AFRICAN DEVELOPMENT BANK UGANDA UGANDA RURAL ELECTRICITY ACCESS PROJECT

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1 Public Disclosure Authorized Public Disclosure Authorized AFRICAN DEVELOPMENT BANK UGANDA UGANDA RURAL ELECTRICITY ACCESS PROJECT ONEC DEPARTMENT September 2015

2 TABLE OF CONTENTS Page I. STRATEGIC THRUST AND RATIONALE PROJECT LINKAGES WITH COUNTRY STRATEGY AND OBJECTIVES RATIONALE FOR THE BANK S INVOLVEMENT DONORS COORDINATION... 2 II. PROJECT DESCRIPTION PROJECT COMPONENTS TECHNICAL SOLUTIONS RETAINED AND OTHER ALTERNATIVES EXPLORED PROJECT TYPE PROJECT COST AND FINANCING ARRANGEMENTS PROJECT S TARGET AREA AND POPULATION PARTICIPATORY APPROACH BANK GROUP EXPERIENCE AND LESSONS REFLECTED IN PROJECT DESIGN PROJECT S PERFORMANCE INDICATORS... 8 III. PROJECT FEASIBILITY ECONOMIC AND FINANCIAL PERFORMANCE ENVIRONMENTAL AND SOCIAL IMPACTS IV. PROJECT IMPLEMENTATION IMPLEMENTATION ARRANGEMENTS PROJECT MONITORING AND EVALUATION GOVERNANCE SUSTAINABILITY RISK MANAGEMENT KNOWLEDGE BUILDING V. LEGAL FRAMEWORK LEGAL INSTRUMENT CONDITIONS ASSOCIATED WITH BANK S INTERVENTION COMPLIANCE WITH BANK POLICIES VI. RECOMMENDATION APPENDIX I: COUNTRY S COMPARATIVE SOCIOECONOMIC INDICATORS APPENDIX II: AFDB S ONGOING PORTFOLIO IN UGANDA APPENDIX III: SIMILAR PROJECTS FINANCED BY THE BANK AND OTHER DEVELOPMENT PARTNERS APPENDIX IV: MAP OF PROJECT AREA

3 CURRENCY EQUIVALENTS Exchange Rate as of April 2015 UA 1 = USD UA 1 = UGX 4, USD 1 = UGX 2, Bank s Fiscal Year 1 st January 31 st December Borrower s (Uganda) Fiscal Year 1 st July 30 th June Weights and Measures m meter KOE kilogram of oil equivalent cm centimetre = 0.01 meter kv kilovolt = 1,000 volts mm millimetre = meter KVA kilovolt ampere (1,000 VA) km kilometre = 1,000 metres KW kilowatt = 1,000 watts m² square meter GW gigawatt (1,000,000 kw or 1000 MW) cm² square centimetre MW megawatt (1,000,000 W or kw) km² square kilometre = 1,000,000 m² KWh kilowatt hour (1,000 Wh) ha hectare = 10,000 m² MWh megawatt hour (1,000 KWh) t (t) metric ton (1,000 kg) GWh gigawatt hour (1,000,000 KWh) Acronyms and Abbreviations AfDB/ADB African Development Bank MoFPED Ministry of Finance, Planning and Economic Development ADF African Development Fund MV Medium Voltage ARAP Abbreviated Resettlement Plan NDP National Development Plan CPPR CSR Country Portfolio Performance Review Corporate Social Responsibility NELSAP NEMA Nile Equatorial Lakes Subsidiary Action Programme National Environment Management Authority CSP Country Strategy Paper NFA National Forestry Authority CPAF Common Performance NORAD Norway Agency for Development Assessment Framework Cooperation DDP District Development Plan NPV Net present value DPs Development Partners O&M Operation & Maintenance EA Executing Agency PCR Project Completion Report EIRR Economic internal rate of return PDU Procurement and Disposal Unit EMDPG Energy and Minerals Development Partner Group PEFA Public Expenditure and Financial Accountability ENPV Economic net present value PFM Public Financial Management EIA Environmental Impact PIT Project Implementation Team Assessments i

4 EPC Engineering, Procurement and REA Rural Electrification Agency Construction E&S Environmental & Social REB Rural Electrification Board ERA Electricity Regulatory REF Rural Electrification Fund Authority ESAP Environmental and Social Assessment Procedures ROW Right of Way ESMF ESMP EU-AITF Environmental and Social Management Framework Environmental and Social Management Plan European Union Africa Infrastructure Trust Fund RESP SE4ALL SP Rural Electrification Strategy and Plan Sustainable Energy for All Service Providers FIRR Financial internal rate of return SPN Specific Procurement Notice FM Financial Management ST Service Territory FNPV Financial net present value STD Sexual Transmitted Diseases GDP Gross domestic product STI Sexual Transmitted Infections GNI Gross national income TA Technical Assistance GoU Government of Uganda UA Units of account HDI Human Development Index UBOS Uganda Bureau of Statistics HH Households UEDCL Uganda Electricity Distribution Company Limited HIV/AIDS Human Immuno Virus/Acquired Immuno Deficiency Syndrome UEGCL Uganda Electricity Generation Company Limited IMF International Monetary Fund UETCL Uganda Electricity Transmission Company Limited IFR Interim Financial Reports UGFO Bank s Uganda Field Office IRR Internal rate of return UGX Ugandan Shillings ISS KIS LDPG AfDB s Integrated Safeguards System Policy of 2013 Kalangala Infrastructure Services Local Development Partners Group UMEME UNRA UREAP The concessionaire distribution company for the main distribution systems in Uganda owned by UEDCL Uganda National Roads Authority Uganda Electricity Access Project LV Low Voltage USD United States Dollar M&E Monitoring and Evaluation UWA Uganda Wildlife Authority MEMD Ministry of Energy and VAT Value Added Tax Minerals Development ii

5 PROJECT INFORMATION SHEET CLIENT S INFORMATION Borrower Government of Republic of Uganda (GoU) Executing Agency Rural Electrification Agency (REA) FINANCIAL PLAN Sources Amount (USD million) Instrument ADB Sovereign guaranteed loan EU-AITF (EUR m) Technical Assistance (TA) grant and Investment Grant (IG) GoU Counterpart Fund/Equity Total Financing for project cost Loan/grant currency Loan type Interest type (Lending Rate) Base Rate Funding Cost Margin Lending spread Commitment Fees Other fees Repayment of Principal Grace period ADB s KEY FINANCIAL INFORMATION United States Dollar (USD) Enhanced Variable Spread Loan (EVSL) Base Rate + Funding Cost Margin + Lending Spread Floating Base Rate based on 6-month LIBOR with free option to fix Base Rate The 6-month adjusted average of the difference between: (i) the refinancing rate of the Bank linked to 6-month LIBOR and allocated to floating interest loans denominated in USD and (ii) 6-month LIBOR ending on 30 June and on 31 December. This spread shall apply to 6-month LIBOR which resets on 1 February and on 1 August. The Funding Cost Margin shall be determined twice per year. 60 basis points (0.6%) per annum None None Maximum 15 Years following a 5-year grace period Maximum 5 Years commencing from the date of signature of the loan agreement KEY FINANCIAL AND ECONOMIC OUTCOMES FIRR 10% EIRR ENPV@ 10% The Proposed Project 11% US$ 7.2 million 22% US$ million TIMEFRAME MAIN MILESTONES (expected) Concept Note Approval 16 March 2015 Project Approval 16 September 2015 Loan Effectiveness 28 February 2016 Last disbursement 31 December 2020 Project Completion 28 February 2019 Last repayment 31 December 2035 iii

