costs for mini-grids are typically far higher than for equivalent grid -based electricity. Further, mini-grid
+operations can be limited by the capacity and willingness to pay on the part of consumers . Prospective mini-grid
+operators also need reasonable certainty that in the event of the grid reaching the area in the near to medium term
+they would be compensated for any stranded assets . The Government needs to clarify its policies and plans on all
+these issues including demarcating areas for mini -grid development and possible subsidies to improve viability of
+mini-grid operations, if this segment is to show any significant results . In its memo dated June 19, 2014, the Task
+Team adds that “in the last couple of months, there has been progress in establishing a compensation mechanism
+where the mini-grid operator would be compensated if grid was extended to the mini -grid area within 5 years of
+establishment of the mini-grid.�? IDCOL staff informed the mission that they are coordinating with the Power Cell to
+clarify policy on buy-back provisions and other incentives through the Remote Area Power Scheme (RAPS).
+
+CFLs
+
+Since CFLs have already gained popularity in the urban areas, under RERED II, a reduced number of CFLs will be
+distributed in rural areas only. RERED II is also opting for simple door-to-door distribution of CFLs free of cost to build
+consumer awareness. It is recognized that for long -term continued use of CFLs, products of good quality at
+affordable prices are made available . The project team informed us that following RERED, there are now about 30
+firms manufacturing CFLs in Bangladesh, indicating a promising competitive market .
+
+
+
+   a. Risk to Development Outcome Rating : Moderate
+
+ 8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+    The quality at entry for the project is rated Satisfactory . The project drew upon the Bank ’s past experience
+on rural electrification within and outside Bangladesh, assembled a diverse and experienced team, generally
+ensured institutional readiness for implementation, and identified major risks while mostly provided for their
+mitigation. An exception was the failure to foresee the lack of readiness and compatibility of REB to provide SHS
+on a fee-for-service basis.
+
+In respect of the grid-related components, the project design incorporated lessons from the Bank ’s previous
+implementation experience with REB (Rural Electrification Projects I, II and III ). For the off-grid SHS components
+– which were new for the Bank in the Bangladesh context – the project design drew upon the Bank ’s experience
+with SHS implementation in other Asian countries . Major risks across the project components were generally
+identified well and mitigating measures were provided for, though the CFL component that was added in 2009
+gave rise to unforeseen challenges as explained below . The project team brought together professionals with a
+range of country and sector expertise in rural electrification and renewable energy projects in the Philippines,
+Zimbabwe, Vietnam, South Africa, Thailand, Laos, Cambodia, Indonesia, Pakistan, India and Sri Lanka .
+
+Both REB, acting as a quasi-regulator and financial manager, and the PBSs acting as service operators, had
+good track records of operational and financial management for implementing the grid -related components. For
+these components, the timely transfer of BPDB lines and facilities to REB was recognized as a high risk . To
+ensure that this transfer was carried out smoothly a comprehensive program was agreed upon between the
+BPDB, REB and the Government ministry. This risk was further addressed by tying disbursements to actual
+progress in effecting the transfers . The financial sustainability of the PBSs was also identified as a risk, and
+efficiency improvements, line rationalization, and increased generation were suggested as the mitigation
+measures. In retrospect, the project design did not anticipate constraints in power supply that might reduce the
+benefits from grid extension and rehabilitation . The project team reasons that at appraisal the country had
+started generating power from large IPPs, and load -shedding was relatively low (less than 10 percent of peak
+demand was unmet in 2002, compared to over 30 percent in 2009) and the supply scenario had looked promising
+overall at that time.
+
+For the IDCOL-managed SHS effort, the project design drew upon the Bank ’s experience with promoting SHS in
+other Asian countries including India (Renewable Resources Development Project ), Indonesia (Solar Home
+Systems Project) and Poverty and Gender studies in Indonesia and Sri Lanka . The project applied lessons
+learned from Sri Lanka’s Renewable Energy for Rural Economic Development project, which had employed
+easy-to-implement grant and delivery models; commercially managed credit lines and grant administration; and
+the promotion of industry associations and NGOs as agents of growth . The project design also drew upon the
+proven success factors of community -based stakeholders (NGOs and microfinance institutions) in Bangladesh.
+
+The project team considered the potential pitfalls for REB – which specializes in grid management – in providing
+off-grid SHS on a fee-for-service basis. Though the project design provided flexibility for REB to adapt
+administratively and financially, the efficacy and cost -effectiveness of this effort proved to be low .
+
+The CFL component that was introduced in 2009 was guided by the criteria used by the Government ’s Efficient
+Lighting Initiative of Bangladesh and lessons from similar projects in other countries . The component design
+recognized the risk associated with the quality of CFLs, and provided for pre -shipment inspection agents to check
+for quality during the production process, and testing for lamp lifetimes at the national testing lab of the
+Bangladesh Standards and Testing Institute . However, the Project National Steering Committee (NSC), which
+had oversight over the project ’s activities, lacked the mandate to oversee CFL quality, monitoring or record
+keeping, and these challenged the success of the program .
+
+
+            at -Entry Rating :
+   Quality -at-                                   Satisfactory
+
+b. Quality of supervision:
+    The Bank performance during project supervision is rated Satisfactory . The Bank conducted intensive
+supervision with over 235 staff weeks devoted for this purpose over the project period . The task team leaders
+and important core team members were based in Dhaka which enabled frequent and intensive interaction with
+Government and implementing agencies . Discussions with IDCOL and REB underline this . REB noted that the
+Bank's performance exceeded its expectations and made a significant contribution to the rationalization of
+distribution lines.
+
+The project team played a catalytic role in assisting the Government to establish an appropriate policy framework
+to guide the rural electrification program . The Bank's involvement enabled the establishment of appropriate
+standards for the selection of grid and off -grid options and the transfer of lines in rural areas from BPDB to REB,
+thereby contributing to the sustainability of the rural electrification program . Importantly, the Bank and GEF
+transferred knowledge of global established international best practice in the field of renewable energy to
+Bangladesh. Respondents from IDCOL and the Government give high marks to the Bank for seizing the SHS
+scale-up opportunity using the IDCOL ownership and micro -finance model. They told the mission that the Bank ’s
+contribution was crucial in terms of planning, training, and advising on financial and capacity development
+matters. The Government and IDCOL also credit the Bank with setting the stage for other donors to join in the
+efforts – Asian Development Bank, KfW, GIZ, JICA, and the Islamic Development Bank . IDCOL staff noted the
+active participation and contribution of WB staff in monthly operational meetings during the formative period of
+the SHS program.
+
+The Bank demonstrated flexibility in responding to issues that negatively affected project implementation,
+including those arising from handover of lines and deployment of CFLs . More importantly, as the IDCOL model of
+SHS deployment was found to be more effective (compared to the REB fee-for-service model) the team
+encouraged IDCOL to scale up its efforts through re -allocating funds from the underperforming component,
+providing two rounds of additional financing, and project restructuring . During supervision, the Bank team
+supported the borrower in overcoming difficulties, such as the delay in handing over lines from BPDB, and
+addressing concerns of partnership organizations based on their experience in the field .
+
+The focus of the Bank's team on quality assurance was demonstrated by the monitoring and quality assurance
+framework agreed with IDCOL and the timely technical advice and support extended to REB in the wake of
+quality issues under the CFL component . The lessons from the first phase of the CFL distribution were captured
+and incorporated in the planning of the CFL deployment component under RERED II .
+
+The project team agrees that the project could have been restructured following the additional financing in 2009
+(rather than 2011), when it became evident that there would be no new activities under the grid component and
+the focus of the project had settled on the off -grid component and efficiency improvements . Likewise the
+cancellation of unused funds for SHS and CFL could have been carried out earlier, but the rapidly increasing
+installation rate of the SHSs made it difficult to accurately establish the cancellation amount before late 2012, and
+the team saw it as more convenient to process both the SHS and CFL cancellations together in one restructuring
+paper.
