Document of The World Bank FOR OFFICIAL USE ONLY Report No: 54384 - NI RESTRUCTURING PAPER ONA PROPOSED PROJECT RESTRUCTURING OF OFF-GRID RURAL ELECTRIFICATION PROJECT APRIL 8, 2003 IN THE INITIAL IDA CREDIT AMOUNT OF SDR 8.8 MILLION (US$ 12 MILLION EQUIV ALENT) AND A GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND OF US$ 4.02 MILLION AND A RESTRUCTURED IDA CREDIT AMOUNT OF SDR 8.8 MILLION (US$ 13.35 MILLION EQUIVALENT) AND A GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND OFUS$4.02 MILLION TO THE REPUBLIC OF NICARAGUA June 14, 2010 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 1 ABBREVIATIONS AND ACRONYMS BBR Bosawas Biosphere Reserve BDS Business Development Services CABEI Central American Bank for Economic Integration CAS Country Assistance Strategy CDP Community Development Plan CNE Comisi6n Nacional de Energia INE Instituto Nicaragiiense de Energia EMF Environmental Management Framework EIB European Investment Bank FODIEN Fondo para el Desarrollo de la Industria Electrica Nacional GEF Global Environment Facility GEO Global Environment Objective IDA International Development Association IDB Inter-American Development Bank IP Overall Implementation Progress IPDF Indigenous People Development Framework IPDP Indigenous People Development Plan MARENA Ministerio del Ambiente y los Recursos Naturales MEM Ministerio de Energia y Minas MFI Micro-financing Institution FNI Financiera Nicaragiiense de Inversiones NGO Non-Governmental Organization PAD Project Appraisal Document PCH Pico-hydro plant PDO Project Development Objective PERZA Proyecto de Electrificaci6n Rural para Zonas Aisladas PIU Project Implementation Unit PMU Project Management Unit PNESER Programa Nacional de Electrificaci6n Sostenible y Energia Renovable para Nicaragua RET Renewable Energy Technology SBCS Solar Battery C,harging Station SHS Solar Home Systems UGA Unidad de Gesti6n Ambiental Vice President: Pamela Cox Country Director: Laura Frigenti Country Manager Joseph Owen Sector Manager: Philippe Benoit Task Team Leader: Xiaoping Wang 2 NICARAGUA OFF-GRID RURAL ELECTRIFICATION CONTENTS Page A. SUMMARy .............................................................................................................. 1 B. PROJECT STATUS ................................................................................................. 1 C. PROPOSED CHANGES .......................................................................................... 2 D. APPRAISAL SUMMARy ....................................................................................... 4 ANNEX 1: Results Framework and Monitoring ................................................................. 6 ANNEX 2: Reallocation of Proceeds ................................................................................ 13 3 A. SUMMARY 1. This restructuring package seeks your approval for a Level I restructuring of the Nicaragua Off Grid Rural Electrification Project - PERZA (Credit No. IDA-3 760-NI and GEF Grant No. TF51960 collectively referred to as the "Project") which includes a trigger of OP4.12 Involuntary Resettlement that the team considered necessary during recent supervision. 2. Two other changes included in the same package have been approved by the Regional Vice President: an 18 month extension of the closing date, from June 30, 2010 to December 31, 2011 and a reallocation of credit and grant proceeds, as requested by the Ministry of Finance of Nicaragua (see the attached request dated April 19, 2010). The proposed changes would allow: (i) an additional 3,660 new electric services connections to poor households in rural Nicaragua, (ii) a full disbursement of the remaining IDA credits and GEF grant, and (iii) compliance with the Bank safeguards policies and guidelines. The Development Objective of the Project would remain the same. B. PROJECT STATUS 3. The Project's Development Objective (PDO) is rated satisfactory, which is to support the sustainable provision of electricity services and associated social and economic benefits in selected rural sites in Nicaragua, and to strengthen the Government's institutional capacity to implement its national rural electrification strategy. The Project's Global Environmental Objective (GEO) is rated moderately satisfactory, which is to achieve greenhouse gas reductions through the reduction of policy, informational, financing and institutional capacity barriers that currently hinder renewable energy technology (RET) dissemination and market development in Nicaragua. 