Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004965 IMPLEMENTATION COMPLETION AND RESULTS REPORT Loan 7927-EG, TF 096930-EG, TF 096929-EG ON A WORLD BANK LOAN IN THE AMOUNT OF US$70 MILLION A CLEAN TECHNOLOGY FUND LOAN IN THE AMOUNT OF US$149.75 MILLION A CLEAN TECHNOLOGY FUND GRANT IN THE AMOUNT OF US$0.25 MILLION TO THE ARAB REPUBLIC OF EGYPT FOR AN EGYPT - WIND POWER DEVELOPMENT PROJECT May 30, 2020 Energy and Extractives Global Practice Middle East And North Africa Region 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. CURRENCY EQUIVALENTS (Exchange Rate Effective September 7, 2019) Currency Unit = Egyptian Pounds (EGP) EGP 16.5 = US$1 FISCAL YEAR July 1 - June 30 Regional Vice President: Ferid Belhaj Country Director: Marina Wes Regional Director: Paul Noumba Um Practice Manager: Erik Magnus Fernstrom Task Team Leader(s): Paul Baringanire ICR Main Contributor: James Sayle Moose ABBREVIATIONS AND ACRONYMS AFD French Development Agency (Agence Française de Development) BOO Build, Own, Operate CPF Country Partnership Framework CTF Clean Technology Fund EEHC Egyptian Electricity Holding Company EETC Egyptian Electricity Transmission Company EIB European Investment Bank ERR Economic Rate of Return E&S Environmental and Social GDP Gross Domestic Product GHG Greenhouse Gas GoE Government of Egypt GRM Grievance Redress Mechanism ICR Implementation Completion and Results Report ISES2035 Integrated Sustainable Energy Strategy to 2035 ISR Implementation Status and Results Report KfW Kreditanstalt fur Wiederaufbau M&E Monitoring and Evaluation NREA New and Renewable Energy Authority OCC Opportunity Cost of Capital OHTL Overhead Transmission Line PAD Project Appraisal Document PDO Project Development Objective RAP Resettlement Action Plan WTP Willingness to Pay TABLE OF CONTENTS DATA SHEET ...................................................................................................................................................................1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ..........................................................................................6 A. CONTEXT AT APPRAISAL ...................................................................................................................................6 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...........................................................10 II. OUTCOME ...........................................................................................................................................................11 A. RELEVANCE OF PDOs ......................................................................................................................................11 B. ACHIEVEMENT OF PDOs (EFFICACY) ...............................................................................................................12 C. EFFICIENCY ......................................................................................................................................................14 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...........................................................................................16 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ....................................................................................................16 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ..................................................................17 A. KEY FACTORS DURING PREPARATION ............................................................................................................17 B. KEY FACTORS DURING IMPLEMENTATION .....................................................................................................17 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME ...................................18 A. QUALITY OF MONITORING AND EVALUATION (M&E) ....................................................................................18 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ............................................................................19 C. BANK PERFORMANCE .....................................................................................................................................20 D. RISK TO DEVELOPMENT OUTCOME ...............................................................................................................21 V. LESSONS AND RECOMMENDATIONS ..................................................................................................................21 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS.................................................................................................24 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION .............................................................34 ANNEX 3. PROJECT COST BY COMPONENT..................................................................................................................36 ANNEX 4. EGYPT WIND AND SOLAR ENERGY DEVELOPMENT - A PRIVATE SECTOR-LED APPROACH .........................37 ANNEX 5. EFFICIENCY ANALYSIS ..................................................................................................................................39 ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ......................................41 ANNEX 7. SUPPORTING DOCUMENTS (IF ANY) ...........................................................................................................43 The World Bank Egypt - Wind Power Development Project (P113416) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P113416 Egypt - Wind Power Development Project Country Financing Instrument Egypt, Arab Republic of Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency ARAB REPUBLIC OF EGYPT Egyptian Electricity Transmission Company Project Development Objective (PDO) Original PDO The project development objective is to develop