+Overall Bank Performance is rated Satisfactory .
+
+
+
+   Quality of Supervision Rating :                 Satisfactory
+
+   Overall Bank Performance Rating :               Satisfactory
+
+
+9. Assessment of Borrower Performance:
+
+a. Government Performance:
+    The government ’s performance is rated Highly Satisfactory . The Government’s strong commitment to the
+project was demonstrated by several actions that it took to solve problems that arose during implementation in
+cooperation with the Bank’s team and implementing agencies. The Government also importantly provided the
+requisite autonomy to IDCOL to achieve its potential in implementing the SHS component . The IDCOL Board has
+been constituted in a balanced manner with four government and private sector representatives each, and
+headed and staffed by qualified professionals .
+
+When the project was initially delayed due to one of the conditions for effectiveness (handing over of lines
+between BPDB and REB) was not met, the Government worked to overcome the opposition of the vested interest
+groups until the issue was resolved . For IDCOL’s SHS program, the Government allowed a large portion of IDA
+resources to be channeled through the non -government channel, indicating a strong commitment to increasing
+access and improving services throughout the country . IDCOL’s strong financing model and good relationships
+with its partner organizations ultimately translated to the large -scale distribution of SHS and the creation of a
+vibrant SHS and ancillary industry in Bangladesh .
+
+The Government has yet to seriously address the financial, institutional and governance issues facing REB and
+PBSs. In respect of mini-grids, the Government needs to get a better handle on the need and demand for such
+facilities and clarify policy issues that are holding back their development .
+
+
+   Government Performance Rating                                  Highly Satisfactory
+
+ b. Implementing Agency Performance:
+    Implementing agency performance during the project is rated Highly Satisfactory . IDCOL has played a pivotal
+role in the success of the SHS program, and its performance is considered exemplary by this assessment . The
+program has now reached a pace of about 60,000 SHS installations per month and IDCOL has set itself the
+impressive goal of financing a cumulative 6 million SHS by 2016. Up to November 2013, a total of about 2.7
+million SHSs have already been installed by IDCOL .
+
+IDCOL demonstrated full ownership of the project and proactively developed solutions to problems that were
+encountered when initiating and ramping up the pace of SHS installations . The relative autonomy accorded by
+the Government gave IDCOL the institutional flexibility to adapt to changes, including increasing its staff strength
+to meet the growing demand of SHS, and to incentivize staff performance and reduce turnover through
+market-based salary structures .
+
+IDCOL successfully evolved a structure that involved multiple partnership organizations (NGOs and micro-credit
+finance institutions) to carry out marketing, sales, installation, system maintenance and payment collection . In
+doing so, IDCOL leveraged the geographical reach of the partnership organizations and their social acceptability
+at the community level, and the existence of a micro -credit culture in rural Bangladesh resulting in customer
+readiness to try SHS. IDCOL works with partnership organizations to train consumers to carry out regular, simple
+maintenance work by themselves . IDCOL ensures quality assurance by setting technical standards and enforcing
+the standards through strong supervision and monitoring . By using the ownership model and working through its
+partner organizations IDCOL has been able to create a sense of ownership on the part of consumers resulting in
+proper system care.
+
+IDCOL succeeded in developing a successful model for SHS involving financial risk sharing with partnership
+organizations together with proper customer selection and attention to collection efficiencies . Partnership
+organizations have achieved an average collection efficiency of 94 percent and are servicing their debts owed to
+IDCOL on a timely basis. IDCOL has succeeded in blending access to financing and availability of grant
+assistance to increase affordability and to ensure that partnership organizations have adequate capital for
+investing in and operating the service infrastructure .
+
+IDCOL’s experiment has proved that multilateral financial institutions in Bangladesh could successfully diversify
+their services to include access to infrastructure services by coupling micro -lending with leveraged donor
+resources. This has served to demonstrate to other low -income countries that the users ’ willingness-to-pay for
+energy services can be tapped - with an affordable payment plan and assurance of good service - to leverage
+assistance from multilateral and bilateral financing agencies and donors .
+
+REB displayed commitment to reducing technical losses and connecting additional households and was largely
+successful in carrying out these tasks . In respect of providing SHS on a fee -for-service basis, REB’s
+performance was less than satisfactory . Since this was not the core business of REB, it found itself institutionally
+challenged to meet the installation targets and conduct installation and bill collection in a cost -effective manner.
+However, the institutional capacity and performance of REB has deteriorated over time as discussed in some
+detail under the sections on ‘achievement of objectives’ and ‘risk to development outcome’. This was partly
+evident from the number of audit observations by the Government auditor on REB project accounts and delays
+faced in the procurement in the activities implemented by REB .
+
+Overall Borrower Performance is rated Highly Satisfactory .
+
+   Implementing Agency Performance Rating :                     Highly Satisfactory
+
+   Overall Borrower Performance Rating :                        Highly Satisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+ a. M&E Design:
+   M&E Design . Outcome indicators for the project ’s first objective -- social development and economic growth
+resulting from increased electricity access - appropriately included i) impact on incomes and reduction in poverty; ii )
+enhanced rural productivity and other development opportunities; iii ) increased empowerment of women; iv)
+enhanced children’s study time through improved lighting; v ) improved provision of safe drinking water; and vi )
+improved quality of life as measured by selected factors .
+Output indicators for the first objective included i ) number of rural households provided access from grid; ii ) number
+of rural households serviced from renewable energy sources; iii ) the number of SHS; and iv) the number of
+renewable energy mini-grids supported. The number of kilometers of distribution lines renovated by REB and the
+resultant reduction of system losses was to be tracked .
+
+ The output indicator for the second objective of improving electricity consumption efficiency was simply the number
+of CFLs that replaced incandescent bulbs . The key global environment objective was to be measured through the
+reduction of atmospheric carbon emissions / greenhouse gas (GHG) emissions.
+
+
+ b. M&E Implementation:
+   M&E Implementation . The socioeconomic outcomes from increased electricity access were measured through
+two impact assessments of grid electrification carried out in in 2005 and 2010 by REB, and an SHS impact evaluation
+in 2012 for the IDCOL program.
+The number of households and enterprises connected to the grid by the project was obtained from REB /PBS monthly
+reports on new connections . The indicators for length of lines renovated and total system loss reduction were
+tracked by the internal reporting system of REB /PBSs and reported regularly to the project .
+
+IDCOL established an ongoing monitoring system for the SHS program . An Operations Committee comprising
+IDCOL management and partnership organizations ’ representatives conduct monthly meetings on the SHS program
+results and issues. The data on the number of rural households serviced by SHS is collected through progress
+reports of IDCOL/partnership organizations. SHS installations are randomly selected for inspections and
+verifications by IDCOL field inspectors . In parallel, independent technical audits are undertaken on a regular basis .
+IDCOL regularly submitted reports to the Bank ’s project staff on the progress in installation of SHS, minutes of the
+Operation Committee meetings, and financial statements .
+
+
+c. M&E Utilization:
+   M&E Utilization . The data collected through project M&E had a strong impact on improving project
+implementation. In particular, in the case of the SHS, feedback from the field helped the project team and IDCOL
+incorporate new technical specifications and technologies, such as LED lights, to better serve lower -income
+households. Feedback from the project teams also proved crucial for the establishment of improved SHS testing
+facilities and improved service provision for partnership organizations . In the case of the CFLs, though there were
+some deficiencies in record-keeping and updating the computer database to meet the stringent CDM requirements,
+post-installation surveys helped to detect early lamp failure rates and prompted REB to take remedial measures,
+including withholding final payments to the supplier and claim replacement of CFLs .
+Overall, M&E is rated High .