4. The Overall Implementation Progress is rated moderately satisfactory. Although disbursements of the IDA credits and GEF grant have been slower than desired, implementation is on track to achieve the Project's objectives. Achievements of the blended project so far include: (a) installation of 6,863 individual solar home systems (SHS) to provide electricity to remote rural households, benefitting more than 41,000 people; (b) installation of seven solar photovoltaic charging stations; (c) completion of three interconnections of isolated systems to the Interconnected National System, two of which are supported with small hydro generation; (d) joint development with the Government and other donors (IDB, CABEI, EIB, etc.) of the National Sustainable Electrification and Renewable Energy Program, which aims to invest approximately US$300 million to increase electricity coverage from 67% in 2010 to 84% in 2014; and (e) a total of approximately 60,000 direct project beneficiaries in rural areas of Nicaragua to date. 5. As of April 5, 2010, US$10.9 million equivalent of the IDA credit and US$ 2.3 million of the GEF grant were disbursed. This leaves US$2.37 million of the IDA credit and US$1.74 million of the GEF grant remaining to be disbursed. Disbursements of 1 approximately US$ 0.52 million from the credit and US$ 0.56 million from the grant are expected by the current closing date. C. PROPOSED CHANGES Results/indicators 6. Neither the PD~ nor the GEO would be changed through the restructuring. The project team proposes to drop the monitoring and evaluation of the sector-related CAS indicators from the results framework because they are beyond the scope of the project. The results frameworks of the project follow the old PAD template and as a result, include sector-related CAS indicators which are no longer required by the updated Bank guidelines. 7. There are 18 PD~ indicators in the original PAD. Not all of them are high-level indicators and in fact, some are redundant with current output indicators. In this restructuring, the project team proposes to drop 9 PD~ indicators, as they either apply to activities beyond the project life or refer to pilot initiatives that will not have been replicated in a larger scale during project implementation, and to incorporate 7 of the PD~ indicators into output indicators. Only the two high-level PD~ indicators are retained, including 1) adoption of a sustainable national rural electrification strategy by the MEM and 2) at least 7,000 new connections with minigrids and individual systems (including SHS and batteries) are made. 8. There are 2 GEF Operational Program indicators and 2 GEO indicators, of which only GEO indicator 1 (i.e. actual tons of C02 abated by pilot projects) has a clear target value and time frame to achieve it. It is then proposed to (i) retain one GEO indicator (actual tons of C02 abated by pilot projects, reaching a total of 10,000 tons by the end of PERZA) in the results framework because it is clearly linked to the GEO and is measureable and verifiable during the project life, (ii) incorporate GEF OP indicators with GEO indicators since they are repetitive and redundant, and (iii) eliminate from the results framework the GEF renewable energy projects replicability indicators that are not quantifiable during the project life but whose trends of development will continue to be monitored by the MEM after the project. It should be mentioned that even though some pilot projects of PERZA are still under implementation, lessons emerged from the earlier pilots of PERZA, including small hydro projects and the solar program, have been studied by the government and other donors and incorporated into the recent development of the national electrification program. 9. The original indicators, proposed changes, and their justifications are shown in Annex 1. 2 Safeguards 10. The team proposes to trigger OP 4.12 Involuntary Resettlement through this restructuring. During the recent supervision, it was found that small scale resettlement (i.e. no physical displacement of people) involving the acquisition of some private and community land happened under the project. In this context, community land refers to the land whose title is registered under a community organization. This was carried out in compliance with the Nicaraguan law in the absence of a Bank's approved instrument through the Project activities to date. The only subproject that involves indigenous people is the solar central charging station in Francia Sirpi where only community land (no private land) was used for housing the station. The choice of the location of the charging station was done through a participatory process and in compliance with the Indigenous People Development Plan and was finalized through a written agreement with community members who are also beneficiaries of the project by receiving electricity services through the project. OP 4.01 (Environmental Assessment), OP 4.04 (Natural Habitats) and OP 4.10 (Indigenous Peoples), which were already triggered at project approval, are still applicable. The assessment carried out by the Bank in March 2010 confirmed that there are no outstanding safeguard issues. An abbreviated resettlement plan was prepared and disclosed in country on May 24, 2010 and at the Infoshop on May 20,2010. Financing 11. The restructuring proposes to (i) take advantage of an additional dollar amount of US$ 1.35 million available due to the appreciation of SDR; and (ii) move some project funds from technical assistance to investment activities under Component 2 Rural Electrification Subprojects to speed up disbursements and maximize the Project's impact. The proposed changes will not affect project performance in achieving the Project's objective of expanding rural electricity services. Instead they will allow the project to use the Project's funds more effectively toward achieving the PD~. 