6 PROJECT SUMMARY Project overview Project outcomes Needs assessment Bank s added value Institutional development and knowledge building The proposed Uganda Rural Electricity Access project covers five service territories (Central, Eastern, South, North-North West and North Eastern) in sixteen district areas (Nakasongola, Luweero, Alebtong, Amuria, Soroti, Mbale, Manafwa, Serere, Ngora, Bukedea, Kaliro, Luuka, Buyende, Iganga, Gulu and Nwoya) and the Bugala Island (Kalangala). The project will: (i) build about 1,147 km of medium voltage and 808 km of low-voltage distribution networks, (ii) provide last-mile connections to the grid for 58,206 rural households, 5,320 business centres and 1,474 public institutions (schools, health centres and administration offices); and (iii) procure additional connection materials, ready-boards and pre-paid energy metres to intensify the last-mile connections with 99,077 new customers near to the existing grid in already electrified rural and urban areas. Construction is expected to be implemented over a period of 21 months after EPC contract effectiveness and is to be completed by February The project s cost is estimated at USD million. The Bank finances USD 100 million from ADB sovereign window and mobilized EUR million from EU-AITF as a grant. Its beneficiaries are mainly rural Ugandans, who will gain access to reliable and affordable electricity and related improved services. The overarching goal of the proposed project is to support the long-term and short-term development strategy and plan of the Government of Uganda (GoU). The expected outcomes are (i) improved access to electricity for households, commercial centres & business enterprises and public institutions (health centres, schools and administration offices) in the proposed project areas. The project will support scaling up inclusive and green connections through: (i) supply and installation of ready-boards, for those who cannot afford housing wiring costs, targeting the most vulnerable households; and (ii) allowing households to pay the connection charges through instalments within a period negotiated and agreed with the service providers. The project will ultimately improve the livelihoods and economic opportunities in rural communities, and provide better access to social services (such as health and education). Electricity remains critical for Uganda to attain the growth trajectory and socio-economic transformation of the country s fast growing population. The limited access to electricity (14 % at the national level and about 7 % in rural areas) has affected the delivery of social services, constrained the development of small-scale industrial and commercial enterprises and adversely affected larger-scale industrial and commercial investment. To alleviate this situation, the GoU has formulated and is implementing several measures to achieve its electricity access targets: (i) the Uganda Vision access to 80 % by 2040, (ii) the National Development Plan 2015/ /20 access from 14% to 30%; and (iii) the Rural Electrification Strategy and Plan sets out a target to increase access to electricity in rural areas from 7% to 26%. The project will be an effective means by which to advance implementation of the government-led, sector-wide approach and ongoing harmonization process in the energy sector. In addition, the project will complement and benefit from the synergy with the Bank s recent interventions in the sector, specifically the interconnection of regional power grids (NELSAP Interconnection Project), the Mbarara-Nkenda & Tororo-Lira power transmission project, Bujagali hydropower plant project and Buseruka hydropower plant project. The Bank will also benefit from further consolidating its leadership role in the development of Uganda s economic infrastructure, and increase its collaboration with other financing institutions and partners that are supporting the electricity sector. The provision of an ADB sovereign guaranteed loan for the project will reinforce the Bank s cooperation with and support for the GoU s development programmes and the implementation of the pillars of the Bank s Country Strategy Paper and Energy Sector Policy. The project supports the phase-2 of the 10-year rural electrification programme (RESP-2) of Uganda. The technical assistance component included in the project will strengthen the institutional capacity of : (i) the project implementing agency (REA) in the areas of feasibility studies for future rural electrification projects, designs, monitoring and evaluation, mainstreaming gender in provision of electricity, social and environmental assessments, compensation/resettlement, procurement and contract management; and (ii) the Electricity Regulatory Authority (ERA) to conduct studies to determine the cost of service (cost structure, cost drivers, and revenue requirements that need to be reflected in appropriate tariff levels) and affordability of the tariff. Analytical knowledge building will also be promoted through the preparation of the Project Completion Report and through the Bank s participation in joint analytical work with other development partners supporting the GoU rural electrification programme. iv

7 OUTPUTS OUTCOMES IMPACT RESULTS-BASED LOGICAL FRAMEWORK Country and project name: Uganda Rural Electricity Access Project Purpose of the project : To provide electricity access and enhance economic growth in rural areas of the country RESULTS CHAIN Increased economic development and improved living standards and wellbeing in rural areas through provision of electricity services Improved access to electricity for HH s paying attention to gender equality, and priority public institutions in the project areas A. Construction of distribution networks - Construction of MV & LV distribution network in targeted rural areas - Supply of connection materials - Improved employment opportunities Indicator (including CSI) - % of population below the poverty level - % of the population below the poverty line in Rural areas - Increased % of national labour force employed - GDP Per capita - Rural areas electricity access - National level electricity access - N households (HH) connected - N of commercial centres & business enterprises connected - N public institutions connected (health centres, schools and administration offices) - N of additional customers to be connected in already electrified rural & urban areas - N O&M and indirect jobs created during operation - N direct jobs created during construction PERFORMANCE INDICATORS Baseline 2013/ % % % - $788 (after GDP rebasing) - 7% - 14% - 1,953,018 Target 2019/ % % - 79% - $1,033-22% - 30% - 58,206-5,320-1,474-99, (30% of which women) (667 semi/lowskilled), of which 198 women (20%) MEANS OF VERIFICATION - Uganda Bureau of statistics - Human Development Report - IMF Country Report - REA - ERA - MEMD s annual report and records - MEMD s annual report and records - REA and SP Annual Reports - Project progress and completion report - Project monitoring and post-evaluation reports - REA s project documents - Progress reports from REA and supervision and management consultant RISKS/MITIGATION MEASURES High connection charges and house wiring costs will be mitigated by(i) Pre-financing and installation of connection materials; (ii) installation of ready boards for households (HH s) that cannot afford house wiring; (iii) payments by instalment with service providers (SP s) for connection charges. Shortage of financing resources will be mitigated by strong government support towards financing of rural electrification programmes to achieve universal access by 2030 (SE4ALL objective). Risks associated with delay on project start-up and implementation will be mitigated by the establishment of a project Implementation Team (PIT) supported by additional staff, the supervision consultant, PIT strengthened through the provision of TA, the use of advanced contracting to accelerate the procurement process and project implementation. - Length of 33 kv MV lines - Length of kv LV lines - 1,147 km of MV lines km of LV lines - Bank supervision mission reports - Disbursement and financial reports from REA v

8 KEY ACTIVITIES Country and project name: Uganda Rural Electricity Access Project Purpose of the project : To provide electricity access and enhance economic growth in rural areas of the country RESULTS CHAIN B.Project Administration & Management - Engineering & Construction Supervision consultant - Project account & environmental audit - Reinforcement of REA s project implementation team C. Technical Assistance (TA) TA for institutional capacity strengthening of the Electricity Regulatory Authority (ERA) & REA; enhanced inhouse capacity to mainstream gender in the provision of electricity D. Implementation of ESMP and ARAP Execution of the ESMP and RAP Execution of sensitization and awareness campaigns COMPONENTS Indicator (including CSI) - N of project progress reports - N of timely environmental audit reports submitted - N of timely project account audit reports - N of additional key staff recruited - N ERA studies completed - N REA feasibility studies completed - N REA & ERA staff trained - Developed capacitybuilding programme for REA and partners to strengthen its in-house capacity to mainstream gender in the provision of electricity and developed gender action plan within REA/ERA - Sex-disaggregated impact monitoring indicators set up and incorporated in REA studies/reports - Gender sensitive project documents developed using in-house capacity - ESMP & ARAP fully executed and quarterly compliance reports submitted - N of trees planted - N of HIV/AIDS awareness and prevention and Health & Safety sessions conducted - N of sensitization campaigns on connectivity, electricity use and concerns conducted A. Construction of distribution networks B. Project administration and management C. Technical assistance and capacity building D. Implementation ESMF/ESMP and ARAP PERFORMANCE INDICATORS Baseline 2013/14-1 National Policy & gender mainstrea ming document in REA Target 2019/20-4 reports per year prepared by the supervision consultant including E&S compliance - One audit report each year, completed within six months - One environmental audit report per year during construction - 8 staff recruited - 1 study for cost of services & tariff affordability - 1 feasibility study for future REA projects - 30 staff trained at least 10 women - capacity-building programme developed and at least 70% of REA technical staff having taken part and gender action plan being implemented by REA/ERA - Implemented sexdisaggregated impact monitoring indicators in REA studies - All REA project documents are developed using a gender sensitive approach with inhouse capacity - 100% execution of ESMP & ARAP - 4 E&S compliance reports submitted p.a ,000 trees planted - Monthly sessions held for contractor workers (100% participation) and affected communities - 26 campaigns conducted and at least 58,206 HHs sensitized MEANS OF VERIFICATION - Project completion report INPUTS RISKS/MITIGATION MEASURES - Risks associated to power supply shortage to meet demand due to new connections will be mitigated by the sufficient supply of electricity from new hydro generation construction that has already begun; - Risks associated with knowledge transfer will be mitigated through in-house technical assistance with clear deliverables in specific areas of expertise. - Risk of completion delay and cost overruns will be mitigated by the hiring of experienced and reputable contractors on turnkey, fixedprice, and time-certain contracts as well as the involvement of the supervision consultant to augment project staff as needed in order to ensure delivery efficiency. - The risk of delays in resettlement and compensation process which will result in delayed handover of the way leaves will be mitigated by: (i) government ringfencing the budget for compensation; (ii) obtaining a waiver to make cash compensations A. USD million B. USD million C. USD million D. USD million Total Project cost: USD mill. vi

9 Sept. Oct. Nov. Dec. Jan. Feb. Mar. April May June July August Sept. Oct. Nov. Dec. Jan. Feb. Mar. April May June July August Sept. Oct. Nov. Dec. Jan. Feb. Mar. April May June July August Sept. Oct. Nov. Dec. Jan. Feb. Mar. PROJECT IMPLEMENTATION SCHEDULE Major Activities Loan approval Loan signature Loan effectiveness Procurement of supervision consultant Review and updating of design and bid documents Issue of SPN Bidding period Bid evaluation and contract award Contracts effectiveness and Construction implementation period vii