infrastructure and business models for scaling-up wind power in Egypt. Revised PDO The project development objective is to develop business models and required transmission facilities for scaling-up wind power inEgypt, and increase transmission capacity in targeted areas. Page 1 of 43 The World Bank Egypt - Wind Power Development Project (P113416) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 490,000 489,980 489,980 TF-95224 70,000,000 57,789,418 57,789,418 IBRD-79270 149,750,000 124,083,894 124,083,894 TF-96930 250,000 249,643 249,643 TF-96929 Total 220,490,000 182,612,935 182,612,935 Non-World Bank Financing 0 0 0 Borrower/Recipient 62,300,000 62,300,000 46,300,000 Borrowing Agency 450,000,000 450,000,000 380,000,000 EC: European Investment 70,000,000 70,000,000 70,000,000 Bank GERMANY: KREDITANSTALT 700,000 700,000 700,000 FUR WIEDERAUFBAU (KFW) Total 583,000,000 583,000,000 497,000,000 Total Project Cost 803,490,000 765,612,936 679,612,936 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 15-Jun-2010 04-Jan-2010 16-Mar-2016 31-Dec-2015 30-Jun-2019 Page 2 of 43 The World Bank Egypt - Wind Power Development Project (P113416) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 10-Jul-2014 10.51 Change in Project Development Objectives Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Safeguard Policies Triggered Change in Procurement Change in Implementation Schedule 20-Dec-2017 81.96 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 23-Jun-2010 Satisfactory Satisfactory 0 02 22-Dec-2010 Satisfactory Satisfactory 0 03 26-Jun-2011 Satisfactory Satisfactory .15 04 28-Dec-2011 Satisfactory Satisfactory .26 05 17-Jun-2012 Moderately Satisfactory Moderately Satisfactory .44 06 23-Dec-2012 Moderately Satisfactory Moderately Satisfactory .49 07 26-Jun-2013 Moderately Satisfactory Satisfactory .49 08 02-Jan-2014 Moderately Satisfactory Moderately Unsatisfactory .49 09 13-Jun-2014 Moderately Satisfactory Moderately Satisfactory 10.51 10 26-Aug-2014 Moderately Satisfactory Moderately Satisfactory 10.51 Page 3 of 43 The World Bank Egypt - Wind Power Development Project (P113416) 11 02-Feb-2015 Moderately Satisfactory Moderately Unsatisfactory 11.18 12 06-Nov-2015 Moderately Satisfactory Moderately Unsatisfactory 43.66 13 30-May-2016 Moderately Satisfactory Moderately Satisfactory 73.36 14 18-Dec-2016 Moderately Satisfactory Moderately Satisfactory 81.05 Moderately 15 11-Jun-2017 Moderately Unsatisfactory 81.57 Unsatisfactory 16 08-Nov-2017 Moderately Satisfactory Moderately Satisfactory 81.92 17 12-Jun-2018 Moderately Satisfactory Moderately Satisfactory 83.89 18 24-Dec-2018 Moderately Satisfactory Moderately Satisfactory 108.12 19 24-Jun-2019 Moderately Satisfactory Moderately Satisfactory 135.52 SECTORS AND THEMES Sectors Major Sector/Sector (%) Energy and Extractives 100 Renewable Energy Biomass 25 Renewable Energy Geothermal 25 Renewable Energy Solar 25 Renewable Energy Wind 25 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 10 Public Private Partnerships 10 Environment and Natural Resource Management 100 Climate change 100 Mitigation 100 Page 4 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ADM STAFF Role At Approval At ICR Regional Vice President: Shamshad Akhtar Ferid Belhaj Country Director: A. David Craig Marina Wes Director: Laszlo Lovei Paul Noumba Um Practice Manager: Jonathan D. Walters Erik Magnus Fernstrom Task Team Leader(s): Chandrasekar Govindarajalu Paul Baringanire ICR Contributing Author: James Sayle Moose Page 5 of 43 The World Bank Egypt - Wind Power Development Project (P113416) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. The Arab Republic of Egypt’s economic performance during the period preceding the global economic crisis was very strong. Between FY05 and FY08, its gross domestic product (GDP) grew on average 6.4 percent per year. Inflation was high and energy subsidies were 6.7 percent of GDP. However, when the project was prepared in 2009, the global economic crisis of 2008–2009 had had an adverse impact on Egypt and as a result the GDP growth rate declined to 4.7 percent in FY09. In response to the crisis, the Government of Egypt (GoE) implemented a response plan featuring fiscal, monetary, and direct support measures. 2. Electricity demand and consequences. The high economic growth before the global economic crisis had also been accompanied by a high growth in electricity use. Electricity demand had increased 7.5 percent a year between FY03 and FY08. This was due to the growth of the economy and electricity prices being set below costs. This growth in electricity demand was requiring large increases in expenditures on electricity infrastructure, especially new power plants which were straining the financial capacity of the state-owned Egyptian Electricity Holding Company (EEHC). Moreover, the rapid growth in electricity demand, as well as demand for other forms of energy, was resulting in a sharp increase in carbon dioxide emissions. These had been growing at a rate of 7 percent per year since 2000 and were expected to continue to grow at the same rate. Egypt was thus ranked as one of the 11 fastest growing greenhouse gas (GHG) emitters. Emissions of carbon dioxide had reached 168 million tons per year by 2007. 