APPENDICES - Global Environment Facility

152 Pages·2006·1.15 MB·English

APPENDICES
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Appendix A: Incremental Cost Analysis

Table A1
Project Outcomes Baseline Alternative Increment
Outcome 1: Investment confidence • Tea factories do not substantially invest • High quality feasibility studies (10) are • Investment confidence of investors and
established in small hydropower in attractive hydropower projects in their carried out by the Project for hydropower project developers established.
sector among investors, project vicinity and continue to use unreliable projects to supply tea factories, co-financed
developers and financing grid electricity and backup diesel with tea factories. Studies include • Investment confidence of financial
generators instead. identification of energy efficiency institutions established.
institutions
opportunities.
• The few who do invest, in response to • Investment mobilized from tea factories in
high fuel prices, design their projects • Technical backstopping is provided to feasibility studies and from factories and
with insufficient data analysis or to poor developers (as per demand) for negotiation FI’s into 6 pilot hydropower project
technical standards giving a bad name with banks, utilities, system design, investments.
to the technology. The exceptional, equipment purchase and selection of
properly done small hydro does not contractors.
replicate to other factories in the near
future. • Confidence of Financial Institutions and
insurance companies is enhanced by training
• Financial institutions lack due diligence on project due diligence and ‘Project
capacity to review hydropower loan Finance’.
applications and do not invest in small
hydro. • Study tour to Sri Lanka provides confidence
to investors and bankers that small
• Commercial banks have insufficiently hydropower can be an attractive investment
short repayment schedules. sector.

Baseline cost: 500,000 Alternative cost:23,642,000 Incremental cost: 23,142,000
GEF: 1,388,000
Private Sector: 21,500,000
TA Co-finance: 254,000
Outcome 2: Technical capacity • Engineering and construction firms in • Capacity of engineering and construction • Technical capacity of Eastern and
enhanced in EATTA countries to EATTA countries have limited firms in East Africa is enhanced through Southern African consultancy/engineering
design and construct small experience carrying out feasibility hands-on training during feasibility studies and construction firms enhanced so they
hydropower and fabricate studies, designing and constructing and project design and construction. can substantially participate in
small hydropower projects Capacity is further enhanced through construction of small hydro.
associated equipment
targeted technical training.
• Lack of technical know-how and lack of • Capability of Eastern and Southern
investment will reinforce each other into • Local equipment and component African firms enhanced to provide
inhibiting the development of the manufacturers (turbines, control systems, equipment and components to small
hydropower sector steel pipes) are trained to supply small hydropower projects. Local value-added
hydropower projects and to increase local increases significantly.
• Lack of manufacturing firms for electro- value added
mechanical and control equipments • Technology transferred to engineering
required for small hydropower plants • Partnerships are facilitated between and equipment supply firms through
international and Eastern and Southern partnerships with international firms.
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Project Outcomes Baseline Alternative Increment
• Lack of technical know-how and in- African firms for joint collaboration and Local firms able to supply faster service
house manufacturing translate to higher technology transfer to tea factory hydro.
costs of hydropower projects
• Quality standard are developed for feasibility • Quality standards available for adoption
• Repairs and maintenance of equipment studies and civil, mechanical, and electrical by the concerned authorities in the
can not be done in a timely manner components of small hydropower plants Bureau of standards, utilities and
without local expertise. This puts a Association of Engineers in EATTA

question mark on the sustainability of countries.
projects.

Baseline cost: 20,000 Alternative cost: 479,000 Incremental cost: 459,000
GEF: 259,000
Co-finance: 200,000

Outcome 3: Models in place for • Small hydropower projects do not • Hydropower developers are supported to • Models are in place for linking small
private-public participation in rural extend power to neighbouring rural apply for government or donor grants to hydropower development (through the
electrification through small communities for lack of encouraging develop a rural electrification component private sector) and financing of the rural
hydropower regulations and incentives. alongside their small hydro project electrification component through
government or donor grants (public)
• Rural electrification expands very slowly • Feasibility studies are carried out by the GEF
due to inadequate power on the national Project to determine cost-effective • Communities are mobilized for rural
grid and low returns from RE to utilities. development of RE distribution networks electrification through formation of user
alongside the small hydropower investment groups; agreements are in place for
• Innovative private-public models are not supply of power from tea factory small
developed to provide rural electrification • User group formation is supported among hydropower plants
services in a cost-effective manner. potential beneficiary communities in the four
projects and negotiations on tariff and terms