10 REPORT AND RECOMMENDATION OF THE MANAGEMENT TO THE BOARD OF DIRECTORS ON PROPOSED FINANCING FOR UGANDA RURAL ELECTRICITY ACCESS PROJECT Management submits the following report and recommendations on a proposed loan for USD 100 million on ADB sovereign guaranteed terms and a grant of EUR million from EU-AITF to finance the Uganda Rural Electricity Access Project. I. STRATEGIC THRUST AND RATIONALE 1.1 Project Linkages with Country Strategy and Objectives The Bank s Country Strategy Paper (CSP) for Uganda ( ) extended to 2016, seeks to support two strategic pillars: (i) infrastructure development through interventions to address the country s transport, energy and agricultural infrastructure bottlenecks, and (ii) skills and technology development by supporting the country education systems. The GoU s long term development strategy (Vision 2040) sets out a target of increasing access to electricity to 80 % in the next 30 years and the 5 year medium-term plan National Development Plan (NDP-II) 2015/ /20 focuses on increasing the percentage of the population with access to electricity from 14% to 30% as the key means to achieving the objective of increasing the stock and quality of strategic infrastructure to accelerate the country s competitiveness. In addition, the GoU s 10 year ( ) Rural Electrification Strategy and Plan (RESP-2) sets out a target to increase access to electricity in rural areas from 7% to 26% Uganda has registered some improvement in economic performance. Still, electricity remains critical for Uganda to attain the growth trajectory and socio-economic transformation of its fast-growing population. High energy costs, coupled with unreliable supply contributed to the high cost of doing business, thereby reducing the country s competitiveness. The limited access to electricity (14% at the national level and 7% in rural areas) and the high cost of electricity services has affected delivery of social services in rural areas, constrained the development of small-scale enterprises and adversely affected larger-scale industrial and commercial investments in the country. In order to address these challenges, the GoU has formulated a wide ranging set of policy measures (i) increasing electricity supply through investing in renewable energy and pursuing improvements in energy efficiency measures, (ii) building resilience of the energy sector supply system, (iii) implementing tariff adjustments, (iv) improving monitoring of sector entities, (v) developing the institutional framework and capacity of the key sector institutions; and (vi) implementing a new RESP The proposed Uganda Rural Electricity Access Project is a direct response to one of the four key development objectives called for in the NDP-II Increase the Stock and Quality of Strategic Infrastructure to Accelerate the Country s Competitiveness though increasing the percentage of the population with access to electricity (disaggregated by region). The project is part of the RESP-2 of the GoU. The proposed project is also consistent with the Bank s energy sector policy approved in October 2012, which centres on promoting energy security and increasing access to affordable and reliable energy services. The project is also aligned with the primary objectives of the Sustainable Energy for All (SE4ALL) initiative that promotes universal access to modern energy services, which Uganda participates in. 1

11 1.1.4 The proposed project is in line with the infrastructure development pillar of the extended CSP for Uganda, which had specifically listed support to rural electrification (grid extension in the North, East, Central and Lira-Gulu areas) under the Bank Group Indicative Assistance Program The extended CSP is in line with the country s long-term development strategy (vision 2040) and its medium-term NDP-II plan, in which energy is a key strategic development sector. 1.2 Rationale for the Bank s Involvement Access to electricity is a necessary precondition for achieving development goals that extend far beyond the energy sector, such as poverty eradication, access to clean water, improvement in public health and education, women's empowerment and increasing food production. The current 7% access rate to electricity in rural Uganda is hampering economic development, entrenching inequality and impeding the improvement of livelihoods. To alleviate this situation, the GoU has given priority to investment of infrastructure development in the energy sector, and particularly in rural electrification. The Bank has indicated its willingness to support the sector in line with its CSP for Uganda and the GoU s policy on division of labour amongst different financing institutions and partners. The proposed project is in harmony with both the GoU s long and medium terms development strategies and the Bank s operational strategy in Uganda, as per the CSP and the Bank s energy sector policy The proposed project is in line with one of the operational priorities of the Bank s tenyear strategy ( ), being infrastructure development, which aims at promoting the development of sustainable energy infrastructure to address the key constraints hindering economic transformation: the energy deficits in the countries, low energy access and high tariffs. The Bank s intervention under the proposed project is part of the broader programme of RESP in Uganda which, among other goals, aims to contribute to an improvement in the energy sector infrastructure services in rural areas and boost commercial and industrial activities, increase productivity, generate employment, eradicate rural poverty, improve access to social services and reduce rural-urban inequality, and catalyse the achievement of Uganda s Vision 2040 goal of attaining middle-income status by The project will provide an effective means to advance implementation of the government-led, sector-wide approach and ongoing harmonization process in the electricity sector In addition, the project will complement and benefit from the synergy with the Bank s recent interventions in the sector, specifically the interconnection of regional power grids (NELSAP Interconnection Project), the Mbarara - Nkenda & Tororo - Lira power transmission project, Bujagali hydropower plant project and Buseruka hydropower plant project. The Bank will also benefit from further consolidating its leadership role in the development of Uganda s economic infrastructure, and increase its collaboration with other financing institutions and partners that are supporting the electricity sector. 1.3 Donors Coordination Uganda s foreign aid coordination and harmonization mechanisms are structured along thematic sector working groups. Development partners (DPs) cover almost all sectors and their total commitments for each year accounts for about 18.2% of Uganda s national budget. The Bank is well-positioned in the effective coordination of DP working groups, which it does through the overall leadership of the Local DPs Group (LDPG), comprising of the Heads of Diplomatic Missions and chaired by the World Bank (WB). The Bank is active 2

12 in the LDPG and chaired the Water and Sanitation DP working group as well as the DP Economist working group during the CSP implementation period. Implementation of the RESP-2 is expected to cost about USD 952 million and DPs have pledged contributions totalling USD 377 million, including the Bank s contribution for the proposed project With respect to the energy sector, DP coordination is done through the Energy and Minerals Development Partner Group (EMDPG) 1 currently chaired by the Government of Germany. There is a continuous dialogue between the GoU and DPs to ensure that results and outcomes are achieved in line with the agreed targets. GoU and DPs also undertake monthly joint Energy and Minerals Sector Working Group meetings and annual Joint Sector Reviews with participation of public sector stakeholders and DPs to provide a platform to discuss financing, institutional and implementation issues in the sector. The Bank actively participates in all the sector coordination activities. The proposed project will provide an effective means to advance the implementation of the government-led energy sector working group and ongoing DP harmonization processes in the electricity sector. II. PROJECT DESCRIPTION The project s main development objective is to provide reliable and affordable electricity to rural Ugandan households, public infrastructure services (schools, health centres, and administration offices) and small and medium scale enterprises. The project will expand the grid medium voltage (MV) and low voltage (LV) distribution networks spread over five service territories (ST) in 16 district areas and provide last-mile connections to households, public infrastructure and small and medium enterprises. In addition, it includes construction of a 7 km long submarine cable to the Bugala Island from the national grid and procurement of connection materials, ready-boards and pre-paid energy metres to intensify the last-mile connections for 99,077 new customers near to the existing grid in already electrified rural and urban areas that do not require grid extension. 2.1 Project Components The project has four main components: (A) Grid extension and last-mile connections through construction of distribution networks, (B) Project Administration and Management, (C) Technical Assistance and Capacity Building; and (D) Environmental and Social Management. N A) Component Name Grid Extension & last-mile connection Est. Cost (USD m) Table 2.1: Project components Component Description Construction of 1,147 km of 33 kv distribution lines, 808 km of low voltage (0.415 kv) networks and connecting 58,206 households, 1,474 public institutions (schools, health centres and administration offices) and 5,320 small and medium scale enterprises in rural areas to the grid Construction of a 7 km long of submarine cable to supply the Bugala Island from the national grid and to supply surplus power from the island solar-diesel hybrid generators to the national grid Supply of connection materials, ready-boards and pre-paid metres to intensify the last-mile connections for 99,077 new customers near to the existing grid in already electrified rural and urban areas that don t 1 The active DPs partners in the EMDPG are the WB, AfDB, French Development Agency (AFD), United Nations Development Programme (UNDP), KfW/GIZ, Government of Germany, Government of Norway, Japanese International Cooperation Agency (JICA), European Union (EU), and the United States Agency for International Development (USAID). 3

13 N Component Name Est. Cost (USD m) require grid extension. B) Project Administration and Management B1 Consultancy Services for Project Supervision and Management B2 Audit Services B3 C) D) Project Administration Technical Assistance and Capacity Building Environmental and Social Management Component Description Review and update of designs, specifications and bid documents, assisting in the bidding process, supervision of construction activities, review and approve contractor s/supplier s designs; and supervision of the implementation of Environmental and Social Management Framework (ESMF) and the Environmental and Social Management Plan (ESMP) Electricity danger sensitization programme for newly connected households Annual technical and financial audit services for the project account and environmental audit The project implementation team will be reinforced through recruitment of additional staff (electrical engineers, accountant, a procurement officer, environmentalist, social expert, way-leaves officer, outreach officers). Capacity building to REA to strengthen institutional planning, designs, monitoring and evaluation, mainstreaming gender in provision of electricity, social and environmental assessments and compensation/resettlement, procurement and contract management Technical assistance to the Electricity Regulatory Authority (ERA) to strengthen the institution to determine the cost of service (cost structure, cost drivers, and revenue requirements that need to be reflected in appropriate tariff levels) and affordability of the tariff Feasibility studies for future rural electrification projects Implementation of ESMP, ESMF and Abbreviated Resettlement Action Plan (ARAP) Cooperate social responsibility (tree replanting in the project areas) 2.2 Technical Solutions Retained and Other Alternatives Explored The project aims to expand the grid through construction of MV and LV distribution networks and to connect households, small and medium scale enterprises, public institutions (health centres, schools, water supply facilities and trading centres). The best off-grid option for decentralized electrification (diesel, micro hydro, or solar photovoltaic) was compared with the national grid expansion option. In the selected project areas, the small-scale generation (stand-alone mini-grids), to some extent the unavailability of resources (solar intensity, wind and water resources), and the costs are higher than for grid expansion. The diesel generator mini-grid option is not in line with one of the Government s RESP-2 objectives, which is that the rural electricity access should fundamentally take into account the aim of offering electricity service to rural consumers at the lowest possible cost and will not make electricity more affordable for customers. In addition, the diesel generator mini-grid option is not in line with one of the three primary objectives of SE4ALL, which is doubling the share of renewable energy in the global energy mix. Table 2.2: Project alternatives considered and reasons for rejection Alternative Brief description Reason for rejection Off-grid, mini-grid solutions Sizable off-grid micro hydro development or diesel generators to provide power to rural villages and towns. Limited availability of hydro sites and insufficient solar intensity for large scale solar PV and wind in some of the project areas. Consequences would include higher investment cost for construction and longer implementation time. The renewable off-grid solutions costs are higher compared

