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Multinational - Ruzizi III Regional Hydropower Plant Project

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    AFRICAN DEVELOPMENT BANK GROUP

    MULTINATIONAL

    RUZIZI III REGIONAL HYDROPOWER PLANT

    APPRAISAL REPORT

    ONEC DEPARTMENT December 2015

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  • TABLE OF CONTENTS

    Currency Equivalents

    Acronyms and Abbreviations

    Project Information Sheet,

    Executive Summa

    Results-Based Logical Framework and Implementation Schedule i to v

    1 STRATEGIC THRUST AND RATIONALE ............................................................... 1

    1.1 Project Linkages with Countries' Strategies and Objectives ......................................... 1

    1.2 Rationale for Bank's Involvement ................................................................................. 1

    1.3 Aid Coordination ........................................................................................................... 2

    2 PROJECT DESCRIPTION ............................................................................................ 3

    2.1 Project Description and Components ............................................................................ 3

    2.2 Technical Solutions Retained and Alternatives Explored ............................................. 3

    2.3 Project Type ................................................................................................................... 4

    2.4 Project Cost and Financing Arrangements .................................................................... 4

    2.5 Project Target Areas and Beneficiaries ......................................................................... 7

    2.6 Participatory Process...................................................................................................... 8

    2.7 Bank's Experience and Lessons Reflected in Project Design ........................................ 8

    2.8 Key Performance Indicators .......................................................................................... 8

    3 PROJECT FEASIBILITY .............................................................................................. 9

    3.1 Economic and Financial Performance ........................................................................... 9

    3.2 Environmental and Social Impacts ................................................................................ 9

    4 PROJECT IMPLEMENTATION ............................................................................... 12

    4.1 Implementation Arrangements .................................................................................... 12

    4.2 Project Monitoring ....................................................................................................... 14

    4.3 Governance .................................................................................................................. 15

    4.4 Sustainability ............................................................................................................... 15

    4.5 Risk Management ........................................................................................................ 15

    4.6 Knowledge Building .................................................................................................... 16

    5 LEGAL FRAMEWORK ............................................................................................... 16

    5.1 Legal Instrument .......................................................................................................... 16

    5.2 Conditions for Bank's Involvement ............................................................................. 16

    5.3 Compliance with Bank Policies ................................................................................... 18

    6 RECOMMENDATION ................................................................................................. 18

    ANNEX 1: Countries' Comparative Socioeconomic Indicators...I

    ANNEX 2: Tables of AfDB Portfolio in the Countries....IV

    ANNEX 3: Development Partners' Operations in the Electricity Sub-Sector in the Great Lakes

    CountriesIX

    ANNEX 4: Map of Project Area...X

    ANNEX 5: On-lending of ADF Resources...XI

    ANNEX 6: Factors of Fragility Addressed by the Project....XII

  • TABLES

    No. Title Page No. Title Page

    2.1 Project Components and Cost 3 2.5 Project Cost by Expenditure Category 6

    2.2 Project Alternatives and Reasons for

    their Rejection

    4 2.6 Expenditure Schedule by Component 6

    2.3 Estimated Cost by Component 5 3.1 Key Financial and Economic Indicators 9

    2.4 Project Sources of Financing 5 4.1 Main Project Implementation Stages 15

    2.4bis Project Sources of Financing by

    Component

    6 6

    Currency Equivalents

    October 2015 1 Unit of Account (UA) = USD 1.41

    1 Unit of Account = EUR 1.25

    1 Unit of Account = BIF 2,222.38

    1 Unit of Account = CDF 1,300.59

    1 Unit of Account = RWF 1,019.60

    Fiscal Year

    1 January - 31 December

    Weights, Units and Measures T Tonne = 1000 kg kW kilowatt = 1000 Watt

    GW Gigawatt = 1 000 000 kW or 1 000

    MW kWh kilowatt-hour = 1000 Wh

    GWh Gigawatt-hour = 1 000 MWh MVA Megawatt-ampere = 1 000 kVA or 1 000 000

    VA

    Toe Tonne of oil equivalent MW Megawatt = 1 000 000 W or 1 000 kW

    kV kilovolt = 1 000 Volt MWh Megawatt-hour = 1 000 kWh

    kVA Kilovolt-ampere = 1 000 VA tCO2 Tonne CO2 = 1000 kg of carbon gas

  • i

    Acronyms and Abbreviations

    ABAKIR Lake Kivu and Ruzizi River Basin Authority

    PC Project Company

    ADF African Development Fund PCR Project Completion Report AfDB African Development Bank PCU Project Coordination Unit