3. Energy resources. While Egypt had significant, although not abundant, fossil fuel reserves, mainly natural gas and secondarily oil, use of these resources was adding to pollution and GHG emissions. Also, these natural resources could be a significant source of foreign currency earning, through exports, if alternative energy resources could be found. Moreover, Egypt had excellent solar resources with electricity generating potential estimated at 73,656 TWh, and wind capacity was also very good with an estimated 7,200 MW commercially available in the Gulf of Suez Area. 4. Government strategy. The Supreme Council for Energy was and is the leading governmental group dealing with energy and is a committee of the Prime Minister’s Cabinet, reporting to the President and dealing with strategic issues in the energy sector, including major policy initiatives, investment programs, and energy pricing. Given the situation outlined above, the Council had endorsed a reform strategy to increase energy prices toward cost-reflective levels and this was being implemented with price increases for electricity and petroleum products. A new Electricity Law had also been approved by the Cabinet, which, among other things, provided for (a) a greater role for the private sector and (b) greater emphasis on renewable energy. The initial effort in the renewables area was on development of the country’s wind power resources using private capital. The Government took a number of steps, including enactment of new laws and regulations, to assist private wind developers with (a) a special policy for access to land; (b) zero customs duties on wind equipment; (c) use of the build, own, operate (BOO) model for developers; (d) power purchase agreements in foreign currency; and (e) support with obtaining the needed environmental, social, and defense clearances. These policy, legal, and regulatory undertakings Page 6 of 43 The World Bank Egypt - Wind Power Development Project (P113416) are outlined in more detail in annex 4. These undertakings and the support provided by this project have led to significant private sector-led investments in the development of wind energy. 5. The project provided support to the Government’s strategy by addressing some of the key barriers for private sector entry into wind power development. The support provided under the project includes (a) technical assistance required to undertake upstream preparatory activities including initial wind measurements, prequalification of developers and subsequently advisory services that enabled preparation of robust bidding and contract documents, selection of the developer, and technical operations support with regard to renewable energy integration to the national grid; (b) mitigating of the off-taker risk associated with the power evacuation by financing associated transmission line infrastructure required to evacuate the wind power generated to the national grid; and (c) blended financing (IBRD and Clean Technology Fund [CTF]) to lower the cost of financing. Theory of Change (Results Chain) 6. The theory of change for the project is shown in figure 1. The project was designed to encourage development of privately financed wind power projects to (a) expand the use of low cost, non-polluting renewable energy and (b) reduce government (EEHC) outlays on new generation capacity. To start, at least one wind power plant of 250 MW was to be built in the Gulf of Suez Area using private capital under a BOO scheme. The World Bank, the CTF, and other lenders would provide the needed transmission investment to interconnect the wind power plant(s) to the national transmission grid. In addition, there would be technical assistance from the CTF and other donors1 to help with the process of arranging for private capital to invest in wind power and help with the process of integrating intermittent wind power into the Egyptian electricity grid. The result was expected to be the rapid development of a largely privately financed wind power generation industry as additional wind plants were built in the Gulf of Suez Area. These plants would reduce GHG emissions as they substituted fossil fuel-fired plants and provide private financing of generation. The project was restructured in 2014 to include additional transmission lines investments. 1An Energy Sector Management Assistance Program study, starting in 2009, on the commercial framework for large-scale wind power made a significant contribution to the development of the project. Page 7 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Figure 1. Theory of Change Note: EETC = Egyptian Electricity Transmission Company. Project Development Objectives (PDOs) 7. The original PDO was “to develop the infrastructure and business models for scaling-up wind power in Egypt.” Key Expected Outcomes and Outcome Indicators 8. The expected outcome was the development of a number of wind power plants in the Gulf of Suez Area with the requisite transmission infrastructure to transmit the generated wind energy to the national grid. The wind plants were expected to be privately owned and constructed under a BOO arrangement. The project supported (a) the infrastructure needed to evacuate the energy generated to the national grid and (b) technical assistance for the development of the BOO program including renewable energy integration into the national grid. The initial project outcome indicators were (a) Transmission infrastructure to evacuate 3,000 MW of wind power (Completion rate); (b) Financial close of first private sector investment in wind power (250 MW) (Yes/No); (c) Progress in implementing remaining wind competitive bidding program (2,250 MW) (percentage); Page 8 of 43 The World Bank Egypt - Wind Power Development Project (P113416) (d) Projected GHG emission reductions from 2,500 MW of new wind capacity (Metric Tons); (e) Public and private investments leveraged for transmission and first BOO wind project; (f) Total Job creation in the wind industry (number); (g) Wind power supply chain development (US$, millions); and (h) Household’s benefitting from wind energy (number). Components 9. There were three project components: (a) Transmission Infrastructure, (b) Technical Assistance to Support the Expansion of Egypt’s Wind Generation Program, and (C) Development of the 250 MW Wind Generation Project. The first two components were to be jointly financed from the loan proceeds and the Borrower, European Investment Bank (EIB); French Development Agency (Agence Francaise de Development, AfD); and Kreditanstalt fur Wiederaufbau, KfW, whereas the third was to be financed by the private sector operator under a BOO approach. 