+
+
+M&E Quality Rating : High
+
+
+
+
+11. Other Issues
+
+ a. Safeguards:
+Safeguards : The project was placed in category B under the Bank ’s environmental and social safeguards and
+triggered the policies for environmental assessment and involuntary resettlement . Expected environmental impacts
+related to temporary and minor land disturbances arising out of laying new distribution lines, construction of
+substations, and small-scale gas or diesel-based power generation. Environmental impacts from SHS installations
+were expected to be minor with the exception of disposal of used batteries .
+
+REB and IDCOL jointly prepared an Environmental and Social Assessment Framework to form the basis for
+undertaking sub-project-specific environmental plans. REB and IDCOL also made provision for public consultation
+on sub-projects and components financed under the project . An updated version of the framework has been
+prepared and publicly disclosed under the follow -up RERED II project. IDCOL has created a full-time Environment
+and Social Safeguards Management Unit . IDCOL now has full-time environmental staff members working with
+partner organizations and battery manufacturers /suppliers to raise awareness about the importance of environmental
+and social safeguards. IDCOL staff visit all battery recycling plants on a half -yearly basis for ensuring environmental
+compliance. No significant issues arose for involuntary resettlement as the project generally restricted itself to
+unencumbered government property or land that was made available by the community .
+
+The project helped to enhance the standards for battery suppliers to the SHS program by requiring them to adopt
+ISO 14001:2004 and OHSAS (Occupational Health & Safety Management Systems ) 18001:2007 standards. At the
+end of the project, all 13 battery manufacturers and all 3 recycling facilities in the country became ISO and OHSAS
+compliant.
+
+The Bank mission in April/May 2012 noted the lack of a national guideline on safe disposal of CFLs . These
+guidelines are now being developed under the follow -up RERED II project with a team of international and local
+consultants, and are required to be in place before the distribution of the CFLs financed under the project can
+commence. RERED II also provides for technical assistance on ensuring safe disposal of expired CFLs financed
+under the project.
+
+
+ b. Fiduciary Compliance:
+Financial Management . Shortcomings in financial management occurred in 2008 from REB's failure to appoint an
+auditor, which was corrected in 2009 when the auditor was in place and REB had taken corrective measures to
+remove a qualified observation from its project audit report . Further qualified observations arose in 2010, but were
+gradually addressed over the next three years, particularly by making their satisfactory resolution a condition for
+disbursement for the energy efficient lighting (CFL) component under RERED II.
+
+IDCOL faced legacy issues in transitioning from a manual to a computerized system for generating financial
+management reports. The project team informed the mission that the computerized system is being made functional
+under the RERED II project and will help reduce /eliminate the scope for manipulation and error .
+
+There were shortcomings in the procurement process in 2008 and beyond - due to delays by REB in concluding
+several procurement packages related to the construction of new lines and connecting new consumers (this was
+partly due to the Government moratorium on new connections, given the prevailing power supply shortage ). The
+related funds were then reallocated to the IDCOL component to support renewable energy development in 2009.
+Procurement was affected again in 2010 due to delays by REB in concluding the first -phase CFL procurement and
+several complaints of alleged corruption received during the procurement process . The second-phase procurement
+of CFLs was initiated in late 2010, but due to various issues (including issues related to the submission of fraudulent
+performance guarantees by the winning bidder ), the procurement could not be completed and the second phase was
+cancelled.
+
+Procurement of SHS was the responsibility of IDCOL ’s partnership organizations, which are expected to follow
+established commercial practices . IDCOL officers informed the mission that stringent standards, including a five -year
+warranty for batteries are strongly enforced . SHS warranty requirements in Bangladesh are among the longest and
+most honored in the world, while SHS costs remain some of the lowest in the world . IDCOL’s management informed
+the mission that as a result of these strictly enforced quality assurance measures, customer satisfaction has been
+consistently high. The task team informed the mission that a recent third party monitoring exercise had rated
+customer satisfaction at 97 percent.
+
+
+c. Unintended Impacts (positive or negative):
+
+
+d. Other:
+
+
+
+12. Ratings :
+12.                                        ICR                   IEG Review                   Reason for
+                                                                                       Disagreement /Comments
+                     Outcome : Satisfactory                 Highly Satisfactory    High Relevance of original objectives
+                                                                                  and design; Efficacy for the original
+                                                                                  objective is rated high given the
+                                                                                  favorable social and economic
+                                                                                  outcomes that can be attributed to the
+                                                                                  outputs that exceeded original targets .
+                                                                                  Efficiency of the original objective is
+                                                                                  rated high from the favorable economic
+                                                                                  rates of return and cost-effective nature
+                                                                                  of operations.
+         Risk to Development Moderate                       Moderate
+                    Outcome :
+
+            Bank Performance : Satisfactory                 Satisfactory
+
+       Borrower Performance : Satisfactory                  Highly Satisfactory   Both Government and implementing
+                                                                                  agency IDCOL's performance are
+                                                                                  considered satisfactory, with the latter
+                                                                                  playing a pivotal role in the success of
+                                                                                  the SHS program.
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+ 13. Lessons:
+  Off-
+  Off -grid household electrification can accelerate the benefits of “lighting �? in a cost -effective manner, to
+populations that face uncertain waiting periods for grid -based electricity, or are unlikely to obtain grid -based
+electricity due to remote or inaccessible locations . The RERED project experience shows that potential
+beneficiaries can respond well to ownership -based Solar Household System schemes, and factor in the likelihood
+of gaining access to grid-based electricity at a later stage .
+A public -private partnership model can efficiently deliver large -scale and dispersed off -grid electricity services,
+by deploying public funding through private sector stakeholders . Flexibility to adapt to market conditions and
+signals are the hallmarks of this model, while quality assurance and after -sales and maintenance service
+mechanisms are a necessity for acceptance by beneficiaries .
+
+Achieving broader social and economic outcomes from electricity access provision will primarily depend upon
+the pursuit of a least cost path for grid expansion backed by appropriate sector policies, complemented by
+off -grid electricity in the interim or permanently as needed . While Bangladesh has demonstrated impressive
+off-
+growth in Solar Home Systems and continues to pursue this path for improving access to electricity, it needs to
+keep in mind that off-grid electrification can inherently provide only a limited range of services to beneficiaries
+compared to grid-based electricity. Achieving broader social and economic outcomes from electricity provision will
+primarily depend upon the pursuit of a least cost path for grid expansion for which persisting policy and regulatory
+bottlenecks have to be resolved .
+
+
+14. Assessment Recommended?                  Yes      No
+
+Why? This ICRR reflects a Project Performance Assessment that was carried out for this project in December
+2013 and published in the report cited below :
+
+. World Bank. 2014. Bangladesh - Rural Electrification and Renewable Energy Development; and Power Sector
+Development Technical Assistance Project . Washington, DC ; World Bank
+Grouphttp://documents.worldbank.org/curated/en/2014/06/19717157/bangladesh-rural-electrification-renewable-ener
+gy-development-power-sector-development-technical-assistance-project
+
+
+
+
+15. Comments on Quality of ICR:
+
+The ICR is written in a clear, thoughtful and analytical manner . The document provides evidence of outputs and
+outcomes. The lessons are well-grounded in the project's institutional and implementation experience . The core
+portion of the document is concise, and relevant information and detailed economic and financial analysis is provided
+in annexes
+ a.Quality of ICR Rating : Satisfactory
+

DataSource/000180307-20141202135918.txt

@@ -0,0 +1,632 @@
+                                                                                                                 ICRR 14375
+                                                                                                 Report Number : ICRR14375
+
+
+ IEG               ICR Review
+                   Independent Evaluation Group
+
+
+
+
+        1. Project Data:                                       Date Posted : 06/30/2014
+
+               Country : Vietnam
+             Project ID : P066396                                                    Appraisal                Actual
+        Project Name : System Efficiency                            US$M ):
+                                                     Project Costs (US$M):                        348                  419
+                          Improvement,
+                          Equitization &
+                          Renewables Project
+  L/C Number :            C3680                        Loan /Credit (US$M):
+                                                       Loan/         US$M ):                      225                  300
+      Sector Board :      Energy and Mining                          US$M):
+                                                       Cofinancing (US$M  ):                       4.5                  4.1
+
+           Cofinanciers : GEF                           Board Approval Date :                                06/25/2002
+                                                               Closing Date :            12/31/2007          12/31/2012
+          Sector (s):      Power (88%); Renewable energy (6%); Central government administration (6%)
+          Theme (s):       Rural services and infrastructure (29% - P); Poverty strategy; analysis and monitoring (29%
+                           - P); Climate change (14% - S); Participation and civic engagement (14% - S); Infrastructure
+                           services for private sector development (14% - S)
+
+Prepared by :              Reviewed by :           ICR Review                   Group :
+                                                   Coordinator :
+Ramachandra Jammi          Christopher David       Christopher David           IEGPS1
+                           Nelson                  Nelson
+
+2. Project Objectives and Components:
+
+ a. Objectives:
+  The objectives of the project, as defined in the Development Credit Agreement, were to assist the Borrower to : (i)
+enhance electricity system efficiency; (ii) provide electric power in selected rural areas; and (iii) sustain reform and
+institutional development of the energy sector .