12. The proposed reallocations do not introduce significant changes to the Project. It represents a minor change in line with BP 13.05 (Project Supervision) and BP 13.25 (Use of Project Cost Savings). Most of the changes involve the procedures for carrying out the activities, not the activities per se. 13. The level of financing for various project components as a result of the proposed reallocations are illustrated in the following table: (IDA in US$ million; 1 GEF in US$ million) Difference Original Proposed Components due to Allocations Allocations Reallocations IDA IDA IDA GEF 1 Exchange rate of US$ 1 = SDR 1.51686 as of April 5, 2010. 3 GEF GEF 1 0.63 0.37 0.83 0.24 0.2 -0.13 2 8.78 2.85 9.60 2.71 0.82 -0.14 3 1.17 0 1.25 0.08 0 4 0.47 0 0.55 0.08 0 5 0.30 0.36 0.40 0.59 0.1 0.23 6 0.65 0.44 0.72 0.49 0.07 0.05 Not allocated* 1.35 0 -1.35 0 Total 13.35 4.02 13.35 4.02 *Due to the appreCIatlOll of SDR agamst US dollar. 14. The detailed reallocations by category of expenditure, both for the IDA credits and GEF grant are shown in Annex 2. Closing date 15. With the proposed 18-month extension the project closing date for the project would be extended from June 30, 2010 to December 31, 2011. This would be the second extension of the project. The first extension was approved in November 2008 for 18 months. If the proposed extension is approved, the Project will be 8 years old at closing. 16. Without the proposed extension, the Project would be expected to cancel an estimated US$1. 85 million of the loan and US$1.18 million of the grant. As a result, it would fail to provide electricity to approximately 3,660 households or 20,760 people. 17. Additional time is required to ensure that the Project's objectives are achieved and all in-country activities are brought to a successful and logical conclusion. The project objectives continue to be achievable, the performance of the project team in the Ministry of Energy and Mines (MEM) is satisfactory, and the MEM has prepared a feasible implementation plan indicating activities to be undertaken during the extension period. 18. The performance of the Ministry of Energy and Mines, the implementing agency, has been satisfactory and there are no outstanding audits for this project. D. APPRAISAL SUMMARY Safeguards 19. The same environmental and social framework developed for the original project will be used. The MEM/PERZA team, with the support received from the MEM/UGA and MARENA on environmental issues, has the implementation capacity required to continue ensuring compliance of the project activities with Bank's safeguards. 4 20. As part of the safeguards review in March 2010, the Bank team visited 4 sub- projects in order to verify that compliance with environmental and social safeguards had been adequately addressed during project implementation. The three safeguard policies that were triggered at project appraisal (OP/BP 4.01, OPIBP 4.04 and OP/BP 4.20) will continue to be applicable during the extended project implementation period and the existing safeguard instruments will provide the necessary guidance to the MEM/PERZA team. 21. OPIBP 4.12 - Involuntary Resettlement - was not triggered at appraisal. However, during the recent supervision, the Bank team confirmed that small scale resettlement has happened during project implementation and, as a result, it was recommended that the policy should be triggered. This resettlement, which does not involve physical displacement of people, has involved the acquisition of some private and community land and was carried out in compliance with the Nicaraguan law in the absence of a Bank's approved instrument. The Bank took action by (i) indicating applicability of the policy, (ii) sending a mission to Nicaragua to identify any existing gaps between implementation and Bank's requirements, and (iii) requesting to the counterpart (MEM/PERZA team) the preparation of an Abbreviated Resettlement Plan. 22. The MEMIPERZA team has already submitted to the Bank the Abbreviated Re~ettlement Plan, together with supporting documentation such as detailed lists of affected land-owners, including land area affected and method used for land acquisition (i.e. purchase, donation or easements), for the sub-projects. The Plan and the supporting documentation have been considered acceptable by the Bank. It is expected that compliance with OP/BP 4.12 will not encounter significant difficulties in the extended implementation period. 