10. Transmission infrastructure. The objective of this component was to reinforce the electricity network capacity (transmission grid and associated substations) to enable evacuation of the planned and future wind power generation (about 3 GW) from the Gulf of Suez Area to the national grid. This component included several subcomponents that together contribute to the full transmission infrastructure development with financing from IBRD/CTF; EIB; AfD; KfW and the Borrower. Key activities included (A1) an overhead transmission line (OHTL) of 500 kV and 280 km in length from the Gulf of Suez to the Samallout Substation located on the Bank of the Nile River; (A2) a new Gulf of Suez substation 220 kV/500 kV and connection to the transmission line under (A1); (A3) an extension of the Samallout 500 kV/220 kV Substation; and (A4) construction of a double circuit 220 kV line from Ras Gharib to Gabel El- Zait to strengthen the national grid along the Suez Gulf coast. The transmission lines were mostly to be financed by the IBRD/CTF loan proceeds, whereas the substations were to be financed by the European Consortium (EIB, AfD, and KfW). 11. Technical assistance. This component included four main activities of technical assistance for the EETC: (a) consultancy services for the development of the wind BOO program, (b) consultancy services for the management of wind power integration in the Egyptian power grid, (c) technical assistance to perform environmental assessments including an ornithological survey, and (d) knowledge management including communication with local stakeholders and the private sector as well as capturing and distilling any lessons learned. These consultancy services were to be financed primarily by the CTF but also the Public Private Infrastructure Advisory Facility and KfW. 12. Gulf of Suez 250 MW BOO Project. The third component, or Component C, was to be developed by a private company using a BOO arrangement and was to be privately financed and involved development and construction of a 250 MW wind farm in the Gulf of Suez region. Table 1. Estimated and Actual Resource Allocation per Component Components Approval Project Closing Percentage of (US$, millions) (US$, millions) Approval Transmission Infrastructure 350.2 277.0 79 Technical Assistance to Support the Expansion 3.0 2.6 87 of Egypt's Wind Generation Program Page 9 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Components Approval Project Closing Percentage of (US$, millions) (US$, millions) Approval Gulf of Suez 250 MW BOO Proiect 450.0 380.0 89 Total 803.5 659.6 82 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 13. The PDO was revised during the first restructuring in 2014 to “Develop business models and required transmission facilities for scaling-up wind power in Egypt and increase transmission capacity in targeted areas.” There were significant savings of about US$106.4 million. At the request of the GoE it was decided to restructure the loan to include additional transmission investments to reinforce the Suez Gulf transmission grid. This was to increase the transmission networks’ capacity needed to efficiently evacuate existing and planned wind generation and upgrade the existing and old transmission lines to increase the OHTLs’ capacity and reduce the bottlenecks in the existing transmission network without having to establish new right-of-way, thereby enhancing the reliability and enabling the utilization of more efficient and cleaner power generation. Revised PDO Indicators 14. The first restructuring included amending the project’s Results Framework and indicators to “(i) revise the indicators based on progress and what could be realistically achieved within the extended time frame of the project; (ii) amend some indicators to ensure alignment and consistency with the revised scope of the project; (iii) introduce applicable core sector indicators; and (iv) remove indicators that were no longer relevant.” The revised PDO indicators are as follows: (a) Transmission infrastructure to evacuate 3,000 MW of wind power (Completion rate) (no change) (b) Financial close of first private sector investment in wind power (250 MW) (Yes/No) (no change) (c) Transmission Capacity for Rehabilitated Transmission Lines Doubled (Yes/No) (added) (d) Progress in Implementing remaining 750 MW wind competitive bidding program (changed) (e) Projected GHG emission reductions from 750 MW of new wind capacity (Metric Tons) (changed: 750 MW instead of 2,250 MW) (f) Direct Project Beneficiaries (number), of which female (%) (new core indicator) 15. The second (and last) restructuring in 2017 changed the PDO indicators again, largely to reflect changes in the closing date of the loans and a new energy assessment undertaken by the World Bank (see below). The final indicators for the project are (a) Increase in transmission infrastructure capacity to evacuate 3,000 MW of wind power (GW); (b) Financial close of first private sector investment in wind power (250 MW) (Yes/No); (c) Projected GHG emission (MT annually) reductions from 750 MW of new wind capacity; (d) Direct Project Beneficiaries (number); and (e) Female Beneficiaries (%). Page 10 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Revised Components 16. Following the 2014 restructuring, more investments were added to the transmission line infrastructure component to increase the transmission system capacity. These consisted of four main investments: (a) a new substation at El Qusair, (b) extension of the North Hurghada Substation, (c) 220 kV/90 km line between the El Qusair Substation and the Sefaga Substation, and (d) supply of thermal conductors to increase the capacity of existing 220 kV lines to interconnect the proposed wind projects to the national grid. Additional activities included (a) construction of 50 km of 220 kV lines to connect the new and proposed wind farms to the 500 kV grid and (b) a 220/500 kV substation. Other Changes 17. First restructuring. In addition to changes in the PDOs, indicators, and components, the project closing date was extended from December 31, 2015, to December 31, 2017. 