+
+b.Were the project objectives/key associated outcome targets revised during implementation?
+
+No
+
+c. Components:
+ The project had three components :
+Component 1: System Efficiency Improvement (estimated cost at appraisal: US$177.80 million; actual cost:
+US$183.60 million), focusing on upgrades of 220 kV and 500 kV transmission systems and DSM.
+
+Component 2: Improving Rural Access (estimated cost at appraisal: US$122.20 million; actual cost: US$151.2
+million), including upgrading of 110 kV sub-transmission systems, rehabilitation of small hydro and development of
+off-grid power supply using renewable energy sources .
+
+Component 3: Sustaining Reforms and Institution Building (estimated cost at appraisal: US$14.0 million; actual
+cost: US$31.4 million), including capacity building, support to equitization and improvement of EVN's (Electricity of
+Vietnam) Management Information System.
+
+The core components were not revised but some subcomponents and activities were either revised or cancelled as a
+result of implementation progress or agreements reached during project supervision . Most of the changes were
+affected through project restructurings and AF . The key changes included :
+
+(i) Components 1 and 2 were made more programmatic in the selection of subprojects to be financed . For
+Component 1, additional subprojects included 423 km of 220 kV single and double circuits and 13 substations, and
+an additional subcomponent of commercial metering at the transmission system interface with generation and
+distribution was introduced. Component 2 included further investments of 122 km of 110 kV single and double circuit
+lines and 18 substations.
+
+(ii) The focus of the subprojects financed under the Remote Areas Renewable Electricity component was changed
+from off-grid renewable energy sources to grid -connected renewable energy sources .
+
+(iii) Component 3 added more activities, including capacity building of ERAV (Electricity Regulatory Authority of
+Vietnam), institutional development of the natural gas sector, establishment of corporate financing units in EVN and
+NPT (National Power Transmission Corporation ), and associated training.
+
+ d. Comments on Project Cost, Financing, Borrower Contribution, and Dates:
+ The project's actual cost was US$ 423.6 million, about 20% higher than the estimated cost of US$ 352.4 million at
+appraisal. IDA financed US$299.7 million (71%) of the final cost, significantly higher than planned (US$220.0 million)
+due to the 2010 AF. The Borrower contributed US$119.8 million, somewhat less than the US$122.9 planned at
+appraisal.
+
+The project was approved on June 25, 2002 and became effective on February 19, 2003 as scheduled. It was
+restructured three times as Level Two restructurings according to the current definition and obtained AF . The first
+restructuring occurred in June 2005 through introducing a programmatic approach for the selection of subprojects .
+During the second restructuring in November 2007, ERAV was added to further support the ongoing sector reform .
+Also, the evolving sector environment and implementation delays required changing the focus of activities from
+off-grid renewable energy sources to grid -connected renewable energy sources . During the third restructuring in
+May 2009, the Credit Agreement was amended to include preparation of the Renewable Energy Development
+Project and simplify the disbursement categories . The AF was approved in June 2010 to meet a financing gap
+resulting from cost overruns and to scale up reform support, including assistance to ERAV and capacity building of
+EVN and NPT. The project closed on December 31, 2012, five years later than originally planned .
+
+
+3. Relevance of Objectives & Design:
+
+a. Relevance of Objectives:
+Relevance of the project development objectives is rated High. The objectives were relevant to the needs of the
+country’s power sector at project appraisal and continue to be relevant at present except for rural electrification,
+which has largely been completed by now. The major sector issues at time of appraisal (2002) included: (i) needs for
+large sector investments and improvement in overall power system efficiency; (ii) a relatively low rate of rural access
+to electricity; (iii) limited capacity to utilize renewable energy sources; (iv) weak management of sector institutions; (v)
+financial sustainability of the power sector, (vi) and lack of a comprehensive legal and regulatory framework to
+underpin sector reform. The project was part of a broader program of investments agreed to between the GOV and
+the Bank to address the above sector issues .
+
+The project was in line with the Bank ’s Country Assistance Strategy for 1999-2002, which identified the Bank’s role
+for the power sector as filling a niche not covered by others and assisting the GOV in its poverty alleviation efforts .
+The project was consistent with the Country Assistance Strategy focus on reducing poverty, promoting equitable
+growth and raising productivity through provision of infrastructure . The project was also consistent with the Bank ’s
+current (FY2012-2016) Country Partnership Strategy priorities in the power sector which emphasizes support for
+improved quality of basic infrastructure services, including electricity . The renewable energy source sub -components
+addressed the Global Environmental Facility Operational Program 6 on Climate Change: promotion of renewable
+energy sources by removing barriers and reducing implementation costs . The project aimed to support a long -term
+programmatic approach to strategically develop renewable energy sources based on the 1999 Renewable Energy
+Action Plan (REAP), jointly developed by the Bank and EVN as a framework for renewable energy source
+development, with hydropower and solar power identified as the sources with the highest growth potential .
+
+
+b. Relevance of Design:
+Relevance of project design is rated Modest . For the first project objective – enhancement of system efficiency – the
+Results Framework clearly links the project ’s activities to its expected outputs and outcomes . For the second
+objective – extension of rural electrification – the off-grid sub-component was made largely irrelevant by the rapidly
+moving grid extension. This sub-component was not properly assessed during project preparation and appeared to
+be largely Bank-driven. For the third objective – sustaining reform and institutional development – the causal linkage
+between the overly general objective and the large number of diverse and relatively limited impact interventions was
+tenuous.
+
+Since the project components included a wide range of sectoral issues (T&D, renewable energy sources, rural
+electricity access, community -based approach to off-grid electricity supply, equitization, number of sector reforms,
+etc.), it ended up being overly complex, involving a large number of implementing agencies, including those at the
+provincial level, dispersed across the country . This design approach was significantly more complex than what was
+adopted for other power projects in Vietnam .
+
+Despite similar experience obtained under previous and then -ongoing Bank-supported sector operations, the project
+design overestimated implementation capacity across the board, resulting in serious implementation delays . In
+particular, the time required to prepare and implement a large number of additional subprojects was underestimated,
+including that needed to prepare and approve feasibility studies, technical designs and procurement documents .