of supply for four projects are facilitated with
the tea factory

Baseline cost: 400,000 Alternative cost:3,348,000 Incremental cost:2,948,000
GEF: 388,000
TA Co-finance: 360,000
Governments: 2,200,000
Outcome 4: Regulatory • 'Light-handed' regulations including for • Light-handed regulations for licensing for • Regulatory environment made conducive
environment enabled to be licensing and environmental clearances small hydropower generation by IPPs and for to small hydropower investment by IPPs
conducive to small hydropower IPP are not in place to encourage investment small hydropower based rural electrification through drafting of light-handed
investment and rural electrification in small hydro and rural distribution development are drafted and submitted to in regulations on licensing and
four EATTA countries environmental clearance
in EATTA member countries • Existing regulations do not adequately
simplify rules for small projects with • Consultations are carried out with authorities • Rural electrification development by IPPs
minimal environmental and social and other stakeholders to arrive at supportive encouraged by formulating light handed
disruptions regulations regulations on rural distribution of power
from small hydropower based generation
• Existing regulations do not sufficiently • Study tours to South Asia and in Africa allow
encourage IPPs to carry out rural regulators and utilities to see effective • Agreement among authorities and other
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Project Outcomes Baseline Alternative Increment
electrification regulations in practice which can bring in stakeholders established for supportive
investment into for small hydro and rural regulations

electrification

Baseline cost: 40,000 Alternative cost:403,000 Incremental cost:363,000
GEF: 323,000
Co-finance: 40,000
Outcome 5: Stage set for • The process of negotiating a PPA is • Studies are carried out in five EATTA • Policy case made on the attractiveness of
uncertain and time consuming which countries on a 'viable' standard PPA for small a standard PPA for investors, utilities and
establishment of a viable ‘standard
translates to higher transaction costs for hydropower end users
PPA’ in EATTA countries for small
a small producer
hydropower • Consultations are carried out with authorities • Draft standard PPA formulated and
• Market risks and uncertainties are high and other stakeholders to arrive at a proposed to authorities in EATTA
for project developers due to the 'standard PPA' based on the study countries
uncertainty of a PPA
• Study tours to South Asia and within Africa
• Small hydropower scaling up does not for regulators and utility officials demonstrate
occur due to lack of a standard offer the value of the standard PPA to scaling up
from the utility on power purchase at a investment in small hydropower
pre-announced price
Baseline cost: nil Alternative cost:237,000 Incremental cost:237,000
GEF: 237,000
Project Coordination, including • No project management or coordination • M&E activities monitor performance and • M&E lessons applied for the effectiveness
activities will occur in the baseline outputs and document lessons learned for of the project
monitoring and evaluation (M&E)
replicability and sustainability
• Collaboration and linkages among • Sustainability of the Project charted
stakeholders non-existent or limited • Collaboration and linkages result with, through a sound Business Plan and
stakeholders, relevant programs and other integrated in the design of the activities of
GEF-funded projects the Project

Baseline cost: nil Alternative cost:359,000 Incremental cost:359,000
GEF: 259,000
Co-finance (EATTA) : 100,000
TOTAL Baseline cost: 960,000 Alternative cost:28,468,000 Incremental cost:27,508,000
GEF: 2,854,000
Co-finance: 24,654,000

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Appendix B: Project Logical Framework

Table B1
Important
Objectives and Outcomes Verifiable Indicators Sources of Verification
Assumptions/Risks

Development Goal
Development of a more
sustainable and competitive
tea industry through wider
use of climate friendly
energy options.

Project objective • $’s invested • EATTA/ National tea • World tea prices do not
Increased investment in • MW produced boards/ associations collapse
small hydropower to reduce • MWh utilized • Investors • Regulatory
energy costs in the tea • Cost of energy • Banks improvements continue
industry in • New households • Tea factories
Eastern/Southern Africa, electrified • Rural electrification
improve reliability of supply, • GHG reduced boards
increase power supply for
rural electrification, and
reduce Greenhouse Gas
emissions.

Outcome 1 • Applications for licenses • Regulators Overall investment climate
Investment confidence • Feasibility studies • EATTA/ National tea positive in the countries in
established in small completed beyond pilot boards/ associations the region
hydropower sector among • Growth rates in • Investors
investors, project investment ($s) and MWs • Banks
developers and financing • Small hydropower • Tea factories
institutions investment attractiveness • Rural electrification
spilling over to non-tea boards
sector • M&E of project

Outcome 2 • Number of competent • Directory of small hydro Sufficient interest from local
Technical capacity consultant and firms firms.
enhanced in EATTA engineering firms • M&E of project
countries to design and engaged in designing,
construct small hydropower construction, and
and fabricate associated successfully
equipment commissioning small
hydropower.
• Increasing local
manufacturing content in
small hydro installations
• Increased local value
added in SHP investment