18. Second restructuring. The main purpose for the second restructuring, Level 2, in 2017 was to extend the project’s closing date from December 31, 2017, to June 30, 2019, to enable completion of planned activities, especially under the transmission infrastructure component. In addition, the Results Framework was updated to (a) revise target dates to correspond to the proposed project closing date and (b) incorporate the recommendations of the MENA Energy Monitoring and Evaluation Assessment undertaken in 2016. Rationale for Changes and Their Implication on the Original Theory of Change 19. The changes were driven primarily by the country’s focus on using the loans fully for scaling up renewable energy development (annex 4). Specifically, there was a need to provide an enabling environment for increased private investment in wind energy generation by providing an adequate transmission network to evacuate the energy generation. Thus, the decision was made to use the savings from the OHTL for other wind-related and needed transmission grid investments. Owing to these additional investments and delays in the associated procurements, as well as political turmoil in the early years of the project, the closing date of the loan had to be extended twice. These changes supported the achievement of the theory of change as they provided additional wind-related infrastructure, provided extra time to finalize the wind-related BOO process, and addressed a key risk for private investors related to off-take infrastructure for investments in upstream wind power generation. II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 20. The relevance of the PDOs is rated High. The revised PDO to “develop business models and required transmission facilities for scaling-up wind power in Egypt and increase transmission capacity in targeted areas” is aligned with Egypt’s Energy Sector Strategy, ‘the Integrated Sustainable Energy Strategy to 2035 (ISES2035)’, approved by Cabinet in 2016. The ISES2035 has set targets for renewable energy to make up 42 percent of the country’s electricity mix by 2035, based on rapid solar and wind deployment. Page 11 of 43 The World Bank Egypt - Wind Power Development Project (P113416) The project’s design approach of ‘demonstrative effect’ in removing barriers to private sector-led investment in the subsector further underscores project relevance to the longer-term sector strategic context. 21. The PDOs of the Wind Power Development Project are aligned with the Country Partnership Framework (CPF) FY15–FY19. The project supports CPF Focus Area 2: ‘Improved opportunities for private sector job creation’ by providing electricity and CPF Objective 2.2 ‘Improved energy generation capacity and improved efficiency’. The project is specifically mentioned under CPF Objective 2.2 as supporting “the country’s effort to eliminate power cuts by FY17 and to promote financial sustainability of the sector by FY 19 through the increased participation of the private sector in new energy generation.” Further, the project is directly aligned with the CPF energy focus: “to support private participation in new generation facilities, including shifting fuel mix toward renewables.” 22. The project contributes to the World Bank Group’s twin goals of eliminating extreme poverty and promoting shared prosperity in a sustainable manner. Furthermore, the project is aligned with the World Bank Group’s expanded Middle East and North Africa Regional Strategy (March 2019) first pillar ‘Renewing the Social Contract’ with respect to creating opportunities for structural transformation and sustainable, inclusive growth. By increasing the generation and associated transmission network capacity to provide power supply to the private sector and the poorer residential areas, the project will improve quality of life and enhance job creation and thus the disposable incomes of consumers. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 23. The efficacy of the project is rated Substantial. The project’s longer-term development impact and efficacy are demonstrated by the project’s success in removing a major barrier to wind power development by financing the requisite off-take infrastructure (transmission lines) and, coupled with the technical assistance, enabled getting the first private sector-led independent power producer in the subsector under BOO terms at very competitive prices. The project’s successful demonstration effect is further evidenced by the independent power producers’ increased commitments using a similar approach facilitated by the project, with a total capacity of about 2.0 GW at various phases of development by project closure in addition to the 250 MW directly supported by the project. 24. The project had two objectives:2 (a) develop business models for scaling up wind power in Egypt (PDO1) and (b) develop the required transmission infrastructure for scaling up wind power in Egypt (PDO2). The first objective was fully achieved by the end of the project; the second was substantially achieved by project closure but expected to be fully achieved by end June 2020, when the remaining activities, added because of the restructuring, are completed. 