+Lack of technical and management capacity of some of the implementing agencies caused delays or cancellation of
+several sub-projects, especially during the early years of project implementation . For the T&D improvement
+sub-projects, there was inexperience in substation control systems, poor coordination between equipment suppliers
+and civil contractors, delays in compensation of affected persons and prolonged contracting processes . The
+applicability of the community based approach under the Remote Area Renewable Electricity component should
+have much more thoroughly assessed during project preparation . Although the Remote Area Renewable Electricity
+attempted to decentralize project implementation responsibilities to the community level, the results were generally
+poor. The communes, that were the direct beneficiaries, seemed to lack enthusiasm to assume any responsibilities
+for these facilities. After this deficiency was realized, the project switched from the community approach to a district
+approach. However, the latter, particularly the district operation & maintenance company in charge of the off -grid
+hydro plants, was still not performing as expected . Supervision mission site visits pointed to grossly deficient
+financial aspects of operation & maintenance and very poor conditions of the mini -hydro power plants newly installed
+or rehabilitated under RARE.
+
+The above discussed serious design issues were largely responsible for the fact that the project was repeatedly
+restructured and the closing date was extended three times for a cumulative period of five years .
+
+
+
+ 4. Achievement of Objectives (Efficacy):
+   PDO 1: To enhance electricity system efficiency in Vietnam . Rated Substantial . The key outputs under this
+PDO were upgrades of the 220 kV and 500 kV transmission line s and associated substations, including installation
+of capacitors to selected substations . Total length of the transmission lines upgraded and constructed was 490 km
+(a 7% contribution to the national system increase during the project implementation period of 2002-2012). Total
+capacity of the 200 kV transformers installed was 3,313 MVA (21%). Total capacity of the 500 kV transformers
+installed was 900 MVA (8%).
+
+In terms of the system efficiency data reported in the Project ICR Implementation Completion Report No . ICR2603,
+June 27, 2013 (p.v). are not entirely consistent with those received by the IEG mission from EVN and tend to
+somewhat overstate the reliability gains, especially concerning interruption duration . In 2012, at 2.33%, transmission
+losses were significantly lower than the project performance target of 3.75%. The target for the number of
+interruptions on transmission lines was overachieved . However, these key performance indicators were defined at
+the overall system level, thus cannot be directly, let alone wholly, attributed to the project . In comparison to the data
+provided in the ICR, the duration of transmission interruptions has worsened to some extent based on system level
+data provided to the IEG mission by EVN . This data is consistent with that received by the mission from the regional
+PCs.) It is noted however, that in an interconnected grid, a sophisticated SCADA system would be needed to
+measure efficiency parameters for parts of the network, and such systems are only now being developed in Vietnam .
+Meanwhile, the network-wide parameters can be accepted as a reasonable proxy for estimating the impact of the
+project activities.
+
+PDO 2: To provide electric power in selected rural areas . Rated Modest . The key outputs under this PDO aimed
+at improving rural access included upgrades of the 110 kV sub-transmission systems, rehabilitation of small hydro
+plants and development of off -grid power supply using renewable energy sources and connecting six additional
+communes to mini-grids.
+
+There were five PDO-level outcome indicators. However, three of them (number and average duration of
+interruptions at 110 kV level and distribution losses ) were measured at the national system level, thus cannot be
+directly attributed to specific project interventions . A major key performance indicator (number of new households
+electrified from commune based off-grids) fell deeply (95%) short of the target because the unanticipated rapid grid
+connections reduced the need for off -grid projects. For the same reason, the target for rehabilitation of small hydro
+power plants was underachieved by nearly one -third. Furthermore, there is a substantial risk to the operational and
+financial sustainability of the seven micro hydropower plants newly installed or rehabilitated under the project . These
+plants serving extremely poor households whose ability to pay for electricity appears to be very limited, unless the
+purchasing tariffs are increased and the operating company (Muong Te HPco) receives further financial and
+capacity-building support to improve its operational record . However, an even more powerful force undermining the
+viability of these power plants is the ongoing rapid extension of the grid to their service areas .
+
+During project supervisions, issues about the sustainability of these plants were raised in terms of insufficient
+revenue collection and working capital as well as unrealistic previous assumptions about the cost and stocks of
+spare parts. Therefore, upon project closure, it was agreed with the Bank that the Ministry of Industry and Trade and
+Lai Chau province will continue to provide adequate support to the operating company and the PPA between Muong
+Te HPco and NPC will be amended to increase the purchasing tariff thereby improving the financial position of the
+company. The support was to include also providing office, equipment, variable capital and capacity building to the
+company. However, this agreement has not been carried out and the power purchase agreement has not been
+revised, as confirmed to the IEG mission by management of Muong Te HPco . The average tariff is very low at about
+US cent 2.2/kWh equivalent. Widespread nonpayment (about 50%) is further compounding the financial hardship .
+As a result, the company has remained stuck in extremely weak financial standing, unable to provide for proper
+facility maintenance, let alone any technical modernization .
+
+The mission visited in the Muong Te district (Lai Chau province) and three micro hydropower plants and associated
+mini-grids funded under the project : Nam Si Luong (500 kW) and Ban Giang (26 kW), both rehabilitated, and Pau U
+(25 kW) newly constructed. The mission found the Nam Si Luong and Pau U facilities were in poor operating
+condition after years of neglect . In this particular case (the Pau U Company, newly constructed ), the equipment
+appeared to be inadequately maintained and in poor condition . The Ban Giang plant has been non -operational since
+grid arrival in April 2013 and has fallen into total disrepair . The mission was informed by company management that
+the Na Hu plant (27 kW, rehabilitated) has been in similar non-operational condition since 2013. The mission is of the
+view that about 10 years after their installation/rehabilitation, all of the micro hydro plants may face abandonment
+upon grid arrival, with the possible exception of the largest one (Nam Si Luong, 500 kW), which has survived the
+recent grid extension by providing of -grid power to two business customers by offering a very competitive tariff .
+However, this facility is also in poor operating condition, performing well below design capacity, and its future
+depends crucially on significant upgrades (including for grid compatibility to allow the plant to sell power into grid )
+and/or availability of off-grid customers. In discussions with GOV officials, both at the national and provincial levels,
+the mission has not seen a credible commitment to “save�? these plants by upgrading them to grid compatibility,
+thereby preventing them from halting operation and an eventual fall into disrepair . On the positive side, the mission
+has received evidence from the regional PCs that the five small on -grid hydro power plants (An Diem, Kon Dao,
+Ankroet, Chieng Dan and Thac Bay ) rehabilitated under the project are in good and sustainable operating condition .
+
+
+PDO 3: To sustain reform and institutional development of Vietnam ’s energy sector . Rated Modest . Most of the
+objectives to sustain reform and institutional development of the electricity sector were only partially achieved . Most
+important, despite a series of recent tariff increases (but only slightly above the inflation rate ) there is still no sound
+procedure of formula based tariff setting in place and electricity tariffs are still highly distorted and stand well below
+true cost recovery levels, resulting in an increasingly poor financial performance of the power sector . Establishment
+of Vietnam Competitive Generation Market, which was launched in July 2012, is a significant step forward, but it was
+inappropriate to assign the administration of this market to the regulatory agency ERAV . This assignment has only
+distracted ERAV from its core responsibility of tariff and quality -of-service regulation. Key performance indicators for
+evaluation of accounts of newly formed joint stock and equitized companies did not achieve the target as the activity
+was hardly implemented. Key performance indicators for reduction of time and complexity for PPAs to get approved
+was substantially achieved . The IEG mission was informed that the approval procedure has been streamlined on the
+basis of the non-negotiable standardized power purchase agreement and the annually updated “avoided cost tariffs�?
+– both approved by the Ministry of Industry and Trade . Evidence has been provided under the ongoing
+Bank-supported Renewable Energy Development Project where the streamlined procedure has been successfully
+applied for nine small (<30 MW) hydropower plants under construction .
+
+Global Environment Objective : To reduce greenhouse gas emissions by promoting electricity production using
+renewable energy .