14 Alternative Brief description Reason for rejection 2.3 Project Type Renewable off-grid installations (solar photo-voltaic systems, wind, mini hydro). to grid connection, severe capacity and electricity storage constraints limits the benefits of electrification, particularly for health centres. In addition, maintenance poses a severe challenge, making off-grid a rather temporary solution. The use of diesel generators would lead to increased electricity costs and negative CO 2 emissions. The proposed project is part of the GoU s ten year rural electrification programme (RESP-2) to expand access to electricity, and is a standalone project that will be financed through an ADB sovereign guaranteed loan blended with EU-AITF grants mobilized through the Bank. The project will extend the national grid for last-mile connections, and is aimed at increasing access to electricity in rural areas of Uganda. In addition, the project constructs a 7 km long submarine cable to supply the Bugala Island from the national grid and to supply surplus power from the island solar-diesel hybrid generation to the national grid. 2.4 Project Cost and Financing Arrangements The total project cost, including physical and price contingencies and excluding all taxes, duties, levies, and VAT in Uganda, is estimated to be USD million, comprising foreign exchange costs of USD and local costs of USD million. Table 2.3 presents the foreign and local currency project cost by component. ` Table 2.3: Project Cost by Component Component USD million Foreign costs Local costs Total A) Grid Extension & last-mile connections B) Project Administration and Management B1) Project Supervision and Management B2) Audit Services B3) Operating Expenses C) Technical Assistance and Capacity Building D) ESMP /ESMF/ARAP and tree replanting Total Project Cost The Bank finances 82.37% (USD 100 m) of the total financial requirement, the EU- AITF Technical Assistance and Investment Grants finances 9.92% (USD m) and the GoU will provide 7.71% (USD m). The relatively low counterpart fund is due to: (i) the project s contribution of the GoU will be above 7.71% since all local taxes for all works, goods and services will be paid by the GoU (ii) the implementation of RESP-2 requires USD 952 million in total and the secured financing from DPs is around 29% and this will cause GoU to mobilize budget resources should sufficient financing not be available from DPs, (iii) ADF allocation has been reduced under the ADF-13 replenishment cycle and the available ADF resources were insufficient to cover all the pipeline projects in Uganda. Ideally rural electrification should have concessional financing; (iv) GoU has committed to achieve a 26% electricity access in 2022 from the current 7%, and (v) GoU s overall budget for Fiscal Year 2015/16 is USD 8.0 billion; of which 15% is devoted to energy sector, which is only exceeded by transport (18%) and this shows the priority assigned to the energy sector. The debt level 5

15 has increased to a Nominal Debt to GDP Ratio of 29.9% on account of large infrastructure projects; but Uganda s Debt Service to Revenue at 9.1%, remains sound. To reduce the GoU s financial burden in this project, the Bank s contribution has been increased. See Technical Annex B The sources of financing of the project are illustrated in Table 2.4. The Bank s financing will be used to cover 86.04% of the total foreign cost and 73.35% of local costs of the project excluding all taxes, duties, levies, and VAT in Uganda. The EU-AITF grant will be used to cover 13.96% of the total foreign costs. Table 2.4: Sources of Financing for Foreign and Local costs USD million Sources % of total Foreign costs Local costs Total ADB sovereign guaranteed loan % EU-AITF Grant % Government of Uganda % Total project cost % Table 2.5: Project Cost by Category of Expenditure Category of expenditure USD million % foreign F/C L/C Total costs Works Grid Extension & last-mile connection % Goods Supply of connection materials, ready boards & energy metres % Services Project Supervision and Management % Technical Assistance and Capacity Building % Audit Service % Operating costs Project Administration and Operating Expenses % Others ESMP / ESMF/ ARAP and tree replanting % Total project cost % The Bank s financing expenditure schedule by component is provided in Table 2.6. Table 2.6: Expenditure Schedule by Component (ADB and EU-AITF) Expenditure per year (USD million) Component Total Grid Extension & last-mile connection Project Administration and Management Technical Assistance and Capacity Building Total Cumulative Project s Target Area and Population The key project beneficiaries will be an estimated 58,206 rural households living within five STs (central, Eastern, South, North-North West and North Eastern) in 16 district areas (Nakasongola, Luweero, Alebtong, Amuria, Soroti, Mbale, Manafwa, Serere, Ngora, Bukedea, Kaliro, Luuka, Buyende, Iganga, Gulu, Nwoya and Bugala Island) representing 6

16 around 279,389 people 2. The households and businesses in Bugala Island (Kalangala) will benefit by getting reliable power supply from the grid. The public institutions and businesses in these district areas will be significantly improved, as the project will provide access to modern, reliable energy to 5,320 business centres and 1,474 public institutions (schools, health centres and administration offices). Finally, markets, business centres, and other major consumers will be given priority in the routing as per the programme design. It is therefore expected that the project will improve livelihoods, economic opportunities in rural communities, better the access to social services (health, education) including maternity facilities, relieve women and children from in-house pollution coming from to use of fuel wood and charcoal, reduce inequalities between urban and rural areas and benefit small-scale businesses and the few large commercial and industrial clients in the areas. The project will also supply connection materials, ready-boards and pre-paid meters for 99,077 new customers near to the existing grid in already electrified rural and urban areas that don t require grid extension. 2.6 Participatory Approach There was intensive consultation amongst DPs during the preparation of the GoU s ten year RESP and on the investment prospectus. The GoU and DPs had discussions in July 2013 and support for the rural electricity programme was reaffirmed In the framework of specific activities related to this project, consultations were conducted with communities, potentially affected people, civil society, and key sector and local administrative officials during the preparation of the ESMF and ESMP. The stakeholders and beneficiaries of the project were identified after undertaking literature reviews and preliminary consultations. The stakeholders consulted included District Local Government Officials (District Environment Officers, District Production Officers, District Engineers, Chief Administrative Officers, District Planners and District Engineers) officials from MEMD, National Environment Management Authority (NEMA), Uganda National Roads Authority (UNRA), National Forestry Authority (NFA), and Uganda Wildlife Authority (UWA) and local communities among others. The stakeholders raised some concerns which are reflected in the ESMF but overall there was broad-based community support for the project. REA will undertake additional stakeholder consultations throughout the design and implementation stages of the project. Overall, stakeholder consultations are a continuous activity throughout the life of the project. REA will also put in place a Stakeholder Engagement Plan (SEP) in order to guide their engagement activities and facilitate reporting. 2.7 Bank Group Experience and Lessons Reflected in Project Design As at the end of May 2015, the Bank s portfolio comprised 17 operations (see Appendix II). These included 15 sovereign loans and 4 grant operations, amounting to a commitment of UA million. The Bank s portfolio distribution by sector shows that infrastructure (energy, transport, water and sanitation) accounts for % of the total commitment, followed by agriculture, 17.85% and human development (social), 28.87%. The Country Portfolio Performance Review (CPPR of 2013) clearly demonstrated that the portfolio performance has improved since 2011, with an improvement in the overall rating of 2.5 in 2012 to 2.66 in There has also been remarkable improvement in the disbursement rate, from 44.29% in 2012 to 46% in There were no problematic or potentially problematic projects as at the end of May The active sovereign portfolio has an average age of 4.85 years with no aging projects. 2 Estimated 4.8 people per household in rural area as per Uganda Bureau of Statistics (UBOS)

17 2.7.2 The AfDB s preparation and appraisal of the proposed project has incorporated lessons learned from the Bank s ongoing operations and past interventions in Uganda, as well as other DPs interventions in the rural electrification programme, particularly in the first phase of RESP. The lessons learned from the Bank s ongoing operations and past interventions, as well as other DPs interventions are detailed in Annex B1. The lessons learned from the Bank s ongoing operations and past interventions in Uganda and from other DPs interventions in the first phase of RESP for the period of 2001 to 2012 relate to: (i) acquisition of way-leaves prior to project implementation to avoid delay in handing over of sites to contractors, (ii) project start-up and implementation delays due to ineffective institutional arrangements, insufficient staffing and delays in fulfilling the conditions precedent to loan effectiveness and to the first disbursement, (iii) delays in procurement processes and poor design of project supervision service contracts due to a lack of expertise and insufficient staffing of the executing agencies, (iv) high level of contract variations arising from incomplete needs assessments and designs; and (v) poor contractors and supervision consultant performances The design of the proposed project takes these lessons into account by: (i) taking appropriate actions in the compensation of project affected people to avoid delays in implementing the project due to compensation and resettlement issues, (ii) assigning a specific project implementation team (PIT) by staffing through the project resources, (iii) strengthening the procurement capacity of REA through training on Bank procurement guidelines and procedures, (iv) project supervision and management consultant involvement to ensure the preparation and submission of good quality bid documents and evaluation reports; (v) providing technical assistance and capacity building training in the relevant areas, (vi) the Bank will do a thorough review on the Terms of Reference and Request for Proposals for recruitment of a supervision consultant and qualification criteria for evaluation of contractors/bidders proposals, (vii) The bidding documents should clearly define the needs, and designs and realistic completion time, and establishing a system for contract management and monitoring jointly between the procurement unit and the PIT; and (viii) carrying out regular Bank supervision missions The proposed project incorporates good international practices and experience in several essential ways: (i) the RESP-2 is formulated on a concept of area coverage for the entire country ensures access for all to cover the entire country; 13 service territories were established so that no one is left out. This approach is in line with experience in other countries; and (ii) accountability for increasing on-grid access established, which enforces accountability for each service provider in their respective service territories to increase access for on-grid connections. 2.8 Project s Performance Indicators The key deliverables and outcome indicators of the project are: Access: 58,206 households, 5,320 business centres (commercial centres & industries) and 1,474 public institutions (schools, health centres and administration offices) connected to the national electricity grid by constructing: (i) 1,147 km of MV distribution lines and (ii) 808 km of LV networks. Additional 99,077 new connections within 3-years after project completion. Quality: Sustained reliability of electricity supply for existing and new consumers in Bugala Island (Kalangala) by constructing 7 km of submarine cable to supply from the national grid. Consumers are suffering from power interruption from the solar-diesel hybrid plant due to the low power factor in the island. 8