2Because the PDOs were changed as part of the first restructuring, a split rating for efficacy (before and after the change) was considered but not applied. The split decision was not applied because the project scope remained broadly the same, targets were adjusted because of the extended implementation period, and indicators maintained with the exception of those dropped at the first restructuring when identified as difficult to measure/attribute. In addition, at the time of the restructuring, the project disbursements were low (about US$0.49 million) to enable any substantive weights based on the share of disbursements. Page 12 of 43 The World Bank Egypt - Wind Power Development Project (P113416) 25. Status. The main infrastructure project, the 500 kV OHTL from the Gulf of Suez to Samallout is operating, the Gulf of Suez substation is built, and the Smallout Substation is expanded. They support the evacuation of wind power generated on the Gulf of Suez Coast to the national grid backbone. The first BOO project (250 MW) is in commercial operation. It commenced commercial operations on a small scale before the project closed on June 30, 2019, and achieved full commercial operation in November 2019. The additional transmission lines, introduced as part of the first restructuring, are at various stages of construction with some completed by the project closing date and the remaining scheduled to be completed by end June 2020. 26. Five indicators were used to evaluate the efficacy of the project: (a) increase in transmission infrastructure capacity sufficient to evacuate 3,000 MW of wind power, (b) financial closure on the first private investment in wind power (250 MW or above), (c) projected GHG reductions from 750 MW of new wind capacity (MT), (d) number of beneficiaries, and (e) percent of beneficiaries that are female. The first indicator is a measure of the increase in transmission capacity directly related to PDO2, the second and third indicators relate to the development of a business model for private wind power plants and relates to PDO1, and the last two are core indicators which relate to the beneficial effects of the overall project. Objective 1: Develop business models for scaling up wind power 27. Financial closure on a private 250 MW wind power plant. This indicator was achieved. The project agreements for the BOO were signed in October 2017 following achievement of all conditions precedent, including financial closure. The private developer is a consortium consisting of Toyota, Engie, and Orascom. The plant began limited commercial operations before project closure and attained full commercial operations in November 2019. The capacity of the plant is estimated to be 262.5 MW compared to the initial design of 250 MW. 28. Projected GHG emission reductions from 750 MW of new wind capacity (target 0.82 million metric tons (MT annually of CO2 reduction including 0.38 million tons from the existing government- owned plants). This indicator was achieved. The two BOO power plants, the Toyota Power Plant of 250 MW which is operating and the 250 MW Lekela Power Plant which is under construction, have projected carbon dioxide emission reductions of about 0.9 MT per year,3 which with the 0.38 million tons attributed to the existing government-owned plants means that total emissions would be reduced by about 1.3 MT of carbon dioxide per year. 29. Direct project beneficiaries (target 1,466,422 persons of which 49 percent are women). This indictor was achieved. The wind power generated is connected to the national grid and thus benefiting all the connected equivalent households of which 49 percent of the household dwellers are women. Objective 2: Develop the required transmission infrastructure capacity for scaling up wind power 30. Increase in transmission infrastructure capacity to evacuate 3,000 MW of wind power (GWh equivalent). This indicator was achieved. The 280 km, 500 kV Ras Gharib-Samallout OHTL was completed in March 2107 and can carry 3,000 MW or 3 GW energy equivalent. It is currently in use, carrying power 3 The calculation assumes a plant utilization factor of 50 percent. The impact of the plants also depends on the source of the electricity that they displace. The ICR analysis assumes they will replace gas-fired plants with a mixture of gas-fired steam plants and combined cycle units. Page 13 of 43 The World Bank Egypt - Wind Power Development Project (P113416) from the Toyota BOO Wind Farm (250 MW) as well as other wind power plants built by the New and Renewable Energy Authority (NREA). The OHTL will also carry power from the Lekela BOO Power Plant which is under construction and other BOOs which are starting construction or are in advanced stages of licensing. The remaining activities associated with reducing the bottlenecks in the existing transmission network and connecting new wind farms were ongoing by project closure and scheduled to be completed by the end of June 2020. The ongoing activities do not affect achievement of this PDO, which has already been achieved, but will help enhance the sustainability of the project by reducing the bottlenecks in the existing transmission network and thus improve power supply reliability. Table 2. Indicators and Results Indicator Target Actual 1. Increase in transmission Infrastructure capacity to evacuate 3,000 Yes Yes MW of wind power (Yes/No) 2. Financial closure on 250 MW wind power plant (Yes/No) Yes Yes 3. Projected GHG emission reductions from 750 MW of wind power 0.82 1.32 plants (million tons of CO2) 4. Direct project beneficiaries (Persons) 1,466,422 1,466,422 5. Female beneficiaries (%) 49 49 Justification of Overall Efficacy Rating 31. The efficacy rating of the project is Substantial. The PDO(s) were achieved, although with a delay, as evidenced by the two project closing date extensions. The main proposed infrastructure for scaling up wind power, the 280 km, 500 kV Ras Gharib-Samallout OHTL and the associated substations, are completed and are in operation helping evacuate and interconnect the wind power in the Gulf of Suez Area to the national grid backbone. The project was successful with regard to strategic sector engagement for wind power development in Egypt based on the BOO model (demonstrative effect). Before the project, the few investments in the subsector were all publicly financed. The business model for private development of wind power is working with the first BOO in operation and other BOOs following.4 C. EFFICIENCY Assessment of Efficiency and Rating 32. The efficiency is rated High. As is discussed in the following paragraphs, the economic rate of return (ERR) is higher than the ERRs at appraisal, mainly because of (a) lower actual construction costs, primarily attributable to using international competitive bidding for the transmission components, and (b) the prices at which the wind power BOO plants would sell electricity to the grid were substantially lower than anticipated due to a reduction in the cost of wind power plants. 