+
+1.8      Outcomes . The project achieved reductions in carbon dioxide emission primarily through rehabilitation of
+on-grid hydro power plants and to a limited extent from the newly installed and rehabilitated off -grid micro-hydro
+plants. As shown in the Table below, the targeted reduction of carbon dioxide emissions was over -achieved by
+about 30%.
+
+                      Reduction of Greenhouse Gas Emissions : Status of Outcome Indicator
+
+  PDO Indicator                           Baseline Value                 Target Value                    Actual Value
+     2
+  CO emission reduced (tons)              0                              208,350-219,140                 278,164
+  Date achieved                           04/01/2005                     12/31/2007                      12/31/2012
+
+  Source: EVN
+
+
+5. Efficiency:
+  Efficiency is rated Modest . Economic analysis employed standard methodology applied in similar project
+situations and covered the full scope of the project . The project’s estimated Economic Internal Rate of Return was
+36%, which is higher than the appraisal estimate of 31%. The net present value at completion was US$ 408 million,
+which is lower than the appraisal estimate of US$ 460 million due mostly to the substantial delays in completion . The
+Financial Internal Rate of Return at completion was 25.5%, which is higher than the Financial Internal Rate of Return
+of 15% at appraisal. The financial net present value at completion was US$ 628 million versus US$274 million at
+appraisal. Project financial indicators improved since electricity prices were substantially raised during the project
+period compared to the assumption set out at appraisal .
+
+While economic and financial rates of return were acceptable upon project completion, efficiency is rated modest due
+to the project experiencing three extensions resulting in a time overrun of five years, more than doubling the
+implementation period estimated at appraisal . A significant portion of this delay can be attributed to
+procedural/approval requirements required by GOV, especially at the early stages of the project as discussed under
+“Implementation Experience�? above.
+
+
+                                                     ERR )/Financial Rate of Return (FRR)
+ a. If available, enter the Economic Rate of Return (ERR)                            FRR ) at appraisal and the
+    re -estimated value at evaluation :
+    re-
+
+                                Rate Available?                           Point Value                         Coverage/Scope*
+
+    Appraisal                       Yes                                       31%                                     74%
+
+    ICR estimate                    Yes                                       36%                                     89%
+                                        * Refers to percent of total project cost for which ERR/FRR was calculated.
+
+
+
+6. Outcome:
+   Overall project outcome is rated Moderately Unsatisfactory . The relevance of the project objectives is rated high
+given the continuing need for system efficiency improvements and further sector reforms . Relevance of project
+design is rated modest due to excessive complexity from multiple components and involvement of several
+implementing agencies that, in retrospect, were not fully justified in terms of the project objectives and outcomes .
+The first PDO of improving system efficiency was achieved to a substantial extent by meeting targeted transmission
+system losses and frequency of interruptions (although duration of interruptions has increased lately ). The second
+PDO of providing electric power in selected rural areas - an effort that was on a much smaller scale compared to that
+of improving system efficiency under the first PDO - is rated modest as key targets related renewable energy
+source-based off-grid electrification were missed by a large margin . The third PDO of sustaining reforms and
+institution building is rated modest due to a lack of demonstrated evidence of progress concerning a number of TA
+activities (e.g., Small Power Producer regulation, ERAV capacity, equitization program, road map for gas market
+reform, corporate financial management strengthening ). Efficiency is rated modest due to the project experiencing
+three extensions resulting in a time overrun of five years, for reasons that were largely under the control of the GOV .
+  a. Outcome Rating : Moderately Unsatisfactory
+
+
+7. Rationale for Risk to Development Outcome Rating:
+   The risk that the achieved development outcomes will not be sustained is rated Significant . The GOV’s
+commitment continues to be strong to follow a long -term and gradual approach to sector reforms which were
+incrementally further advanced under this operation, including development of the Vietnam Competitive Generation
+Market. However, no significant progress has been made in equitization, sound tariff and quality -of-service
+regulation. The power sector’s service reliability performance is still subpar by a large margin . The Bank has since
+remained engaged in promoting sector reforms under several ongoing operations, particularly the DPOs, aimed to
+ensure (i) sustainability of the partial reform gains achieved to date; and (ii) substantial completion of GOV’s
+gradualist reform program within a reasonable period of time .
+
+Some of the system efficiency gains (in particular, network losses) to which the project contributed in the past decade
+are considered sustainable and in fact some additional moderate improvements can be expected given the GOV ’s
+commitment to further strengthen the national networks and the Bank ’s continued strong engagement in the T&D
+sector under ongoing (Distribution Efficiency Project) and proposed operations (Transmission Efficiency Project ).
+Clearly, there is a very substantial scope for improvement in network reliability . Network loss reductions are
+expected to follow a long-term decline trajectory albeit at a much slower rate as diminishing returns have set in given
+the already relatively low level of the combined nationwide T&D losses (8.9% in 2012), which are reasonably close to
+acceptable levels.
+
+There is a high risk to the operational and financial sustainability of the micro hydropower plants installed and
+rehabilitated under the the Remote Area Renewable Electricity component . With the purchasing tariffs not increased
+and the national grid being rapidly extended to its service area, sustainability of the operating company (and its
+seven off-grid plants) is at a real and serious risk. In large part, this substantially failed component, slow progress
+with some of the sector reforms and serious concerns about the general financial standing of the power sector
+account for rating the risk as Significant that the achieved development outcomes will not be maintained .
+
+
+   a. Risk to Development Outcome Rating : Significant
+
+ 8. Assessment of Bank Performance:
+
+ a. Quality at entry:
+     The project’s conceptualization and initial design was based on recommendations of a major sector study,
+“Fueling Vietnam’s Development: New Challenges for the Energy Sector, �? Report No. 19037-VN, December
+1998. which served as a sound rationale of the Bank intervention : extend access to electricity in rural areas,
+increase efficiency in the entire energy chain, create creditworthy institutions, improve corporate governance,
+rationalize sector management, facilitate private participation and advance sector reforms through advisory
+services. However, by trying to address so many objectives, the project became too ambitious and very complex .
+Also, despite the considerable experience obtained under other Bank operations in Vietnam, the project
+overestimated implementation capacity across the board, which led to serious implementation delays . In
+particular, there was a lack of realism regarding the actual capacity of the local organizations . In retrospect, the
+growth potential for grid connected rural electrification could have been more carefully assessed and projected
+than done during project preparation thus preventing a major restructuring and associated extension of the credit
+closing date. In general, relevant important lessons learnt under a number of Bank funded power projects in
+Vietnam were not adequately internalized in the overall project design and implementation framework . The
+above-mentioned Quality at Entry issues were largely responsible for the fact that the project was repeatedly
+restructured and the losing date was extended for a total of five years .
+
+            at -Entry Rating :
+   Quality -at-                                   Moderately Unsatisfactory
+
+ b. Quality of supervision:
+    Sufficient budgetary and staff resources were allocated to project supervision . Close supervision and
+monitoring was made possible by a highly decentralized Bank team in Vietnam . The latter made strong efforts to
+adjusting project activities in a rapidly changing sector environment . Safeguards and fiduciary aspects received
+adequate attention and appropriate actions were taken in a timely manner . The mid-term review of the project
+identified weak management by Ministry of Industry and Trade ’s Project Management Board for power projects in
+rural areas. It was also found that the Bank ’s supervision of the rural and renewable energy source based
+projects in isolated remote areas needed to be strengthened . The Bank’s supervision team addressed the need
+for improvement of the economic and financial analyses of feasibility studies of sub -projects by hiring a
+consultant to assess the problems and develop guidelines and training for the implementing agencies . However,
+some problems remained and the Bank ended up approving some sub -projects with incorrect economic and
+financial analyses. Candor and quality of performance reporting was also an issue, especially during the early
+stage of the project regarding implementation delays and achievements .
