Langue : ANGLAIS

38 Pages·2016·1.38 MB·English

AFRICAN DEVELOPMENT BANK GROUP
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PROJECT : POWER SECTOR IMPROVEMENT AND
GOVERNANCE SUPPORT PROJECT (PAGASE)

COUNTRY : DEMOCRATIC REPUBLIC OF CONGO (DRC)
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ONEC DEPARTMENT

November 2016

Translated Document
TABLE OF CONTENTS
Currency Equivalents, Acronyms and Abbreviations, Grant Information, Executive Summary,
Results-based Logical Framework and Implementation Schedule…………………….....… i to vii
1 STRATEGIC THRUST AND RATIONALE ........................................................................................... 1
1.1 PROJECT LINKAGES WITH COUNTRY STRATEGY AND OBJECTIVES ........................................................... 1
1.2 RATIONALE FOR BANK’S INVOLVEMENT .................................................................................................. 2
1.3 AID COORDINATION .................................................................................................................................. 3
2 PROJECT DESCRIPTION ....................................................................................................................... 3
2.1 PROJECT DESCRIPTION AND COMPONENTS ............................................................................................... 3
2.2 TECHNICAL SOLUTIONS RETAINED AND ALTERNATIVES EXPLORED ........................................................ 4
2.3 PROJECT TYPE ........................................................................................................................................... 5
2.4 PROJECT COSTS AND FINANCING ARRANGEMENTS ................................................................................... 5
2.5 PROJECT’S TARGET AREAS AND BENEFICIARIES ....................................................................................... 7
2.6 PARTICIPATORY PROCESS FOR PROJECT IDENTIFICATION, DESIGN AND IMPLEMENTATION ...................... 8
2.7 BANK EXPERIENCE AND LESSONS LEARNED REFLECTED IN PROJECT DESIGN.......................................... 8
2.8 KEY PERFORMANCE INDICATORS .............................................................................................................. 9
3 PROJECT FEASIBILITY ......................................................................................................................... 9
3.1 ECONOMIC AND FINANCIAL PERFORMANCE.............................................................................................. 9
3.2 ENVIRONMENTAL AND SOCIAL IMPACTS ................................................................................................ 10
4 PROJECT IMPLEMENTATION ........................................................................................................... 12
4.1 IMPLEMENTATION ARRANGEMENTS........................................................................................................ 12
4.2 PROJECT MONITORING ............................................................................................................................ 15
4.3 GOVERNANCE ......................................................................................................................................... 16
4.4 SUSTAINABILITY ..................................................................................................................................... 16
4.5 RISK MANAGEMENT ............................................................................................................................... 16
4.6 KNOWLEDGE MANAGEMENT .................................................................................................................. 17
5 LEGAL FRAMEWORK .......................................................................................................................... 17
5.1 LEGAL INSTRUMENT ............................................................................................................................... 17
5.2 CONDITIONS ASSOCIATED WITH BANK’S INTERVENTION ........................................................................ 17
5.3 COMPLIANCE WITH BANK POLICIES ........................................................................................................ 19
6 RECOMMENDATION ............................................................................................................................ 19

ANNEX 1: DRC’s Comparative Socio-Economic Indicators
ANNEX 2: Status of Bank Group’s Active Portfolio in DRC as at 31 July 2016
ANNEX 3: Development Partners’ Interventions in the Power Sub-Sector in DRC
ANNEX 4: Map of Project Area
ANNEX 5: Analysis of Key Drivers of Fragility to be taken into Consideration by the Project
ANNEX 6: Counterpart Financing Waiver

TABLES
No. Title Page No. Title Page
2.1 Project Components and Costs 3 2.5 Project Costs by Expenditure Category 6
2.2 Project Alternatives Explored and 6
4 2.6 Expenditure Schedule by Component
Reasons for Rejection
2.3 Estimated Costs by Component 5 3.1 Key Financial and Economic Indicators 9
2.4 Project Sources of Financing 5 4.1 Project’s Main Implementation Stages 15
2.4bis Project Sources of Financing by
6
Component
i
Currency Equivalents
September 2016