33. Economic efficiency at appraisal. At appraisal, the economic efficiency was calculated for the transmission project only (not including the wind power plant) as the project was financing the 4The project structuring and contract documents developed with the support of the project have created further interest in Egypt’s wind development sector. Several proposals with a combined capacity of about 2.0 GW have been submitted for consideration, accepting the same terms and conditions as those developed for the first BOO. Page 14 of 43 The World Bank Egypt - Wind Power Development Project (P113416) transmission part of the project and not the wind power plant. It was also assumed that the first wind plant would be 250 MW in capacity and thereafter other wind plants would enter operation building to a total of 3,000 MW of wind power. 34. The project benefits were taken to be the value of the electricity delivered to the final consumer and the social value of decreasing carbon dioxide emissions. The consumer’s willingness to pay (WTP) was used to estimate the value of the electricity delivered to the final consumer. Several different values were used for the social value of reducing carbon dioxide emissions. These ranged from US$0 to US$50 per ton of carbon dioxide eliminated. 35. Total costs, which were subtracted from benefits, included the cost of the investments, operating costs of transmission and distribution, as well as losses in transmission and distribution. An additional cost is the estimated cost to the EETC of buying power from the privately owned wind power plants. This cost was taken to be US₵8 per kWh for all wind plants. 36. The project appraisal assessment used a number of estimates of the ERR for the project using different estimates of the WTP and the social value of decreasing carbon dioxide emissions. The estimates of the ERR range from 2.6 percent to 21.1 percent with most of them being less than 10 percent. The base case assigned no value to the reduction in carbon dioxide emissions and a high value for the WTP and has an ERR of 9.6 percent, which is lower than the opportunity cost of capital (OCC) for Egypt that is generally taken to be 10 percent. However, with the concessional CTF financing, the OCC for this project was estimated at 5.7 percent. 37. The project economic analysis was updated at the first restructuring to adjust for the substantially lower-than-estimated cost of the OHTL. The various ERRs increased by 0.5–2.0 percent and the base case is increased from 9.2 percent to 10.5 percent. 38. Economic analysis for ICR. The economic analysis for the Implementation and Completion Results Report (ICR) uses actual project costs and the actual cost of purchased power. The estimates of WTP for electricity are the same as those used at project appraisal, and wind generation is assumed to increase to 3,000 MW over time. The main difference between the economic analysis at appraisal and in the ICR is the cost of purchased power. At appraisal, it was assumed that the cost of the wind power would be US₵8 per kWh, whereas the actual price paid by the EETC for electricity from the Toyota Power Plant is US₵3.8 per kWh, as it is for the Lekela Power Plant. Future wind power purchases are expected to be about US₵3.1 per kWh based on the latest bids. 39. In the ICR base case, using the above mentioned assumptions but with no value assigned to the reductions in carbon dioxide emissions, the ERR for the project is 35 percent compared to the appraisal estimate of 9.2 percent and the estimate of 10.5 percent made at restructuring. If reductions in carbon dioxide emissions5 are included, the project ERR rises to 41 percent. Details of the efficiency assessment are provided in annex 5. 5Emissions reductions are valued the way it is recommended following the World Bank Guidance Note on Shadow Pricing of Carbon in Economic Analysis (November 12, 2017) and in particular using that paper’s low case estimates for the social value of carbon dioxide emission reductions. Page 15 of 43 The World Bank Egypt - Wind Power Development Project (P113416) 40. Aspects of design and implementation. The design and implementation approach using international competitive bidding contributed to significant cost savings, and thus high efficiency, as reflected by the ERR calculations in the preceding paragraphs. There were significant cost savings in the procurement of the transmission lines and substations. Furthermore, the selection of the BOO developer followed an international selection process using the technical assistance provided by the project, which also contributed to a competitive expected rate of return on the capital investments. This, combined with the fall in prices of wind power generation equipment, reduced the energy cost from the appraisal estimate of US₵8 per kWh to US₵3.8 per kWh. However, there were significant delays post the project restructuring in 2014 that necessitated a second project extension in 2016. The delays were mainly attributed to procurement delays arising out of lack of prudent project management and inexperience with the competitive bidding process for the BOO plants in addition to the political transition during 2011– 2014. Notwithstanding, the delays did not negatively affect project