5 ANNEX 1: Results Framework and Monitoring Nicaragua: Off Grid Rural Electrification Project (PERZA) 1. There is no change to the project development objective, which is to support the sustainable provision of electricity services and associated social and economic benefits in selected rural sites in Nicaragua, and strengthen the Government's institutional capacity to implement its national rural electrification strategy. 2. There is no change to the project's global environmental objective, which is to achieve greenhouse gas reductions through the reduction of policy, informational, financing and institutional capacity barriers that currently hinder renewable energy technology (RET) dissemination and market development in Nicaragua (GEF Operational Program No.6). 3. The results frameworks of the project follows the old PAD template and include sector-related CAS indicators, outcome/impact indicators for PDO/GEO and output indicators for each project component. Since monitoring and evaluation of the sector-related CAS indicators are beyond the scope of the project, we propose these indicators are eliminated. 4. There are 18 PD~ indicators in the original PAD. Not all of them are high-level indicators and in fact, some are redundant with current output indicators. In this restructuring, the project team proposes to drop 9 PD~ indicators, as they either apply to activities beyond the project life or refer to pilot initiatives that will not have been replicated in a larger scale during project implementation, and to incorporate 7 of the PD~ indicators into output indicators. Only the two high-level PD~ indicators are retained, including (i) adoption of a sustainable national rural electrification strategy by the MEM and (ii) at least 7,000 new connections with minigrids and individual systems (including SHS and batteries) are made. 5. There are 2 GEF OP indicators - 1.) increased number of renewable energy technology projects in Nicaragua and 2) quantity of C02 emissions avoided - and 2 GEO indicators - 1) actual tons of C02 abated by pilot projects, reaching a total of 10,000 tons by the end of PERZA and 2) estimated C02 abatement through replication of project pilots on a large scale. Only GEO 1 has a clear target value and time frame to achieve it. Moreover, these two sets of indicators are repetitive. It is then proposed to (i) retain one GEO indicator (actual tons of C02 abated by pilot projects, reaching a total of 10,000 tons by the end of PERZA) in the results framework because it is clearly linked to the GEO and is measureable and verifiable during the project life, (ii) incorporate GEF OP indicators with GEO indicators since they are repetitive and redundant, and (iii) eliminate from the results framework the GEF renewable energy projects replicability indicators that are not quantifiable but whose trends of development will continue to be monitored by the MEM both during and after the project. It should be mentioned that even though some pilot projects of PERZA are still under implementation, lessons emerged from the earlier pilots of PERZA, including small hydro projects and the solar program, have been studied by the government and other donors and incorporated into the recent development of the national electrification program. 6. The original indicators, proposed changes, and their justifications are shown in the table below. 6 Key Performance Indicators Proposed changes Justification As in the PAD -~~ These are higher order impact level indicators (Le. sector-related CAS indicators) and cannot be fully assessed during the lifetime of the project. Indicators 1.1 to 5.1 This is a higher order impact level indicator. are dropped from Capacity strengthening in rural electrification 3.1. Capacity Strengthened in CNE, INE, and microfinance the project, but activities is specifically measured by PD~ institutions. shall be monitored indicators 1.1 and 3.2 for CNE and for at the CPS level or microfinance institutions respectively. incorporated as part This is a higher order impact level indicator. 4.1. Improved environmental management through the use of of the project Measurement of improved environmental renewable energy technologies (RETs) and community indicators below. management is indirectly captured by GEF programs in targeted communities. Global Development objective indicator 1 (i.e. reduction in This is a higher order impact level indicator and cannot be fully assessed during the lifetime of 5.1 Successful demonstration and replication of new the project. However, the government will decentralized offgrid energy solutions and business models that continue to monitor the replication impacts of can be managed at the local level. the pilot activities and business models PERZA. Not quantifiable as defined during the project life but captured indirectly by PD~ indicator 1.1 since adoption of a national rural electrification 1. Increased number of RET projects in Nicaragua. Dropped here and strategy that incorporates off-grid solutions is incorporated with expected to lead to an increased number of RET the GEO indicators. ·ects in the Already captured through GEF Global 2. Quantity of C02 emissions avoided. ·ve indicator 1. 