UA 1 = USD 1.39434
UA 1 = EUR 1.25255
UA 1 = CDF1387.77847

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 = 1,000 Wh
GWh Gigawatt hour = 1 000 MWh MVA Mega Volt Ampere = 1 000 kVA or 1 000 000 VA
Toe Tonne oil equivalent MW MegaWatt = 1 000 000 W or 1 000 kW
kV kiloVolt = 1 000 Volt MWh Mega Watt-hour = 1 000 kWh
kVA Kilo Volt Ampere = 1 000 VA tCO Tonne CO = 1000 kg of carbon gas
2 2

Acronyms and Abbreviations

ADF African Development Fund
AfDB African Development Bank
AFD French Development Agency
ANSER National Agency for Electrification and for Energy Services in Rural
and Suburban Areas
ARE Electricity Sector Regulatory Authority
CBFF Congo Basin Forest Fund
CDF Congolese Franc
CMU Project Coordination and Management Unit
CSP Country Strategy Paper
ESIA Environmental and Social Impact Assessments
ESMP Environmental and Social Management Plan
EU European Union
GPRSP Growth and Poverty Reduction Strategy Paper
MERH Ministry of Energy and Water Resources
MONUSCO United Nations Mission for Stabilization in DRC
PNSD National Strategic Development Plan (being finalized)
OPSCOM Operations Committee
PAP Government’s Priority Action Plan
PAR Project Appraisal Report
PASEL The Inga Site Development and Electricity Access Support Project
PCN Project Concept Note
PEASU Semi-Urban Drinking Water Supply and Sanitation Project
PEPUR Peri-Urban and Rural Electrification Project
PIU Project Implementation Unit
PMEDE Project for the Rehabilitation and Strengthening of the Inga Hydropower Stations and
Kinshasa Distribution Grid
PRISE Project for the Reinforcement of Socio-Economic Infrastructure in the Central Region
RAP Resettlement Action Plan
SAPMP Southern African Power Market Project
TFP Technical and Financial Partners
TSF Transition Support Facility
UA Unit of Account
WB World Bank

ii
PROJECT INFORMATION SHEET

CLIENT INFORMATION
Donee/Borrower Democratic Republic of Congo
Executing Agency Ministry of Energy and Water Resources

FINANCING PLAN
SOURCES Amount (UA million) INSTRUMENT
ADF (PBA) 4.88 Grant
ADF (PBA) 66.22 Loan
TSF 25.00 Grant
DRC Government 1.498 Counterpart funds
TOTAL PROJECT COST 97.598

FINANCIAL INFORMATION ON GRANTS AND LOAN
Type of Financing ADF Grant TSF Grant ADF Loan
Currency UC UC UA
Interest Rate Type NA(*) NA NA
Interest Rate Spread NA NA NA
Service Charge NA NA 0.75% / year
Commitment Fee NA NA 0.50% / year
Other Charges NA NA NA
10 years grace period and 30 years
Tenor NA NA
reimbursement
(*)NA: Not applicable

FIRR 13.1%
FNPV CDF 30.00 billion
EIRR 19.6%
ENPV CDF 82.19 billion

TIMEFRAME AND MAIN MILESTONES
Concept Note Approval August 2016
Project Approval December 2016
Effectiveness January 2017-April 2017
Last Disbursement December 2019
Completion 30 June 2019
Last Reimbursement 31 December 2057
iii
PROJECT SUMMARY

1. Project Overview: The Power Sector Improvement and Governance Support Project in
DRC (PAGASE) will help to improve power sector management by contributing to the effective
establishment of an institutional framework for regulation and rural electrification. It will also
contribute to the development of electricity facilities in Kinshasa and in Kasaï and Central Congo
provinces. It is consistent with the implementation of the new Power Sector Law adopted in June
2014. The project will help to foster an enabling environment for investments, promote public-
private partnerships, improve the electricity access rate and enhance quality of service to users.
The project, whose total cost is UA 97.598 million, will be implemented over a three-year period.

2. Needs Assessment: Through its different development strategies, DRC wishes to transform
the power sector into a real driver of its socio-economic development. Therefore, it has embarked
upon reforms aimed, in particular, at increasing investments in order to meet demand for electricity
which, linked to demography and urbanization, has risen sharply in relation to supply, creating chronic
supply deficits. This situation is particularly prevalent in Kinshasa, the country’s capital and main
centre for power consumption, with a population of almost 12 million people, and in Katanga province
where the shortage of electricity is impeding the development of the mining industry.