18 In-house capacity: (i) increased number of staff trained and improved rural electrification project planning and design preparation, as well as an improved financial management system, procurement handling, environmental and social safeguards implementation and improved capacity to mainstream gender in the provision of electricity in the executing agency; and (ii) established institutional capacity within ERA to carry out the cost of service and affordability of tariff studies in the future REA will have the primary responsibility for tracking the project s key performance indicators, using data from the contractors, the supervision consultant, the service providers and other project stakeholders. Statistics reports produced by ERA and MEMD will verify the performance indicators. The progress during implementation will be measured by the timely commencement of the work, regular disbursements, consultations with the Project Management Teams, timely submission of quarterly progress reports and implementation of the ESMP/ESMF/ARAP, and annual audit reports. After completion of the project, its effectiveness will be assessed via monitoring of productive use of electricity in the targeted project areas, which will be done in close cooperation with the concerned government organizations. MoFPED will play its role of monitoring the developing impact and evaluation. After project closing, the connections to be carried out by Service Providers (SPs) within the first 3 years after commissioning of the project, will be monitored and ensured by REA, as REA has entered into Lease Agreements with all SPs that clearly articulate performance targets of individual SPs and rights and obligations of the parties involved The technical assistance component will provide capacity development and know-how to strengthen in-house capacity for preparation of project planning and design documents, feasibility study, proper financial management and procurement handling for REA. For ERA it will provide for the preparation of cost of services and affordability of tariff studies and for building the in-house capacity for future revision of these studies in order to accurately determine the generation, transmission, distribution and end user tariffs. The source of data to confirm these indicators will be time-to-time assessments of the effectiveness of the technical assistance. This effectiveness will be monitored, after completion of the project, through the quality of future rural electrification projects and documents prepared by REA and revised cost of services studies prepared by ERA. III. PROJECT FEASIBILITY 3.1 Economic and Financial Performance The Bank and REA jointly developed the project s financial model, basing it primarily on data from the project technical feasibility studies conducted by the consultants for each district. In order to determine the impact of the proposed investment, the model adopts an incremental analysis, which entails comparing the with the project scenario to the without the project scenario The results of the analysis show that the project is financially sustainable and economically viable. Its financial internal rate of return (FIRR) is estimated at 11% (real) while the financial net present value (FNPV) discounted at a real rate of 10% is USD 7.2 million. These figures were obtained on the basis of electricity tariffs on the ERA website of UGX per KWh charged to domestic consumers (UGX 150 for the first 15 units), UGX charged to commercial consumers and UGX charged to small industries, respectively. 9

19 3.1.3 The economic benefits of the project are computed by considering the willingness-topay of the targeted end users. According to the data available from the technical feasibility studies, the total amount spent by non-electrified households on energy-related expenses is UGX 32,000 (around USD 12) per month. The studies provide an average consumption of 60 kwh per month for non-electrified households, given an energy cost of UGX 532/kWh (around USD 0.19/kWh). The project will yield an economic internal rate of return (EIRR) of 22% (real) and an economic net present value (ENPV) discounted at the opportunity cost of capital of 10% (real), estimated at USD million The main financial and economic results are summarized in Table 3.1 below. The detailed calculations and assumptions are presented in Annex B7. Table 3.1: Key Financial and Economic Results Base case FIRR (%, real) 11% FNPV real, million USD) 7.2 million EIRR (%, real) 22% ENPV real, million USD) A sensitivity analysis was also performed against the key risk variables of the project to test the robustness of its financial and economic cash flows. The key risks tested include an increase in investment costs, an increase in operating costs, and a reduction in revenues. The results of the sensitivity analysis show that the economic results are robust under adverse conditions. Details of the financial and economic analysis, as well as the sensitivity analysis, are provided in Annex B Environmental and Social Impacts Environment The project has been classified as Category-2 type in accordance with the AfDB s Integrated Safeguards System (ISS) Policy and the Environmental and Social Assessment Procedures (ESAP) of 2014 because no major adverse environmental and social impacts are expected to arise but during implementation there would be potential small scale, localized and short-term environmental and social impacts that will be mitigated. Most of the expected impacts will be minimal as the project will intervene in distribution and supply line networks and will not pass through any sensitive areas nor will it result in physical displacement of people. To a large extent, the project facilities will run along existing community access and feeder road reserves hence; no resettlement is anticipated. Though the preliminary designs and line routing have been completed, the detailed designs and final routing shall be determined during project implementation. The tools deemed most suitable for the environmental and social assessment and management of the project are the Environmental and Social Management Framework (ESMF) and the Environmental and Social Management Plan (ESMP). The ESMF and ESMP summaries were posted on the Bank s website since 29 June 2015 for a period of 30 days prior to the presentation of the project to the Board Mitigation Measures Though the project has large positive impacts, it is anticipated that the project will trigger some limited potential negative impacts which will include; soil erosion arising from excavations for pole foundations and this will be mitigated by compaction of loose soil surfaces. Possible disruption of traffic flow along the roads during project implementation will be mitigated by 10

20 working with traffic police who will guide traffic. There will also be some spot losses of sections of roadside vegetation which can be reduced through adopting designs that avoid thick vegetation areas and where necessary, limited compensation for some affected roadside trees. Other concerns will include management of construction waste such as conductor wire off-cuts which the contractor will collect and dispose in designated areas outside the project areas. The project will provide Personal Protective Equipment (PPE) for the health and safety of the workers. On HIV/AIDS and Sexually Transmitted Infections (STI)/Sexual Transmitted Diseases (STDs) concerns for the workers and the nearby communities, this is to be addressed through sensitization of workers on HIV/AIDS and provision of condoms and voluntary counselling and testing (VCT) which is to be done by nearby health units in the project areas under project arrangements. Potential oil spills from transformers will be mitigated by ensuring that the transformers are prepared and set, ready for installation, before transportation to the site. Acquisition of temporary camp sites will be secured directly by the contractors from the land owners under agreed terms and the sites are to be fully restored at the close of the project. Overall, the project will have minimal environmental and social impacts which will be mitigated through implementation of measures outlined in the ESMP Climate Change One of the positive impacts of the project relates to its potential provision of alternate source of energy for cooking and lighting especially at domestic and institution levels in schools and health facilities (e.g. energy for sterilization of medical equipment and laboratory based operations) which to a small scale, will reduce reliance on fire wood and charcoal in the rural areas. However, other anticipated climate change aspects of the project relate to potential flooding of the wetland areas and intense storms and hotter temperatures during the dry seasons which will affect stability of the poles and power distribution lines. To mitigate these, REA ensures electricity distribution wires are strung in such a way that allows for their contraction and expansion due to heat and temperature changes without breaking. On the other hand, the stability of power distribution poles in areas prone to flooding, especially wetlands, is to be guaranteed and compacting gravel around the poles for purposes of stabilizing them. In some sections of wetland areas, electricity distribution poles are placed in plastic drums which form part of their foundations and later filled with gravel and compacted. To avoid damage from seasonal fires, the Right of Ways (RoWs) are routinely maintained through periodic and systematic vegetation cutting and tree trimming. On the other hand, through REA s CSR programme, it is expected that some 110,000 trees planted will planted under then project Gender Uganda has a GII 3 value of 0.529, ranking it 115 out of 149 countries in the 2013 index. The longer term objective of the project will be to contribute to addressing the identified challenges through increasing energy access to public institutions such as health centres, schools and market places and ensuring that the project adopts a gender sensitive lens to its design. For instance, energy is a critical enabler for vital primary health care services, especially during maternal and childbirth emergencies. Electricity is needed for basic lighting, 3 The Gender Inequality Index (GII) reflects gender-based inequalities in three dimensions reproductive health, empowerment, and economic activity. Reproductive health is measured by maternal mortality and adolescent birth rates; empowerment is measured by the share of parliamentary seats held by women and attainment in secondary and higher education by each gender; and economic activity is measured by the labor market participation rate for women and men. The GII can be interpreted as the loss in human development due to inequality between female and male achievements in the three GII dimensions. 11