7 Key Performance Indicators Proposed changes Justification As in the PAD PDQ: support the sustainable provision of electricity services and associated social and economic benefits in selected rural sites in Nicaragua, and to strengthen the Government's institutional capacity to implement its national rural electrification strategy 1.1. Adoption of a sustainable national rural electrification (RE) Change CNE to CNE was changed to MEM in 2007 due to strategy by CNE, which integrates off-grid solutions and reflects MEM in the text reorganization of the government agencies. the social diversity between the Atlantic and Pacific zones. This indicator applies to activities beyond the 1.2. New portfolio of offgrid projects applies lessons from Dropped project life and should be monitored by the piloted schemes. MEM. Dropped here and incorporated as 2.1 At least S new PERZA private concessionaires This is an output indicator. output indicator under Component 2 This indicator applies to activities beyond the 2.2 At least $S m new private sector investments in offgrid RE Dropped project life and shall be monitored by the MEM. I I This indicator is redundant with output indicator ! Dropped here and 2.1. The target capacity will stay at 1 MW, as incorporated as 2.3At least 2 MW total installed capacity PERZA minigrids specified in Indicator 2.1, since it is a more output indicator realistic target based on project implementation under Component 2 to date. Dropped here and 2.4At least 100 kW of total installed PV capacity for all types of incorporated as This is an output indicator. users output indicator under Component 2 Dropped here and incorporated as This indicator is redundant with output indicator 2.S At least 4 PV companies accredited and doing business output indicator 2.2. under Component 2 The first pilot of central battery charging station serving 370 users was built but proven unsustainable due to the high maintenance cost 2.6 At least SOO new users of central battery charging, both solar relative to the ability to pay of the users. It was Dropped and minigrid-connected agreed with the government that alternatives such as mini-grids and solar home systems would be explored. Thus, this indicator is no longer relevant. 2.7 At least 7,000 total new connections with mini-grids and No change individual systems (SHS, batteries) ,-- -- - - - --- -- --- ----------------------- 8 Key Performance Indicators Proposed changes Justification As in the PAD 3.1. Successful implementation of replicable micro-finance service delivery systems in pilot areas and surrounding Dropped here and This indicator is too specific to be a PD~ communities, measured by the volume of outstanding loans for incorporated as indicator. The current output indicators under productive purposes (between $500,000 and $600,000), the output indicator component 3 already capture the success in the number of households using microcredit to hook up to electricity under Component 3 development of micro-finance services. systems, user satisfaction, and full cost coverage by micro- finance service providers. Dropped here and 3.2. At least 5 microfinance institutions offering loans for rural incorporated as This is an output indicator. electrification. output indicator under Component 3 Component 4 on BDS has been progressing very slowly. The government has indicated that they 4.1. Successful delivery of sustainable BDS delivery models and will continue to make efforts to pilot the new products developed for the pilot areas and surrounding proposed models during the project life, but its Dropped communities, as measured by the number of businesses paying sustainability is uncertain. Thus this indicator is for BDS services and client satisfaction. too ambitious. Nonetheless, output indicators 4.1-d 4.3 already capture the outputs of Component 4. Component 4 on BDS has been progressing very slowly. The government has indicated that they will continue to make efforts to pilot the 4.2 An improving trend of significant cost recovery by BDS proposed models during the project life, but its Dropped providers (income greater than subsidy). sustainability is uncertain. Thus this indicator is too ambitious. Nonetheless, output indicators 4.1-d 4.3 already capture the outputs of I Component 4. Component 4 on BDS has been progressing very slowly. The government has indicated that they will continue to make efforts to pilot the 4.3. Increased number ofBDS providers to at least 10 firms proposed models during the project life, but its Dropped offering services in project sites and extended economic zones. sustainability is uncertain. Thus this indicator is too ambitious. Nonetheless, output indicators 4.1- 4.3 already capture the outputs of Com~onent 4. 