+
+In the course of implementation, an already complex project became even more complex, involving an unusually
+large number of implementing agencies dispersed across the country . Under these circumstances, the Bank
+properly reacted by adopting a more programmatic approach to allow a pragmatic response to a rapidly evolving
+situation (priority sub-projects constantly changing ) in the T&D sector and by reallocating the funding to those
+activities that yielded stronger development impacts . However, since the project was restructured three times,
+indicators for cancelled activities (e.g., FMIS/MMIS) and activities with reduced relevance (e.g., off-grid mini
+hydropower) should have been cancelled or revised accordingly . PDO-level indicators that measured the whole
+national T&D system rather than the project areas should also have been revised during project restructuring .
+
+
+   Quality of Supervision Rating :               Moderately Satisfactory
+
+   Overall Bank Performance Rating :             Moderately Unsatisfactory
+
+
+9. Assessment of Borrower Performance:
+
+ a. Government Performance:
+    The GOV’s ownership and commitment to achieving the PDOs was high . It was strongly committed to
+improving the efficiency of operations of EVN and the PCs and expanding rural electrification . During
+implementation, the GOV streamlined the excessive centralization and control, and adopted more flexible
+approaches to project implementation, including delegation of investment decisions and day -to-day investment
+management to EVN and the PCs.
+
+Provision of counterpart funding was adequate . The GOV demonstrated continuing commitment by approving the
+additional financing to the project . However, the GOV showed strong reluctance to adjust power tariffs as
+required under the Credit Agreement and, therefore, the tariff covenant was later dropped . Despite recent GOV
+approved tariff increases (slightly over the inflation rate), the power sector continues to experience serious and
+growing financial difficulties with power tariffs standing well be below true cost -recovery levels. The Local
+Distribution Utilities face particularly severe financial challenges . The GOV has not made any noticeable
+progress to date in the implementation of the equitization program supported under the project ’s institutional
+development component. In the initial stages of implementation, the project suffered from excessive GOV
+centralization and control, including complex and time -consuming approval processes involving hundreds of
+subprojects and procurement actions . This was a major implementation shortcoming for a project with an
+unusually high number of sub-projects. Subsequently, this issue was addressed by the GOV through relaxing the
+centralized control by delegating more approval decisions to EVN and the PCs .
+
+   Government Performance Rating                              Moderately Unsatisfactory
+
+ b. Implementing Agency Performance:
+    The commitment of implementing agencies to achieving the PDOs was consistently strong, except for the lack
+of local community interest in off-grid micro hydropower plant schemes in remote areas due to the anticipated
+rapid grid extension. EVN and the PCs demonstrated technical and professional competence in carrying out
+project activities. Beneficiary and stakeholder consultations and involvement during project preparation were
+adequate, including implementing agencies ’ outreach to local communities and civil society organizations . The
+record in terms of implementation readiness, arrangements and capacity was mixed, especially for the
+subcomponents MIS/MMIS, the Remote Area Renewable Electricity programmed equitization of community or
+district based power utilities. However, these sub-components constituted a relatively small part of the overall
+investment operations under the project .
+
+There was a close working relationship between the implementing agencies and the Bank team and most of the
+implementation issues were openly discussed . For a number of implementing agencies and local governments
+the project was a learning experience in project implementation and management to comply with Bank policies .
+
+   Implementing Agency Performance Rating :                   Satisfactory
+
+   Overall Borrower Performance Rating :                      Moderately Unsatisfactory
+
+
+
+10. M&E Design, Implementation, & Utilization:
+
+a. M&E Design:
+    The M&E system was overdesigned and too complicated . It included sector related Country Assistance Strategy
+level indicators (e.g., power sector investment ratio of GDP ) that were not directly attributable to the project . In
+addition, there were too many (30) performance indicators. Indicators for the T&D systems were set for the entire
+national EVN national system, rather than for the parts benefiting from the project . Given the relatively small
+contribution The project’s contribution to the incremental growth of the entire EVN system during 2002-2012 was as
+follows: 220 kV transmission line: 7%, 200 kV transformers: 21%, 500 kV transformers: 8%.
+ of the project to the rapidly expanding national system, this made it difficult to assess actual project outcomes . In
+retrospect, the project should have selected indicators more directly attributable to project interventions . M&E design
+did not examine data sources, reliability and collection carefully, relying instead on reports by national and local GOV
+agencies. Data on T&D systems relied on EVN’s and the PCs’ own performance management data. However, since
+these data pertain to EVN’s entire national system, it was difficult to measure the specific contribution of the project .
+Use of the power system level key performance indicators were not specific to the subject project but also were used
+in other T&D projects such as the TDDR Project and the Second T&D Project . Data reported by the implementing
+agencies for sub-projects were also believed to be unreliable .
+
+
+
+ b. M&E Implementation:
+   During the restructurings and the AF, the M&E indicators were significantly revised : Country Assistance Strategy
+level indicators were dropped; indicators for sector reform were almost entirely modified; and those for the system
+efficiency improvement and rural electricity access components were also revised . Outcome level indicators were to
+be reported at the end of the project, except for system efficiency improvement, which required annual reporting .
+Annual or biannual reporting would have been more appropriate . All intermediate and component level indicators
+were reported quarterly, which placed a burden on GOV agencies . Clearly, the M&E arrangements were difficult to
+implement due to hundreds of sub -projects implemented by multiple implementing agencies which had not yet had
+M&E competency. However, some implementing agencies demonstrated commitment to improving M&E and
+providing requested data and compensated their capacity gap by allocating their own resources to hire consultants to
+help with data collection and analysis .
+
+ c. M&E Utilization:
+   . Despite the original design shortcomings, M&E data on project progress were utilized to inform the 2007
+restructuring and the 2010 additional financing. The data were used to inform decisions and reallocate resources .
+M&E data on T&D system are still being routinely collected after the closing of the project since these data have been
+integrated into the EVN and PCs’ own performance management. However, the Bank should have made more
+efforts during project restructurings and the AF to replace the PDO level indicators for the whole national power
+system by more relevant project -level indicators. Also, there was a lack of adequate attention to the need to follow
+up on activities for which key performance indicators and intermediate indicators were set (e.g., capacitor, corporate
+financing unit and gas market reform ) partly due to too many indicators and activities, which were changed
+frequently.
+
+M&E Quality Rating : Modest
+
+
+
+
+11. Other Issues
+
+ a. Safeguards:
+               Safeguards. The project’s environmental safeguard category was B. Safeguards triggered included
+Environmental Safeguards.
+Environmental Assessment, Natural Habitats and Forestry. Independent external monitors oversaw the
+Environmental Management Plan. At a later stage of the project, it was found that insufficient environmental
+protection measures in micro hydropower sites under the Remote Area Renewable Electricity and the T&D system
+improvement components resulted in marginally satisfactory safeguard performance, however these issues were
+resolved toward the end of the project .
+
+Social Safeguards . Indigenous Peoples and Involuntary Resettlement were triggered . A resettlement policy and
+ethnic minority framework was developed . Adequate institutional and financial arrangements for Resettlement Action
+Plan and Indigenous People Development Plan (IPDP) implementation were made. Independent external monitors
+oversaw the Resettlement Action Plan and Indigenous Peoples Development Plan implementation and provided a
+quarterly report to the Bank. At a later stage of the project, there were delays in compensation and completion of a
+resettlement plan under the the Remote Area Renewable Electricity program, but these were resolved by the end of
+the project. As with the environmental safeguards, all implementing agencies underwent a learning process .
+Overall, the project was reported to be in substantial compliance with the Bank ’s environmental and social safeguard
+policies.