21 vaccine storage, access to clean water, equipment sterilization, and to power other essential equipment. Energy access to schools will allow students the option of attending class in the evening potentially increasing school enrolment and it will also allow schools to put in place Information Technology (IT) labs for the students, this is expected to encourage and prepare students for secondary and potentially higher education REA has considerable commitment and informal capacity on gender in place. REA has partnered with NORAD and ENERGIA, the International Network on Gender & Sustainable Energy, to prepare a gender mainstreaming strategy for rural electrification projects. REA has put in place a Gender Focal Team and has an employment ratio of 55% women and 45% men, of these, 29% of women are at management level while 71% are men. To date, REA has achieved the commitment of senior decision-makers to gender mainstreaming; integration of gender in six rural electrification projects; established a Gender Task Team for further gender mainstreaming support; increased awareness of gender issues through workshops with REA staff, contractors and civil society partners; and shared experience with other energy agencies in Uganda and with international networks. REA attempts to increase access by specifically targeting women and men with different promotional messages for connections, according to their energy needs, media access, and household decision making, considers subsidies, pre-payment cards, and ready-boards as a means of increasing access for women and has committed to providing connections to social infrastructure such as health clinics and water pumping stations for free In order to ensure that gender dimensions are considered already during the design stages of REA projects, REA typically engages gender focal points in the stakeholder engagement process, these focal points are placed in the various regions and form a part of the gender network established by the Ministry of Gender, Labour and Social Development. Furthermore, the project intends to set aside a budget specifically for gender-targeted activities and will support REA in achieving some of its key milestones set out in its gender mainstreaming strategy. The following activities have been identified and will subsequently shape the social and gender components of the project, namely, under the capacity building component a provision has been made for gender training for board, management and staff by supporting the development of a capacity-building programme for REA, to strengthen the capacity within REA to mainstream gender in the provision of electricity. The project also intends to support REA in setting up sex-disaggregated impact monitoring indicators within a comprehensive monitoring system. Further details are provided in Technical Annex B Social Uganda s Gini coefficient is 44.3 (where 0 expresses perfect equality and 1 expresses maximal inequality) and Human Development Indicator (HDI) value for 2013 is 0.484, which is in the low human development category, positioning the country at 164 out of 187 countries and territories. Between 1980 and 2013, Uganda s HDI value increased from to 0.484, an increase of 65% or an average annual increase of about 1.53%. Uganda s 2013 HDI of is below the average of for countries in the low human development group and below the average of for countries in Sub-Saharan Africa. HIV prevalence among ages is 7.2% and infant mortality rate (per 1000 live births) is The top 4 causes of death in Uganda in 2010 were HIV 17%, Malaria 12%, Lower Respiratory infections 7% and Tuberculosis 5%. 5 4 URL: 5 URL: 12

22 The project is expected to directly influence the quality of life in the rural areas through improvements in health service delivery, quality of education, safety of drinking water, sanitation and general improvement of livelihoods. Furthermore, the project is expected to enhance HIV/AIDS awareness of the rural population and also the construction workers through HIV/AIDS awareness campaigns that will be held on a regular basis. Since the majority of the rural people are engaged in subsistence agriculture, rural electrification will be critical in value addition for agricultural produce. Type of settlements may also change over time from being scattered to linear as people will shift to staying near power supply sources. The type of structures which are largely temporary and semi-permanent may transform to permanent as a result of rural electrification REA has also established a pro-poor scheme that allows vulnerable households to access power connection for payment on instalment terms within an agreed timeframe based on vulnerability criteria and ready-boards are provided as an option for more affordable connections. Feasibility studies indicated that there is an overall willingness to pay for electricity in the rural areas of intervention. Details are provided in Technical Annex B Involuntary Resettlement The project is not envisaged to trigger relocation of people, however, it is expected that a number of people will be affected in terms of loss of crops and fruit trees along the RoW which is estimated to be 10 metres wide. The estimated number of people to be affected, if at all, shall be determined when the final line route has been established by the contractor. The nature of distribution lines is such that social impacts are much less compared to transmission lines, and that in most cases the line routes will be within the road reserves of existing community and district feeder roads. In addition, much of the impacts that may befall the populations are linked to crops and trees which could easily be mitigated. Thus, in the event that people are affected by the project, the applicable resettlement action plans in accordance with the Bank s ISS will be developed prior to commencement of distribution lines/networks construction works in such section(s). IV. PROJECT IMPLEMENTATION 4.1 Implementation Arrangements Institutional Arrangements: The borrower of the proposed ADB sovereign guaranteed loan will be the GoU through its MoFPED. For the purpose of implementing the national rural electrification programme, the GoU has established REA as a semi-autonomous Agency under the MEMD through Statutory Instruction No.75 to facilitate projects implementation regardless of the source of funding. Accordingly, the executing agency for the proposed project will be REA, which reports to MEMD. MEMD provides policy guidance and oversight for the Rural Electrification Programme. REA will be primarily responsible for facilitating, monitoring, evaluating, and reporting on project activities and progress. In assessing the capacity of REA, it is noted that REA has gained technical and managerial experience through implementation the RESP-1 projects. However, as per the current organizational setup of REA, some of the required key project staff is not within one work unit, which means it requires cross-work unit coordination and this affects the timely availability of staff. REA s Project Development & Management Department is managing all projects regardless of the source of funding and faces a huge challenge to control, monitor, and supervise the projects as required and as RESP-2 involves several projects; further 13

23 strengthening of the existing staff for the proposed project implementation is needed. For the proposed project, the PIT will be established within the Department, comprising sufficient staff to run the project. REA will submit the Curriculum Vitae of one environmentalist, one procurement specialist, one social expert, two electrical engineers, one way-leave officer, five outreach officers, and one accountant to be assigned to the project for the Bank s approval. The profiles of the staff members are given in Annex B.3. The project team will be assisted by Engineering and Construction Supervision Consultant procured under this project that will review and update the designs, technical specifications and bid documents, assist during the bid evaluation, review and approve the contractor s detailed engineering design, and supervise and monitor the project implementation, including the ESMP/ESMF and ARAP. REA will be responsible for compiling and transmitting quarterly progress reports including the implementation of ARAP and annual financial and audit reports to the Bank. REA s organizational chart and the project implementation arrangements are detailed in Annex B Procurement Arrangements: All procurement of goods and works through International Competitive Bidding (ICB) and acquisition of consulting services financed by the Bank will be in accordance with the Bank's Procurement Rules and Procedures: Rules and Procedures for Procurement of Goods and Works, and Rules and Procedures for the Use of consultants both dated May 2008 and revised July 2012, using the relevant Bank Standard Bidding Documents and Request for Proposals. Procurement of Goods and acquisition of consulting Services financed by EU-AITF grant will be in accordance with the resolution adopted in July 2010 (ADB/BD/WP/2010/113/Approved) by Board of Directors of the Bank extending the procurement eligibility for operations financed with the resources of the Trust Fund. Procurement of goods and works through National Competitive Bidding (NCB) will be in accordance with national procurement procedures using the national Standard Bidding Documents, and the provisions stipulated in the Financing Agreement signed between the Bank and the Government of Uganda. The Executing Agency has prepared the project Procurement Plan for the Bank s approval. The Government has requested the use of Advance Contracting procedures for design review and construction supervision as well as for the EPC contracts, as a way of limiting project start delays. REA will be responsible for the procurement of works, goods and services financed by the project through the Project Implementing Team of the Project Development & Management Department. The resources, capacity, expertise and experience of the REA have been assessed and found to be adequate to carry out the procurement activities required for the project. Meanwhile, given that the REA manages all projects, regardless of the source of funding, and faces a huge workload challenge, technical assistance will be provided in order to strengthen its capacity. Toward the same, the Bank will organize regular training on Bank s Procurement Rules and Procedures Financial Management: In line with Paris Declaration on Aid Effectiveness and Accra Agenda for Action, the Project will to a large extent make use of the country s financial management systems. The day to day financial management of the Project will be as per the rules and procedures stipulated in REA s Financial Policies and Procedures Manual. REA s Manager for Project Development and Management assisted by the Manager Finance and Administration will be responsible for the overall Financial Management function of the Project. REA has experience in managing donor funded projects having worked with other Development Partners like the World Bank, JICA, SIDA and NORAD. However, it was noted that REA has as of now not yet implemented any AfDB-funded project. There will, therefore, be a need to second/recruit a Project Accountant by REA with relevant qualifications and experience to facilitate the financial transactions of the Project. The Project will prepare and 14

24 submit quarterly reports (financial and physical) to the Bank and the Ministry of Finance within 45 days after the end of each quarter. REA s internal audit department will include the Project financial transactions in their annual work programme. Detailed financial management arrangements and assessments are included in the Technical Annex B Disbursement: The project shall mainly apply two (2) of the four (4) disbursement methods of the Bank as set out in the Disbursement Manual. These will be the Special Account (SA) and Direct payment methods. The project will operate one foreign special account (USD) into which the proceeds of the loan will be deposited and further to a local currency special account. Both accounts will be opened at the Bank of Uganda. An initial disbursement will be deposited in the project SA in foreign currency based on a six month cash flow forecast for the project and based on the agreed work plan approved by the Bank through the initial Withdrawal Application to the Bank after the effectiveness of the loan. Actual expenditures will be replenished through submission of Withdrawal Applications supported by Statements of Expenditures (SOE) while the direct payment method will be used for equipment, supplies and services payments (including audit and consultancy). All disbursements from the EU-AITF financing will be made in EURO. The Bank s Disbursement Letter will be issued stipulating key disbursement procedures and practices. A detailed analysis of disbursement is provided in Annex B Audit: The project s annual financial statements will be audited annually by the Office of the Auditor General or an independent external auditor acceptable to the Bank. The audit report, complete with a Management Letter, will be submitted to the Bank not later than six months after the end of the financial year. The cost of the audit will be borne by the project. A detailed analysis of audit is provided in Annex B Project Monitoring and Evaluation The monitoring and evaluation arrangements of the proposed project activities will be undertaken by REA as mandated in RESP-2. REA will provide regular reporting and liaison with the Bank for all financial, procurement, fiduciary, safeguard and project implementation matters. REA will have the responsibility to supply current data on the set of agreed performance indicators at least: (i) on an annual basis for project outcome indicators, (ii) on a quarterly basis for performance targets based on the output of each component of the project and propose corrective actions; and (iii) on an annual basis for audit reports. These reports shall cover all aspects of project implementation, including the status of progress against agreed implementation and disbursement schedules for all components; implementation of environmental and social mitigation measures; and the status of fulfilment of the loan conditions. The audit report will be prepared by the Office of the Auditor General and once it is cleared by REA management, REA submits to the Bank. Through the Bank s supervision missions - at least twice a year - and reviews of annual audit reports, the Bank will closely monitor project implementation. In addition, gender analysis will be an integral part of implementation, monitoring and evaluation of all project activities The Bank will undertake a mid-term review of the project approximately 24 months after the effectiveness of the loan. The execution of the ESMP/ESMF and ARAP will also be monitored during all stages of the project by REA and through the Bank s supervision missions. The supervision consultant shall also prepare and submit to REA and the Bank final commissioning reports at the completion of its assignment. Within six months of the completion of the project, the Bank, together with REA, will prepare a Project Completion Report (PCR). 15