3. Bank’s Added Value: For over a decade, AfDB has been helping the DRC to develop its
energy sector. In particular, its operations have concerned electricity infrastructure which it continues
to finance. Through this operation, the Bank is supporting the DRC with regard to the sector’s
governance by establishing key institutions that will guarantee the success of the reforms. The
Regulatory Authority and Agency responsible for Rural Energy Services should play a key catalytic
role in mobilizing the financing required to significantly improve access to electricity. The Bank’s
operation will also help to build resilience and reduce the number of situations of fragility that
have characterized the country. Special attention is paid to the gender issue through the
establishment of a mechanism that will mainstream this concern in the energy sector.

4. Knowledge Management: The project is among those aimed at supporting clean energy
initiatives with a transformative effect on the economies of beneficiary regional countries, in
particular by facilitating access to electricity. The experience that will be acquired in managing
complex anchor projects in the form of public-private partnerships will speed up implementation
of the Bank’s New Energy Deal for Africa. Indeed, such experience will create opportunities for
replication especially concerning strategic themes entailing: (i) setting up the right enabling policy
environment; (ii) enhancing the capacity of power utility companies for success; (iii) significantly
increasing the number of bankable energy projects; and (iv) rolling out waves of country-wide
energy ‘turnarounds’. The Project is in keeping with the Bank’s vision for the development of
the African Energy Sector through the promotion of universal access to modern energy based on
a low carbon growth trajectory.
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RESULTS-BASED LOGICAL FRAMEWORK
POWER SECTOR IMPROVEMENT AND GOVERNANCE SUPPORT PRORECT (PAGASE)
Project Goal: Contribute to the implementation of sector reforms and the development of power infrastructure
PERFORMANCE INDICATORS
Baseline MEANS OF RISKS AND MITIGATION
RESULTS CHAIN TARGET
INDICATORS Situation VERIFICATION MEASURES
(2020)
(2016)
Reports:
T 1.1. National electricity coverage rate (coverage rate: the 15% 23%(2021) - Ministry of Energy RISKS
AC Contribute to improving the quality of life of the population in population with effective access to the service - Ministry of Finance
MP the project area (served) compared to the population of localities 1. Socio-political situation in the DRC.
I electrified) - SNEL, ARE, ANSER
1.1 Improved power service quality 1.1 Charging rate of MV/LV public cabins > 90% <75% - National Institute of 2. CMU capacity to coordinate several
ES Statistics projects at the same time.
M 1.2 Increased power supply 1.2 Additional available capacity - 30 MW
CO MITIGATION MEASURES
T
U
O 1. The ongoing peace
process in the country for several years
Component 1. Infrastructure Development
and several other factors such as: (i) the
1.1 The North Kinshasa MV/LV grid restructured 1.1 MV/LV lines/transformer stations constructed - 575/60 Reports: existence of a United Nations peace-
1.2 New connections made (km/number) - 136000
keeping mission (MONUSCO) which is
1.3 Rehabilitation studies conducted on power plants 1.2 Connections made (number) - 05 - Ministry of Energy
the world’s biggest; (ii) the ongoing
1.4 A metering system installed in Kinshasa transformer stations 1.3 Study reports available (number) - 32 - SNEL, ARE, ANSER
national dialogue to reach a consensus on
and sub-stations 1.4 Metering systems installed
electoral issues; (iii) the commitment of
Component 2 Support to Governance - National Institute of
the international community, are reasons
2.1 The main thrusts defined for restructuring of SNEL - 01 Statistics
for believing that the project’s
2.2 ARE and ANSER established 2.1 Study report available (number) - 02 -Activity status reports
implementation will not be affected by
2.3 The institutional and structural aspects of the sector’s 2.2 ARE and ANSER operational - 01 -Bank supervision reports
the socio-political situation.
S governance studied 2.3 Study report available (number) Status report on CGED 2. Recruitment of the
T 2.4 An integrated information system established - 01 activities
U consultant engineer to support the CMU in
P 2.5 Capacity of sector actors built 2.4 Integrated information system operational - 70/30 - CMU monitoring report
T its mission to control and supervise the
U Component 3. Institutional Support 2.5 Number of employees trained (men/women) - Completion report different services as well as the
O 3.1 Rehabilitation of Zongo 1 CHE as a PPP studied and defined - 01
appointment of a dedicated PAGASE
3.2 Renewable energy development projects studied 3.1 Study report available
project leader will help to mitigate this
3.3 Gender-related development activities conducted - 10
risk.
3.2 Study report available