9 Key Performance Indicators Proposed changes Justification As in the PAD 5.1. Six meetings per year to support the strengthening of the Meetings are part of the organizing process but community organization with better coordination among Dropped are not a good indicator of increased capacity. community members to develop an action plan. 5.2. Acceptance ofPERZA and its social impact promoted Meetings are part of the organizing process but through efficient media dissemination, with eight meetings at the Dropped are not necessarily an indicator of social impact. different national and regional dialogue forums. 5.3. Seventy five percent of the community population will Dropped here and participate in several activities such as workshops, meetings, incorporated as This is an output indicator. hearings held in radio and TV programs, etc. during the output indicator of the under ComDonent 5 This indicator is one of the project development objectives per se which has been covered by Dropped PDO indicator 1.1 and output indicators under 6. 1. Actual tons of C02 abated by pilot projects, reaching a total No change of 10,000 tons by the end of the PERZA Project. Dropped here, but the MEM should 2. Estimated C02 abatement through replication of project pilots continue to monitor This indicator covers a period beyond the on a larger scale. the trends of RET project life, hence would be best estimates only. project Rural Electrification and Renewable No change 1.3 New regulatory framework for offgrid electrification officially adopted Com Rural Electrification Pilot Vrni"l't" Change to: At least Removing "off-grid" because detailed least-cost 2.1 At least 1 MW of decentralized offgrid systems established 1 MWof analysis during project implementation showed at end of Project, operated by private sector. decentralized that four of the pilot projects have improved """tptl1" established economic benefits bv connectin2: and 10 Key Performance Indicators Proposed changes Justification As in the PAD at end of Project, excess electricity to the national grids. operated by private sector. 2.2. At least 2 PV companies accredited and marketing systems nationwide, and at least 3,000 additional stand-alone PV systems No change. installed at end of Project. 2.3 At least 5 new PERZA private concessionaires New Was a PD~ indicator 2.4 At least 100 kW of total installed PV capacity for all types of New Was a PD~ indicator users Component 3: Provision of Microfinance Services to Low-income Households and Micro- and Small Businesses 3.1 At least 30% of households and businesses that connect to systems use micro finance services. 3.2. Microfmance products and delivery models suited for No changes to household and businesses have been developed and tested in Indicators 3.1 to pilot areas. 3.3. 3.3. MFIs cover all costs related to providing services to project sites by end of project. 3.4. At least 5 microfinance institutions offering loans for rural New Was a PD~ indicator electrification. I Component 4: Provision of Business Development Services 4.1 Increased access to BDS (e.g, skills training and market No change. information) for MSBs in project areas. This component has had a very slow start because it was time consuming to implement Change to: Number 4.2 Number of clients served by the BDS providers, fees awareness enhancement of the BDS providers of clients served by generated are greater than the value of the subsidy. and potential clients. It is expected that BDS the BDS providers providers will continue to require subsidy to serve their clients. 4.3 BDS Client Satisfaction (at least 80% find BDS satisfactory). No change. Component 5: Promoting Project Communication and Social Participation 5.1 A community development action plan is elaborated by thirty percent of community members and enjoys community No changes ownership. 11 , Key Performance Indicators Proposed changes Justification As in the PAD 5.2. Seventy five percent of community leaders participate in follow ups and community training during the life of the project. Component 6: Support to Project Management Change to: Monitoring and Evaluation of the 6.1. Monitoring and Evaluation of the Project adequately Project adequately CNE changed its name to Ministry of Energy performed by CNE, and reflected in periodical update ofPSR performed by MEM and Mines (MEM) in 2007 and project progress reports. and reflected in project progress reports. 6.2. PMU manages pilot projects competently and in a timely No change. manner. 12 ANNEX 2: Reallocation of Proceeds Nicaragua Off Grid Rural Electrification Project - PERZA 1. The proposed reallocations for CREDIT 3760-NI involve shifting some resources originally allocated for the provision of technical assistance to defray the increased capital costs of the remaining two major subprojects - Wiwili and La Florida hydro projects - and the increased cost of project management due to the longer project life. Some resources originally allocated for provision of technical assistance and preparation of new investment activities are no longer necessary because the preparation of the Wiwili and La Florida subprojects was partially financed by the government and the concerned concessionaires. Since most of the proposed adjustments involve activities in the same components, the subsequent changes to the levels of financing for various project components are minimal. 