25 4.3 Governance As REA will be the implementing agency for the project, the Executive Director of REA shall be the Accounting Officer in relation to the accountability of resources entrusted for the project s operations. He shall designate the managers for Project Development and Management and Finance and Administration to undertake the day-to-day management of the project. The Bank, MoFPED and MEMD will provide oversight during the life of the project. All the Anti-Corruption measures that pertain to REA and the Government will apply to this project. 4.4 Sustainability The project is technically, economically, and financially sustainable as described in the following key factors: Government commitment to the project and programme. The GoU s commitment to RESP-2 and to its objective is strong, and is anchored by targets of the NDP-2 to increase the national access to electricity from 14% to 30% and the Uganda Vision 2040 to increase the national access to electricity to 80%. The proposed project, which is part of the GoU rural electrification ten year programme, will provide and improve access to modern, reliable and cost effective electricity services to households, businesses and priority public institutions as per the GoU s commitment Development partners commitment to the programme. The commitment of DPs is positive and was found strong in the implementation of the first phase of the programme for the period of 2001 to For the RESP-2 the DPs have expressed their intent to provide additional financing, and up to USD 277 million is already pledged, excluding the Bank s financing for the proposed project Affordability of tariff, connection charges and the financial viability of the Service Providers (SPs). The Rural Electrification Board (REB) has entered into lease agreements with 5 SPs for 7 STs out of 13 STs, with clear roles and responsibilities. The 5 STs are run by the Uganda Electricity Distribution Company Limited (UEDCL) under management contracts. UMEME and WENRECO are SPs with concessional agreements with GoU. To ensure the financial viability of SPs, and at the end of the rural electrification programme, the tariff needs to be set at a level that recovers operating costs along with connection charges and needs to be affordable for the rural population. The GoU through RESP-2 has mandated ERA to determine and approve electricity pricing taking into consideration the operating costs of each SP including systems operations and administrative expenses, approved capital expenditure recovery through depreciation allowance, financing costs and/or established rate of capital return corresponding to investments made by the SPs. Under guidance from REA, SPs are preparing new tariff proposals for review and approval by ERA. One of the subcomponents of the technical assistance component under the proposed project is design to strengthen the in-house capacity of ERA to carry out the cost of service studies to determine the electricity pricing and this will help in the long-term to continuously revise the tariff. The current tariff is affordable for most of rural unconnected households in Uganda. The major barrier to electricity access in rural areas is the upfront cost of connection charges and the house wiring, rather than the tariff affordability. The connection charge is mitigated by relieving the poor households from upfront payment giving provision to them to pay the connection charges through instalments within a period negotiated (via an easy instalment plan payable on the monthly electricity bill). The project uses the ready boards for those poor households that cannot afford internal house wiring costs. (See Technical Annex A.3). 16

26 4.4.5 Project technical design. All the technologies applied in the project have been widely used in other countries with similar conditions and in the region. The proposed project will use existing distribution standards and technical requirements in Uganda, which are based on international standards and best practice; adapted for conditions prevailing in Uganda. The distribution networks are also based on standard off-the-shelf equipment and proven technologies, making the project significantly immune to technological risks. 4.5 Risk Management The RESP-2 and the proposed project involve some degree of risk at the implementation level and during the life of the facilities (after project completion). The major risks and mitigation measures are discussed in Table 4.1 below. The overall risk to achieving the development objectives is assessed as low to moderate and supervision missions will monitor progress in implementing the mitigation measures. (The ratings are: L: Low, M: Moderate, H: High.) Table 4.1: Risk and Mitigation Measures Risk Risk description Rating Mitigation Risks at implementation level of RESP-2 and the proposed project Political risk M and stakeholders Completion delay and cost overrun a) Borrower relations: Political interference in the prioritization and selection of areas for grid extension leading to non-viable investments & GoU s target of 26% for rural electrification by 2022 unlikely to be met. b) Partner relations: There may be a lack of harmonization between the various DPs involved in the sector. c) Inter-agency cooperation: A lack of clarity of roles and responsibilities of various government agencies may impede on harmonized implementation. Risk of completion delay and/or that the cost of the project might escalate during implementation. L a) (i) REA has established Rural Electrification Master Plan which provides a prioritized guideline for extending access. (ii) REA in its RESP-2 has established out 13 service territories to cover all the country and ensure no one will be left out from the programme. (iii) RESP-2 is complementing with selected off-grid electrification wherever it is more cost-effective than grid connection. b) (i) Strengthen the Energy Sector Working group and REA to take leadership in streamlining DP support to the rural electrification programme. (ii) Sector oversight will be enhanced through the strengthening of the Sector Working Group c) (i) Continue with the current implementation arrangements, where the REA is responsible for implementation with guidance from MEMD. (ii) Strengthening the capacity of SPs in terms of finance and technical support Meticulous preparation of design and technical specifications, as well as evaluation and qualification requirements, should ensure minimum variance in costs. Selection of experienced and reputable contractors and equipment suppliers through international competitive bidding process with fixed price and time bounded contracts will minimize delays in completion. Selection and employment of experienced project supervision consultant to augment project staff will ensure project s delivery efficiency. 17

27 Risk Risk description Rating Mitigation Delay on procurement and contract implementation Unaffordability for connection charges and house wiring expenses Environmental and social Delay on Financial and Audit reports a) The risk associated with delay on starting and the long procurement process time due to limited human resources in REA will delay project implementation b) Inadequate contract management will result in delayed project implementation & potential loss of value. There is a risk that poor households cannot afford connection charges and house wiring expenses which results in not achieving the targets of connections. The project is classified as environmental Category II. There are risks of weak and slow implementation of the ARAPs prior to construction works due to insufficient resources and staffing available for safeguards implementation. There is a risk of delays in resettlement and compensation process which will result in delayed handover of the way leaves. There is a risk for late submission of project financial and audit reports, due to lack of follow up as the audit is normally done by Office of Auditor General. Risks after completion of the project Inadequate power supply to meet demand stemming from new connections There is a risk associated with rapid increase of demand from the households and other when accelerating the expansion of on-grid electricity services and delay of ongoing power generation projects. M L M M L Implementation of the advance contracting/procurement option. Selection of an experienced project management and supervision consultant to review and update the designs, specifications and biding documents. Hiring additional technical staff for the project to support procurement and contract management and complementing these with design and supervision consultants. The proposed project envisages the supply and installation of ready board units for the poor households. REA is giving provision to the households to pay the connection charges through instalments within a period negotiated and agreed with the service providers. The project unit capacity and staffing constraints will be enhanced with two additional safeguard staff (one social specialist and one environmental specialist) and 1 way leave officer and 1 outreach officer who will be largely involved in compensation and community engagement with Bank funding, to ensure that there is sufficient capacity for close implementation monitoring and reporting of all environmental and social issues including safeguards (ESMF/ESMP and ARAP). During project launching and throughout project implementation, the Bank s team will provide sufficient training and support on Bank s safeguard policies and requirements. As a mitigation measure, the government will prioritize the budget for compensation and obtains a waiver to make cash compensations. Advance procurement of way-leave consultant Bank s supervision missions will monitor progress in implementing mitigation measures. As this problem is recorded on the ongoing Bank s operation in Uganda, the Bank will continuously dialogue with the Borrower (MoFPED). In regard to overloading of networks, currently the government is conducting integrated network development plan study based on the 15 year load forecast to identify possible bottleneck areas. The study will recommend upgrading and extension of networks. The increased demand will be mitigated by the timely completion of the new hydropower generation projects (Karuma and Isimba) that began its construction. 18