Outcome 3 • Private sector incentives • Public announcements/ Governments committed to
Models in place for private- for investment in rural reports from RE Boards, innovative RE
public participation in rural electrification proposed to Regulators
electrification through small govt • M&E of project
hydropower • New distribution models
developed and proposed
to authorities

Outcome 4 • New ‘light handed’ • Gazettes Reform processes continue
Regulatory environment regulations proposed to • Government acts and momentum.
enabled to be conducive to relevant authorities policies
small hydropower IPP outlining a simplified • Public announcements
investment and rural process to acquire water • M&E of project
electrification in EATTA rights and licenses for
member countries generation and where
appropriate, distribution
of power
• Simple yet effective
environmental
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Important
Objectives and Outcomes Verifiable Indicators Sources of Verification
Assumptions/Risks
regulations proposed for
small hydropower

Outcome 5 • Number of countries with • Utility announcements/ Terms of PPA are practical
Stage set for establishment proposed ‘standard PPA’ reports Utility in good financial
of a viable ‘standard PPA’ for small hydropower • Electricity Regulator health
in EATTA countries for announcements
small hydropower • Ministries
• M&E of project

OUTPUTS

Outputs for Outcome 1

1.1 Ten full feasibility • Licenses received for ten • Announcement and Risk:
studies, including small hydropower reports of financing High interest rates make
detailed design, projects institutions infrastructure investment
completed for small • Ten high quality • M&E of project unattractive.
hydropower feasibility studies
demonstration projects completed Frequency of droughts not
in at least four EATTA • PPAs signed with exacerbated by climate
countries. respective utilities (where change
appropriate)
1.2 At least six small • Small hydropower
hydropower projects financing window
developed with established
commercial investment • Financial closure
from the tea industry. achieved

• Contracts signed for
1.3 Five additional pre
construction and
feasibility studies with
equipment supply
accompanying training
• Project construction
completed in remaining
completed
EATTA countries.
• Projects commissioned

• Five additional feasibility
1.4 Financing modalities
studies financed by
facilitated for small
developers
hydropower

Outputs for Outcome 2

2.1 Five Eastern/Southern • Engineering firms receive • Engineering firms records
African feasibility study and • M&E
consultancy/engineerin construction contracts
g and construction • Manufacturing firms win
firms engaged in small contracts to supply small
hydropower hydropower components
development. • Good quality work carried
out by Eastern/Southern
2.2 Two Eastern/Southern African firms
African manufacturing • Estimate of local value
firms engaged in added in small
producing components hydropower
for small hydropower. development.
• Quality standards for
2.3 Increased local value small hydropower
added in small proposed and
hydropower acknowledgement
development. received from concerned
authorities.
2.4 Quality standards for
small hydropower
formulated and
proposed to concerned
authorities in Bureau of
standards, utilities, and
Association of
Engineers in EATTA
countries.
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Important
Objectives and Outcomes Verifiable Indicators Sources of Verification
Assumptions/Risks

Outputs for Outcome 3

3.1 Two feasibility studies • Feasible studies
completed for viable available to demonstrate
models to demonstrate the viability of a small • M&E
small hydropower- hydropower based RE in
based RE project EATTA countries
electrifying • Power sales agreement
neighbouring between small
communities. hydropower developer
and community
electrification cooperative
(where appropriate).

Outputs for Outcome 4

4.1 Light-handed • Draft regulations • Public
regulations on licensing available on water rights announcements/reports
of small hydropower for small hydropower, • Official communications
generation by IPPs licensing, distribution and • M&E of project
formulated and environmental
proposed for EATTA requirements in EATTA
countries countries.
• Acknowledgment from
4.2 Light-handed authorities of draft
regulations for private regulations
sector involvement in
small hydro based rural
electrification
formulated and
proposed to authorities
in EATTA countries.

Outputs for Outcome 5

5.1 Policy case made for • Policy studies available • M&E of project
standard PPA’s demonstrating the • Reports
attractive to investors, viability of a standard • Official communication
utilities, and end users PPA for all EATTA • Stakeholder
for small hydropower member countries consultations
made in all EATTA • Acknowledgment from
countries. authorities of draft
standard PPA
5.2 Draft standard PPA
formulated and
proposed to authorities
in EATTA countries.
ACTIVITIES MEANS COST

Activities for Outputs 1.1-
1.5
• Project financing Total Cost: Six feasibility studies will
1.1 Undertake high quality expertise US$ 23,642,000 of which typically result in 3-4
feasibility studies for 10 • Feasibility study experts GEF contribution is US$ completed projects! This is
hydropower sites • Energy efficiency experts 1,388,000 a risk!
including demand • System design experts
analysis and energy • Training workshops
efficiency.