- 01

3.3.1 Gender unit operational at MERH - 05

3.3.2 Cold rooms installed (number) - 1000/550
3.3.3 Number of people whose income has risen women
3.3.4 Number of temporary jobs created (direct and - 200 (50)
indirect) (including for women)

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1. Infrastructure Development: (i) extension of Lungudi power plant; (ii) rehabilitation of Inga 1 power plant (1 generator); (iii) installation of a metering Inputs: UA 97.28 Million (UAM)
Y system in 9 transformer stations and 23 sub-stations of SNEL; (iv) restructuring of Kinshasa MV/LV grids by strengthening and expanding the MV/LV TSF Grant : UAM 25.00
B
S T grid and installation of 60 new cabins, (v) LV recharging from 35 discharge cabins; and (vi) building the capacity of feeder posts and sub-stations. ADF (Loan and Grant) : UAM 71.10
EN 2. Governance Support: (i) definition of SNEL restructuring thrust; (ii) operationalization of ARE and ANSER; (iii) definition of an optimal structure for
ITINE the Ministry of Energy; (iv) establishment of an information system; and (v) capacity building for the Ministry; DRC Government : UAM 1.498
TIVPO 3. Institutional Support: (i) Study on rehabilitation of Zongo I CHE as PPP; (ii) Studies on renewable energy development; and (iii) gender mainstreaming Uses: UAM 7.28 (UA Million)
CM activities Component 1 : UAM 78.747 ; Component 3 : UAM 3.761
AO 4. Project Management: works control and supervision, operation of project management unit MUC
Y C
E Component 2 :UAM 7.740 ; Component 4 : UAM 7.350
K

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PROJECT IMPLEMENTATION SCHEDULE
ACTIVITIES 2 016 2 017 2 018 2 019 2 020
10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 ## 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Approval / Effectiveness
Project Approval
Signature of Financing

Agreements (grants and loan)
Financing Agreement

Effectiveness
Fulfilment of Disbursement

Conditions
Procurement (TOR, bidding

and contract signature)
Consultant Engineer
Renewable Energy

Development Studies
Zongo1 Studies
SNEL Restructuring Studies
Tariff Studies
Provincial Electrification Plan

Studies
Study on Structural Aspects of

MERH
Rehabilitation of G16
Lungudi CHE Extension
Metering System
Restructuring of Kinshasa Grid
Integrated Information System
Project Implementation
Procurement of Goods
Conduct of Studies
Rehabilitation of G16
Lungudi CHE Extension
Gender Promotion Activities
Restructuring of Kinshasa Grid
Project Supervision Mission
Supervision Missions
Project Audit
Recruitment of Auditors
Auditor Services
Completion Report
Borrower’s Report
ADF/TAF Report
vii
MANAGEMENT’S REPORT AND RECOMMENDATIONS TO THE BOARD OF
DIRECTORS ON A PROPOSED TSF GRANT, ADF GRANT AND LOAN TO THE
DEMOCRATIC REPUBLIC OF CONGO

Management herewith submits the following report and recommendations on a proposed: (i)
UA 25 million TSF Grant; (ii) UA 4.88 million ADF grant; and (iii) UA 66.22 million ADF
loan to the Democratic Republic of Congo to finance the Power Sector Improvement and
Governance Support Project.
1 STRATEGIC THRUST AND RATIONALE
1.1 Project Linkages with Country Strategy and Objectives
1.1.1 The project is aligned on the Government’s Priority Action Programme (2012-2016
PAP) and the National Strategic Development Plan (PNSD) about to be adopted. The first five
years of the PNSD will cover the 2017-2021 period. The PAP is focused on five sectors
including infrastructure, economic and administrative governance. It aims to increase power
generation and improve access to electricity. Furthermore, within the PNSD framework,
narrowing the energy gap is one of the key factors on which the country is counting in order to
accelerate its development. The project’s ultimate goal is to provide the Congolese population
and economy with clean, high quality energy. The diagram below summarizes the
Government’s power strategy - an area for which it has set a target of increasing available
capacity by 600 MW over the 2017 – 2030 period through the rehabilitation, modernization
and construction of new infrastructure, and the doubling of the electricity coverage rate from
15.2% to 30% by 2030.