2. The table below shows the proposed reallocations of the proceeds for CREDIT 3760-NI: Category of Expenditure Allocation % of Financing (SDR Equivalent) Current Revised Current Revised Current Revise (1) Sub-loans I, under Parts B.3 and No 1,045,000 1,045,000 100% No B.5 of the Project Changes Changes (2) Sub-loans II, under Parts B.1, B.2 3,556,000 3,567,000 100% and B.4(b) of the Project (3) Sub-loans III, under Parts B.4(a) 30,000 0 100% of the Project (4) Sub-loans IV, under Part C.1(a) 630,000 572,000 100% of the Project (5) Grants I, under Part C.1(b) ofthe 130,000 63,000 95% Project (6) Grants II, under Part D.1(a) of the 110,000 73,000 95% Project (7) Subsidies I, under Part B.3 and 580,000 490,000 95% B.5 of the Project (8) Subsidies II, under Parts B.2 and 86,000 504,000 95% B.4(b) of the Project (9) Subsidies III, under Part BA(a) of 65,000 0 95% the Project (10) Subsidies IV, under Part D.1 of 160,000 182,000 95% the Project (11) Goods: (a) under Parts B.1, 50,000 50,000 100% of foreign BA(a) and BA(b) of the Project expenditures 100% of local expenditures( ex- factory cost); and 85% oflocal expenditures for other items procured locally 13 Category of Expenditure Allocation % of Financing (SDR Equivalent) (b) under Parts B.7(d), C.4, E.2, and 246,000 270,000 100% of foreign F.l of the Project expenditure 100% of local expenditure s( ex- factory cost); and 85% of local expenditures for other items procured locally (12) Works under Parts B.l, B.4(a) 383,000 290,000 85% and B.4(b) of the Project (l3) Consultant's Services 1,117,000 955,000 91% (a) under Parts A, B.6, B.7, and F.2 of the Project (b) under Parts C.2, C.3, C.4, D.2, 155,000 284,000 91% and D.4 of the Project (14) Training, under Parts B.7(e), 152,000 103,000 91% B.7(f), C.2, and F.l(b) of the Project (15) Audit Services required under 85,000 34,000 91% Section 4.01 of this Agreement and Part F.l(c) of the Project (16) Operational Costs, under Parts E 220,000 318,000 90% and F.2 of the Project Total 8,800,000 8,800,000 3. The proposed reallocations for GEF Grant TF051960 involve a reduction of resources originally allocated for the provision of technical assistance to the development of a local solar PV market and improvement of related regulatory framework and policies. Given the success of the Project to date, with 6,800 solar home systems already installed, additional technical assistance needed is limited relative to the remaining resources. It is proposed to use the remaining resources to instead partially subsidize more solar home systems targeting poorer households ofthe rural poor. 4. The table below shows the proposed reallocations of the proceeds for GEF Grant TF051960: Category of Expenditure Allocation % of Financing (US$) Current Revised Current Revised Current Revise (1) Subsidies I under Parts B.3 No changes 479,000 922,000 95% No changes and B.5 of the Project (2) Subsidies II under Parts B.2 60,000 159,000 95% and B.4(b) of the Project (3) Subsidies III under Parts B.4(a) 52,000 0 95% (4) Consultants' services under Parts A, B.6, 2,749,000 2,461,000 91% B.7, E and F.2 14 Category of Expenditure Allocation % of Financing (U_S$) (5) Training under Parts B.7, E, B.7(f) 534,000 192,000 91% and F.1(b) of the Project (6) Audit Services, under Section 4.01 146,000 286,000 91% of the Agreement and Part F.l(c) of the Project Total 4,020,000 4,020,000 5. The Project's PD~ is rated satisfactory and GEO is rated moderately satisfactory. While disbursement of the credit and the grant has been slower than desired, implementation is well on the way to achievement of the project objectives, with about 60,000 rural people having already benefited directly from the project. 6. As of April 5, 2010, US$10.9 million equivalent of the IDA credit and US$ 2.3 million of the GEF grant were disbursed, while US$2.37 million of the IDA credit and US$1.74 million of the GEF grant remain to be disbursed. Disbursements of approximately US$ 0.52 million from the credit and US$ 0.56 million from the grant are expected by the current closing date. 7. The proposed reallocations are necessary to (i) take advantage of additional dollar amount of US$ 1.35 million available due to the appreciation of SDR; and (ii) move some project funds from technical assistance to investment activities under Component 2 Rural Electrification Subprojects to speed up disbursements and maximize the Project's impact. 15 Restructuring Status: Final Restructuring Type: Level 1 Last modified on date: June 14,2010 Source Revised IDA 12 million equivalent 13.35 million equivalent (SDR 8.8 million equivalent) (SDR 8.8 million equivalent) GLOBAL ENVIRONMENTAL FACILITY 4.02 4.02 Borrower 2.23 2.23 Private sector 0.72 0.72 Total 18.97 20.32 Government of Nicaragua Ministry of Energy and Mines Nicaragua , ,··c .. .... ., 4. Implem.enting Agency .