    AFD French Development Agency PIB Gross Domestic Product

    CPIA Country Policy and Institutional Assessment

    PIDA Programme for Infrastructure Development in Africa

    CSP Country Strategy Paper PIU Project Implementation Unit

    DRC Democratic Republic of Congo PPP Public-Private Partnership

    ECCAS Economic Community of Central African States

    PRSP

    II Poverty Reduction Strategy Paper

    RE Regional Envelop

    ECGLC Economic Community of the Great Lakes Countries

    RMC Regional Member Countries

    EGL Great Lakes Electricity Utility RIPS Regional Integration Policy and Strategy (RIPS)

    EIB European Investment Bank RISP East Africa Regional Integration Strategy Paper

    EPC Engineering, Procurement and

    Construction

    EU European Union RO Regional Operation GPRSP Growth and Poverty Reduction

    Strategy Paper SME Small-and-Medium-Sized Enterprises

    KfW Kreditanstalt fr Wiederaufbau tCO2 Tonne of carbon dioxide

    NELSAP

    Nile Equatorial Lakes Subsidiary

    Action Programme - Project to

    Strengthen Power Grid Inter-

    connection of Nile Equatorial Lakes

    Countries

    TFP Technical and Financial Partners TSF Transition Support Facility (formerly Fragile

    States Facility-FSF) UA Unit of Account

    PBA Performance-Based Allocation WB World Bank

  • ii

    PROJECT INFORMATION SHEET

    CLIENT INFORMATION

    Donees:

    Borrowers:

    Burundi and Democratic Republic of Congo

    Democratic Republic of Congo and Rwanda

    Executing Agency Electricit des Grands Lacs (EGL)

    FINANCING PLAN

    SOURCES Amount (UA million) INSTRUMENT

    BURUNDI DRC RWANDA TOTAL

    COUNTRY TOTAL 21 60 17.5 98.5

    ADF (PBA) 7 7 Grant

    7 7 Loan

    ADF (RE) 14 30 44 Grant

    10 10.5 20.5 Loan

    TSF (Pillar I) 15 15 Grant

    5 5 Loan

    AfDB (private sector) 35.62 Loan

    Other Donors (AFD, EIB, WB,

    KfW, EU) 238.05

    Private Partnership 71.24

    TOTAL PROJECT COST 443.40

    BURUNDI DRC RWANDA

    Type of Financing ADF Grant ADF/TSF

    Grant ADF/TAF Loan ADF Loan

    Currency UA UA UA UA

    Interest Rate Type NA(*) NA NA NA

    Interest Rate Spread NA NA NA NA

    Service Charge NA NA 0.75% / yr. 0.75% /yr.

    Commitment Fee NA NA 0.50% / an 0.50% / yr.

    Other Charges NA NA NA NA

    Maturity NA NA

    10-year grace period

    and 30 years of

    reimbursement

    10-year grace period

    and 30 years of

    reimbursement

    (*)NA: Not applicable

  • iii

    FIRR 7.84%

    FNPV USD 63.13 million

    EIRR 13.35%

    ENPV USD 36.13 million

    TIMEFRAME AND MAIN MILESTONES

    Concept Note Approval 3 September 2015

    Project Approval 16 December 2015

    Effectiveness 30 April 2016

    Closing Date 31 December 2022

    Completion 31 December 2023

    Last Reimbursement 31 December 2056

  • iv

    EXECUTIVE SUMMARY

    1. Project overview: The Ruzizi III Hydropower Plant Project which is part of the Programme for the Development of Infrastructure in Africa (PIDA) concerns Burundi, the Democratic Republic of

    Congo (DRC) and Rwanda. It entails the construction of a run-of-river dam (on the Ruzizi River

    between DRC and Rwanda downstream from the Ruzizi II hydropower dam), a 147 MW power plant

    and a distribution station. Burundis current total capacity will double, while Rwandas will increase by

    half. DRCs share will contribute to raising supply in the Eastern region currently not connected to the

    interconnected network, while also significantly reducing the percentage of energy o

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