+
+
+ b. Fiduciary Compliance:
+Financial Management . The project had an adequate financial management system in place to meet the Bank ’s
+fiduciary requirements. The financial management arrangements of the project were fully integrated with that of
+EVN, which made project financial management more effective . The budgeting, fund flows, staffing, accounting and
+financial reporting, internal control systems and external audit, and maintenance of supporting documents at the
+implementing agencies were generally adequate . With the exception of non-compliance with some financial
+covenants, Examples are tariff increases, financial performance ratio, carrying out time -bound action, and EVN to
+complete and incorporate a current valuation of all fixed assets . which was a sector/corporate issue rather than
+specific to the project, the implementing agencies were proactive in dealing with the recommendations by Bank
+missions.
+
+Audits were qualified since 2007 due mostly to non-compliance with a number of IFRS International Financial
+Reporting Standards (IFRS). However, the qualifications were not regarded to have a substantial impact on the
+capacity of the implementation agencies since the qualification points were on technical accounting treatments and
+disclosures pertaining to IFRS.
+
+Procurement . Overall, procurement activities appear to have been carried out in accordance with Bank guidelines .
+At early stages in the project, some implementing agencies delayed the procurement process in large part due to
+their unfamiliarity with the Bank’s procurement process, such as training packages, but also due to uncertainty
+related to the sector reform. Another delaying factor was the complex approval processes, but this was a systemic
+issue not specific to the project or the power sector . However, this situation improved over time as the implementing
+agencies learned from experience and received support from the Bank . The Bank’s oversight and close involvement
+in all phases helped to ensure the transparency and effectiveness of procurement and contributed to the
+implementing agencies’ ability to procure quality goods and services at competitive prices .
+
+
+c. Unintended Impacts (positive or negative):
+
+
+
+
+d. Other:
+
+
+
+
+12. Ratings :
+12.                                      ICR                 IEG Review                    Reason for
+                                                                                    Disagreement /Comments
+                     Outcome : Moderately              Moderately              Relevance of project design is rated
+                               Satisfactory            Unsatisfactory         modest due to excessive complexity
+                                                                              from multiple components and
+                                                                              involvement of several implementing
+                                                                              agencies. While the first PDO of
+                                                                              improving system efficiency was
+                                                                              achieved to a substantial extent, the
+                                                                              second PDO of providing electric power
+                                                                              in selected rural areas and the third
+                                                                              PDO of sustaining reforms and
+                                                                              institution building were rated modest .
+                                                                              Efficiency is rated modest due to the
+                                                                              project experiencing three extensions
+                                                                              resulting in a time overrun of five years,
+                                                                              for reasons that were largely under the
+                                                                              control of the GOV.
+         Risk to Development Moderate                  Significant             No significant progress has been
+                    Outcome :                                                 made in equitization, sound tariff and
+                                                                              quality-of-service regulation. Slow
+                                                                              progress with some of the sector
+                                                                                reforms and serious concerns about
+                                                                                the general financial standing of the
+                                                                                power sector
+           Bank Performance : Moderately                    Moderately          By trying to address several objectives,
+                              Satisfactory                  Unsatisfactory      the project became too ambitious and
+                                                                                very complex. Also, the project
+                                                                                overestimated implementation capacity
+                                                                                across the board.
+       Borrower Performance : Moderately                    Moderately          Reluctance to adjust power tariffs as
+                              Satisfactory                  Unsatisfactory      required under the Credit Agreement;
+                                                                                no noticeable progress in the
+                                                                                implementation of the equitization
+                                                                                program.
+                Quality of ICR :                            Satisfactory
+
+NOTES:
+NOTES
+- When insufficient information is provided by the Bank
+  for IEG to arrive at a clear rating, IEG will downgrade
+  the relevant ratings as warranted beginning July 1,
+  2006.
+- The "Reason for Disagreement/Comments" column
+  could cross-reference other sections of the ICR
+  Review, as appropriate.
+
+ 13. Lessons:
+   In a rapidly evolving sector environment, a de facto flexible approach should be adopted to adjust to changing
+                                                   the -ground developments . Even if the changing situation could not
+priorities as well as new institutional and on -the-
+be foreseen at the project design stage, such an approach would enable more smooth and successful
+implementation of the project . This aspect is illustrated in all three projects and particularly in the SEIER project
+where both the Bank and Borrower responded to changed circumstances through project restructuring to allow
+flexibility for investing in subprojects that took on greater priority .
+The project M&E framework should focus on identifying the direct causal links between project interventions
+and outcomes to the maximum extent possible . This is particularly important, albeit challenging, in large and
+rapidly evolving sector context in which Bank supported interventions only partially influence but do not
+determine overall outcomes . In addition to being unnecessarily complicated with too many performance
+indicators, several key outcome indicators related to improved T&D reliability and efficiency were defined at the
+national system level, which made an accurate outcome assessment for the T&D component largely impossible or
+tentative at best under the TDDR (Transmission, Distribution and Disaster Reconstruction Project ) and SEIER
+projects. While they are usually more challenging to design, in similar situations project -level indicators or
+appropriate proxies should be used for the relevant project areas .
+
+
+14. Assessment Recommended?                  Yes      No
+
+Why? This review reflects the findings of the following Project Performance Assessment for this project prepared
+on June 23, 2014.
+
+World Bank. 2014. Vietnam - Transmission, Distribution, and Disaster Reconstruction Project; Rural Energy Project;
+and System Efficiency Improvement, Equitization, and Renewables Project . Washington, DC : World Bank Group.
+http://documents.worldbank.org/curated/en/2014/06/19717147/vietnam-transmission-distribution-disaster-reconstruct
+ion-project-rural-energy-project-system-efficiency-improvement-equitization-renewables-project
+
+
+
+
+15. Comments on Quality of ICR:
+
+This is a very thorough ICR. It demonstrates a high degree of attention to detail, especially in the economic analysis .
+With this thoroughness has come an overly long exposition . A greater effort should be made to focus on what the
+author considers the most important project aspects, particularly in terms of providing evidence for the lessons
+learned. EVN installed management information systems in their operating companies using its own funds . The ICR
+does not indicate the outcomes from this program . The ICR states that a study on the implementation of an EVN
+“equitization program�? was completed in September 2006, and that the Bank continued to monitor the process of this
+program, but it does not discuss the outcome .
+
+a.Quality of ICR Rating : Satisfactory
+

DataSource/27365-ino-pcr.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:9234ed31319ea3d857ee4731b7560da5b93482a15a1c4a8f23283f3674438632
+size 5108248

DataSource/31433-phi-pcr.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:0d99624bea972d743049bfdf046f684e6970564b38aff9bd360274ed57461cf1
+size 2560187

DataSource/34100-013-pcr.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:280e1cfbca083b667127c16182c6f0dd99781df1958cc111dc618ee7be08c2cd
+size 1467381

DataSource/35139-013-pcr.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:94df7bd84d10e152b23807eb15fc4e69c63c41275bacf69e12b5b6c335f2ee39
+size 4034699

DataSource/35242-013-pcr-en.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:ebb34f822226c6f630e77bd30334460f2175ebc85f11b6334f3bce716e026900
+size 2377726

DataSource/38183-013-pcr-en.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:2aced0f1de649ae39dfa224adfe4fedc9d3e1ee2ec932352d92b826ece6c55a1
+size 2681115

DataSource/42182-013-pcr-en.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:3b3825840300778487b500d802a8f6cdcfe3cf46ca769a9cb79c975b2a3d23db
+size 4115907

DataSource/46268-002-pcr-en.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:aa111da9cc22dd5ca5d931961bc83ca5d432b576d1414118cec3db5bfdc221c1
+size 1538853

DataSource/pcr-ind-27068.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:ef120e983833eda6fc2ec15730f399ff9454a7ee65b61a55f590a64b27efddbc
+size 1804807

DataSource/pcr-phi-27231.pdf

@@ -0,0 +1,3 @@
+version https://git-lfs.github.com/spec/v1
+oid sha256:dc598fb712303f8cc9e9594282c08978f7ecbf9ea0d2e9fb7ba3842d3b8856d5
+size 1975733