28 Risk Risk description Rating Mitigation SPs capacity and technical risks a) Weak implementation capacity of SPs will result in slow implementation that will constrain the scale-up of connections. b) Lack of long-term maintenance will result in poor sustainability of investments, reversing gains made by the electrification programme. L Appropriate capacity building programmes for SPs are underway financed by World Bank and REA. This includes in Inventory Management, purchase of machinery and tools for operation and maintenance. Continuous human resource development on operational and maintenance activities supported by development partners through RESP-2. The grid extension investments will be operated and maintained by several SPs under agreed performance targets included in the O&M contracts. Operator performance will be monitored and supervised by the Regulator (ERA) under their license obligations. 4.6 Knowledge Building The knowledge transfer mechanism, especially on project management and supervision, is important to build the in-house capacity of REA, as it will manage several similar future projects to meet the government s access targets. During implementation of the project, the captured knowledge will be monitored during Bank supervision missions, in quality and time assessments of the procurement process, and in audit reports The project s activities will support REA s management of feasibility studies for future rural electrification projects and training. Capacity building will support REA s project planning, preparation of feasibility studies, and design and technical specifications. This inhouse knowledge building will enable REA to prepare projects on time and ensure quality at entry to DPs for future projects. In addition, the TA activity will support ERA for the conduct of cost of service studies. These components will, in the short to medium term, reduce the technical and capacity risks. V. LEGAL FRAMEWORK 5.1 Legal Instrument The legal instrument to be used for financing of the project is an ADB loan to the Republic of Uganda. 5.2 Conditions Associated with Bank s Intervention Conditions Precedent to Entry into Force The entry into force of the Loan Agreement shall be subject to the fulfilment by the Borrower of the provisions of Section of the General Conditions Applicable to Loans and Guarantee Agreements of the ADB Conditions precedent to first disbursement The first disbursement of the loan shall be subject to Borrower having submitted to the Bank, (i) A Subsidiary Financing Agreement for on-granting the proceeds of the loan to REA; 19

29 (ii) Opening of a foreign currency denominated Special Account and a designated Special Account for local currency in the Bank of Uganda for receipt of part of the proceeds of the Loan (Paragraph here above); Other Conditions (i) Submission of Specific ESMPs for each section of the Project prior to the commencement of distribution lines/networks construction of works in such section; (ii) Actual compensation of PAPs (if any) as well as any persons whose assets such as trees and crops may be damaged during Project implementation, in accordance with the Bank s Policy on Involuntary Resettlement, the RAP or ARAP for the Project (if applicable) and the Specific ESMPs for any given section(s) of the Project, prior to commencement of distribution lines/networks construction works in such section(s); Undertakings (i) Recruitment of key personnel for the REA Project Implementation Team (1 Procurement Officer, 1 Environmentalist, 2 Electrical Engineers, 1 Accountant, 1 Social Specialist, 1 Way-leave Officer and 5 Outreach Officers) within 6 months following the first disbursement of the Loan; and (ii) Conclusion, not later than 3 months prior to commissioning of the sub-marine cable connecting Bugala Island to the national grid, of an agreement or other satisfactory arrangement between relevant Government Agencies and Kalangala Infrastructure Services Limited (KISL) concerning KISL s role following the connection of the island to the national grid. 5.3 Compliance with Bank Policies This project complies with all applicable Bank policies. In particular, it is consistent with the Bank s Energy Sector Policy, approved in October 2012 and Diversifying the Bank s Products to provide Eligible ADF-Only Countries Access to the ADB Sovereign Window approved in May The Board approved Uganda s request for ADB public sector financing in 2014 in connection with the Uganda Markets and Agricultural Trade Improvement Programme (MATIP-2) Project in accordance with the Bank s Credit Policy, as at 2014, following a Credit Risk Committee (CRC) decision that Uganda was sufficiently creditworthy, had a Low Risk of Debt Distress classification and was within its non-concessional borrowing limit. There has subsequently been no major change in Uganda s macroeconomic and debt outlook that would invalidate the original assessment provided in the Information Note to the Board in VI. RECOMMENDATION Management recommends that the Board of Directors approve the proposed loan to the Republic of Uganda for an amount not exceeding USD 100 million on ADB sovereign guaranteed loan terms and the EU-AITF Technical Assistance and Investment grants for an amount not exceeding EUR million subject to the conditions stipulated in this report, the Loan and Grant Agreements. 20

30 Appendix I: Country s Comparative Socioeconomic Indicators Indicator Year Uganda Africa Basic Indicators Developing Countries Developed Countries Area ('000 Km²) , , ,658.4 Total Population (millions) , , ,068.7 Urban Population (% of Total) Population Density (per Km²) GNI per Capita (US $) , , ,688.1 Labor Force Participation - Total (%) Labor Force Participation - Female (%) Gender -Related Development Index Value Human Develop. Index (Rank among 169 countries) Popul. Living Below $ 1 a Day (% of Population) GNI per Capita (US $) Uganda Africa Demographic Indicators Population Growth Rate - Total (%) Population Growth Rate - Urban (%) Population < 15 years (%) Population >= 65 years (%) Dependency Ratio (%) Sex Ratio (per 100 female) Female Population years (% of total population) Life Expectancy at Birth - Total (years) Life Expectancy at Birth - Female (years) Crude Birth Rate (per 1,000) Crude Death Rate (per 1,000) Infant Mortality Rate (per 1,000) Child Mortality Rate (per 1,000) Total Fertility Rate (per woman) Maternal Mortality Rate (per 100,000) Women Using Contraception (%) ,5 3 2,5 2 1,5 1 0,5 0 Population Growth Rate - Total (%) Uganda Africa Health & Nutrition Indicators Physicians (per 100,000 people) Nurses (per 100,000 people)* Births attended by Trained Health Personnel (%) Access to Safe Water (% of Population) Access to Health Services (% of Population) Access to Sanitation (% of Population) Percent. of Adults (aged 15-49) Living with HIV/AIDS Incidence of Tuberculosis (per 100,000) Child Immunization Against Tuberculosis (%) Child Immunization Against Measles (%) Underweight Children (% of children under 5 years) Daily Calorie Supply per Capita , , , ,284.7 Public Expenditure on Health (as % of GDP) Access to Safe Water (% of Population) Uganda Africa Education Indicators Gross Enrolment Ratio (%) Primary School - Total Primary School - Female Secondary School - Total Secondary School - Female Primary School Female Teaching Staff (% of Total) Adult Literacy Rate - Total (%) Adult Literacy Rate - Male (%) Adult Literacy Rate - Female (%) Percentage of GDP Spent on Education Environmental Indicators Land Use (Arable Land as % of Total Land Area) Annual Rate of Deforestation (%) Annual Rate of Reforestation (%) Uganda Africa Per Capita CO2 Emissions (metric tons) Sources : ADB Statistics Department Databases; World Bank: World Development Indicators Last update: April 2015 UNAIDS; UNSD; WHO, UNICEF, WRI, UNDP; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available Secondary School - Total I

31 No. A. AGRICULTURE Appendix II: AfDB s Ongoing Portfolio in Uganda Sector and project name Community Agricultural Infrastructure Improvement Programme- Project II Markets and Agricultural Trade Improvement (MATIIP) Community Agricultural Infrastructure Improvement Programme III Type of Instrument ADF Loan ADF Loan ADF Loan Total amount (Million UA) % disb. as of May 2015 Approval date % 17/09/ % 25/03/ % 03/05/2011 Total Approvals % B. TRANSPORT 4 Road Sector Support Project 2 (Fort portal ADF Loan Bundibugyo Rd) (103KM) and Grant % 17/12/ Road Sector Support Project 3( Nyakahaita Ibanda Rd)(143KM) ADF Loan % 25/09/ Road Sector Project 4 ( Kigumbba Masindi Rd) 135 KM ADF Loan % 13/03/2013 Total Approvals % C. WATER & SANITATION 7 Kampala Sanitation Project ADF Loan % 16/12/ Kawempe Urban Poor and Sanitation Improvement Project ADF Grant % 04/01/ Water Supply and sanitation programme ADF Loan and Grant % 05/10/2011 Total Approvals % D. SOCIAL 10 Rehabilitation of Mulago and KCC Clinics ADF Loan % 06/07/ Support to Post Primary Education and Training Project (Education IV) ADF Loan % 25/11/ Education V Project (HEST) ADF Loan % 21/11/ Rural Income and Employment Enhancement Project ADF Loan % 17/11/2009 Total Approvals % E. ENERGY 14 Bujagali Transmission Interconnection Project ADF Loan % 28/06/ Mbarara-Nkenda/Tororo-Lira Transmission Lines Project ADF Loan % 16/12/2008 Total Approvals % F. MULTI NATIONAL PROJECT 16 NELSAP ADF Loan and Grant % 27/11/ Lake Victoria Water Supply and Sanitation programme phase II ADF Grant % 17/12/2010 Total Approvals % GRAND TOTAL % II

32 Appendix III: Similar Projects Financed by the Bank and Other Development Partners Country/Agency Sector Project Government of Norway Government of Norway BADEA/SFD WB JICA OPEC Fund for International Development (OFID) Islamic Development Bank (IDB) Islamic Development Bank (IDB) French Development Agency GPOBA, KfW, EU & GoU Abu Dhabi Fund for Development WB (IDA & GEF) Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Rural Electrification Implementation of two rural electrification projects Implementation of six rural electrification projects Rural Electrification Projects in Eight Areas Development Partners finance Expected Completion Date 46.9 million NOKs million NOKs million US$ 2015 ERT II Additional Funding 12.5 million US$ 2016 Rural Electrification Project in Uganda Phase III Energy Development & Access Expansion Project Distribution Lines associated with (i) Opuyo Moroto 132 kv Transmission Lines; (ii) Kabale Mirama Grid Rural Electrification Project; AFD-Funded Grid Extensions in North Western, Rwenzori, Western, Mid-Western, South & South Western Distribution Service Territories Output Based Aid for lastmile connections Rural Electrification Project (Kalungu Component) ERT Phase III (Rural Energy Infrastructure) 10 million US$ Under Defects Liability 10 million US$ million US$ million UD$ 2019 Loan 42.9 million Euro Grant 8.0 million Euro million USD million USD million USD 2019 III

33 Appendix IV: Map of Project Area IV