Conduct of exploratory
work and technical studies

Improvement of the
sector’s institutional Development of existing Increased energy
framework and energy potential supply
governance

Mobilization of public and Development of
private capital distribution channels
The main objective of the Government’s strategy will be to: (i) improve the sector’s
institutional framework and governance (establishment of master plans and mechanisms to
regulate electricity and water supply); (ii) conduct exploratory work and technical studies (for
all forms of energy); and (iii) modernize energy infrastructure and expand its geographic
coverage, especially by constructing PLDs (development ‘bright spots’). Improved access to
energy will come from increased generation and enhancement of the power transmission and
distribution grids. It will also provide impetus to the construction of large cities, modern
administrative and commercial centres as well as business districts in both rural and urban
areas. (Source: PNSD)
1
1.1.2 The project, which aims to implement sector reforms and develop power
infrastructure, is in line with Pillar 1 of the Bank’s CSP (2013-2017) for DRC (‘Development
of private investment and regional integration support infrastructure’). It is also in keeping
with Pillar 2 of the CSP (‘building central government capacity in order to increase public
revenue and create an incentive framework for private investment’). Furthermore, it will help
to achieve the CSP’s main objective, which is to help DRC emerge from its situation of fragility
and create conditions for strong and inclusive growth driven by the emergent buoyancy of the
productive sectors.
1.1.3 In June 2014, DRC adopted a law governing the power sector which, in particular,
enshrined its liberalization by opening up the electricity market to private operators. The
targeted objectives are: (i) the creation of an environment that will encourage competitiveness;
(ii) the promotion of public–private partnerships and access to diversified sources of financing;
(iii) a higher coverage rate; and (iv) improved service quality to users. In addition, the law
provides for a new institutional architecture of the sector, which has not yet been concretized
(as is also the case with the expected impacts of SNEL’s reform embarked upon since 2010).
1.2 Rationale for Bank’s Involvement
1.2.1 The project is consistent with the Bank’s Energy Policy (approved in 2012), one of
the objectives of which is to support the efforts of regional member countries to provide all
their population and production sectors with access to modern, reliable and affordable energy
services. It is also aligned on the Bank’s Ten-Year Strategy (2013-2022), Pillar 2 of which aims
specifically to facilitate affordable access to reliable power infrastructure. The project
addresses the need to improve people’s access to power by enhancing the quality and expanding
electricity coverage in Kinshasa and conducting various electrification studies. Furthermore, it
is in line with the operational priorities of the Bank’s Ten-Year Plan in terms of infrastructure
and private sector development. It targets one particular area of interest of the aforementioned
strategy by building the capacity of a fragile State.
1.2.2 The project is aligned on the first of the High 5s, “Light up and Power Africa”. It also
plays a role in achieving the priorities related to the following: “Industrialize Africa” and
“Improve the quality of life for the people of Africa". In addition, it is consistent with the
Bank’s New Deal on Energy for Africa (2016-2025) since it covers almost all the 7 strategic
themes on which the Deal is based: (i) Setting up the right enabling policy environment;( ii)
Enabling utility companies for success; (iii) Dramatically increasing the number of bankable
energy projects; (iv) Increasing the funding pool to deliver new projects; (v) Funding ‘bottom
of the pyramid’ energy access programmes; (vi) Accelerating major regional projects and
driving integration; and (vii) Rolling out waves of country-wide energy ‘turnarounds’.
1.2.3 The project is also in keeping with the Bank’s 2014-2019 ‘Strategy for Addressing
Fragility and Building Resilience in Africa’ - Focus Area 2 (“promote resilient societies
through inclusive and equitable access to employment, basic services and shared benefits from
natural resource endowment”) of which considers equitable access to electricity as a factor
likely to strengthen the legitimacy of governments, build trust between the State and its citizens
and consolidate the peace dividends in post-crisis contexts. The analysis carried out identified
the following drivers of fragility: (i) administration’s lack of authority in the power sector; (ii)
socio-economic exclusion linked to low access to electricity; (iii) SNEL’s weak institutional
capacity; (iv) extreme poverty and high unemployment among young people, and few
opportunities for their social and vocational integration; and (v) a tense and uncertain political
situation. Details on the analysis of the factors of fragility and their consideration in the project
are presented in Annex 5.
2