1.2 Study tours to South
Asia and within Africa
for prospective
investors and
developers.

1.3 Support in negotiating
PPA agreements with
utility and in negotiating
financial closure with
banks.
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Important
Objectives and Outcomes Verifiable Indicators Sources of Verification
Assumptions/Risks

1.4 Training on managing
risks in small
hydropower for
developers.

1.5 Develop financing
modality for small
hydropower
investments

1.6 Training on ‘project
finance’ for bankers
and insurance
companies.

1.7 Technical backstopping
(on demand) for
system design,
selection of
contractors, and
equipment purchase.

1.8 Review and conduct
quality control of (pre-)
feasibility studies
undertaken in by
prospective
developers.

MEANS COST
Activities for Outputs 2.1-
2.3

2.1 Develop quality
• Small hydropower design Total Cost:
standards for feasibility
and construction US$ 479,000 of which GEF
studies and civil,
expertise contribution is US$ 259,000
mechanical, and
• Small hydro fabrication
electrical components
expertise
of small hydropower
Training workshops
established in EATTA
countries.

2.2 Training of consulting
and construction
engineers, system
designers, surveyors.

2.3 Training and Q.C. of
local equipment and
component
manufacturers.

2.4 Facilitation of
partnerships between
international and
Eastern and Southern
African firms for joint
collaboration and
technology transfer.

2.5 Assessment of local
value added in small
hydropower
development.

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Important
Objectives and Outcomes Verifiable Indicators Sources of Verification
Assumptions/Risks
MEANS COST
Activities for Output 3.1

3.1 Feasibility studies of
local distribution • Feasibility study experts Total Cost:
network. (economists, engineers) US$ 3,348,000 of which
• Social mobilization GEF contribution is US$
expertise 388,000
3.2 Initiate negotiation of • Distribution tariff
tariff and terms of expertise
supply. Stakeholder consultation

3.3 Stimulate formation of
user groups among
potential beneficiary
communities.
MEANS COST
Activities for Output 4.1-4.2

1.1 Draft ‘light handed’
regulations for small • International, regional, & Total Cost:
hydropower national experts US$ 403,000 of which GEF
development in EATTA • Regulatory expertise contribution is US$ 323,000
countries • Facilitators
• Workshops and meetings
1.2 Consultations with
authorities and other
stakeholders to arrive
at supportive
regulations

1.3 Study tours to South
Asia and within Africa
to visit countries with
effective regulations
MEANS COST
Activities for Outputs 5.1-
5.2

5.1 Studies on a ‘viable’ • Consultants with PPA Total Cost:
standard PPA for small expertise US$ 237,000 of which GEF
hydropower in EATTA • Facilitators contribution is US$ 237,000
countries. • Workshops and meetings

5.2 Consultations with
authorities and other
stakeholders to arrive
at a ‘standard PPA’
based on study

5.3 Study tours to South
Asia and within Africa
for regulators and utility
officials to observe
impacts of standard
PPA.
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Appendix C: Response to Project Reviews

STAP Expert Review

By Maxwell Mapako

Project Number: GFL/2328-2721-PMS: GF/4010/5-
Project Title: Greening the Tea Industry in East Africa

Minor editorial details

Draft 3 of the project brief is well written and makes a persuasive case for the development of mini
hydro power for tea estates. The use of examples from countries that are comparable to those
targeted in Africa is also highly appropriate. The comments will dwell more on those points where it
was felt that important issues needed to be flagged.

There are some minor editorial issues which still need to be dealt with. Some of these are
summarized below:

(cid:123) On pages 16, 18 and elsewhere the unit GHz is used for electricity consumed. Presumably
this was meant to be GWh. This can be easily fixed with a global search and replace.

(cid:123) The heading for table 4 on page 15 does not adequately convey the contents of the table,
which contains both energy use as well as reliability data. The exact meaning of the
percentages presented for “Outages on the grid” is also not clear.

(cid:123) Commas are sometimes used as decimals and also as thousands delimiters (see for example
pages 44 and 60) while spaces are also used as thousands delimiters. This will cause
confusion.

(cid:123) Units need to be presented in accordance with the SI system. The abbreviations for meter
(m), kilo-(k) for example are not consistently written, for example in Table 9 on page 20, Km
should be km, and M should be m where it denotes meters. M is also used to denote million
under the column “Investment cost”. Cams under the “Design flow” column is presumably
meant to be m3/s.

Response: These have all been corrected in the final FSP Brief.

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