efficiency. D. JUSTIFICATION OF OVERALL OUTCOME RATING 41. The overall outcome rating for the project is rated Satisfactory given the High rating for relevance, Substantial rating for efficacy, and High rating for efficiency. The project was successful in achieving the strategic and transformative role of creating an enabling environment for private sector investments in wind power generation and remains highly relevant based on Egypt’s ISES2035 and the World Bank’s CPF. The project is aligned with the World Bank Group’s expanded Middle East and North Africa Regional Strategy (March 2019). The project costs were significantly below the estimates and outcome indicators were achieved by project closure. Project implementation took longer than expected because of political transition in the early years and additional activities following the first restructuring, which required more time to complete. Given the delays, the project extensions enabled achievement of the objectives and thus the longer implementation time did not negatively affect the project. E. OTHER OUTCOMES AND IMPACTS (IF ANY) 42. Gender. The project helped both genders and the entire population (99 percent of households have access to electricity) by providing electricity supply at a low cost. It is hard to say whether one gender benefited more than another from the electricity supply, but women and girls may have benefited slightly more than men in that they tend use more of the residential electricity as they often take lead responsibility for household chores. 43. Institutional strengthening. The project supported institutional strengthening for wind energy development and integration. There were two primary pieces of technical assistance: (a) services to develop the wind BOO Program and (b) wind power integration into the Egyptian power market. Both technical assistance services were successfully completed and have enhanced the Government/EETC’s capacity to develop and negotiate wind projects with the private sector and the EETC’s capacity to manage wind power generation integration operations. The BOO structuring and contract documents developed with the support of the project have created further interest in the Egyptian wind industry. Several proposals have been submitted for consideration, accepting the same terms and conditions as those developed for the first BOO but with lower prices. 44. Mobilizing private sector financing. Mobilizing private sector financing for wind generation was a major goal of this project and was achieved. This is a major contribution to Egypt’s Renewable Energy Page 16 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Development Strategy with its focus on increased private sector participation (annex 4). The first privately owned wind power plant (250 MW) is in operation and is financed with private capital of about US$380 million. A second 250 MW private wind power plant is under construction. Several proposals with a combined capacity of about 1,250 MW, with an equivalent capital cost of about US$1.90 billion, have been submitted for consideration. Furthermore, investments in the transmission infrastructure provided an ‘enabling environment’ by putting in place the requisite infrastructure to evacuate wind power. Altogether, the project was highly focused on mobilization of private financing for wind power and was successful. 45. Poverty reduction and shared prosperity. All electricity consumers in Egypt benefit from the project. The increased supply and lower cost of electricity assists everyone across the income distribution groups. In addition to households, businesses benefit by having a more reliable and less expensive electricity supply, which should help increase their profitability. The BOO wind plants will be privately financed, and thus any government funds which would have needed to go into financing this additional generation capacity can instead be used for poverty reducing purposes, as evidenced from the recent energy sector subsidy reforms.6 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 46. The project was well designed and had the transformative goal of creating an enabling environment to attract private sector-led investments in Egypt’s wind power development. However, the project appraisal was overly optimistic about the lead time to conclude such ‘first time’ private sector-led transactions. The first BOO (250 MW) tendering was forecast to be completed in 2010, with the construction of 2 x 250 MW wind power plants to be completed in each of the subsequent three years and a final 3 x 250 MW in the year thereafter. This was premised on the progress made by December 2009 with the EETC having completed the prequalification of 10 bidders, about half of which were leading international wind companies. However, the selection of the developer took considerably longer than expected with the financial closure of the first plant achieved only in 2017. 47. The project appraisal costs for the transmission infrastructure were overestimated. This contributed to a project restructuring to use the loan savings and a subsequent restructuring associated with extending the project closing date. B. KEY FACTORS DURING IMPLEMENTATION 48. The project was delayed during implementation. The delays occurred for several reasons. First, the political transition during 2011 to 2014 made decision-making more difficult. Foreign investors were uncertain about investing in Egypt because of changes in the government between 2011 and 2014 and later as the currency was devalued. The second reason for the delay was the long lead time required for 6 The comprehensive energy subsidy reforms lead to increased budget spending on social sectors, with spending on social protection increasing as spending on energy/electricity declined. (Source: Egypt Third Fiscal Consolidation, Sustainable Energy and Competitiveness Development Policy Financing [P164079] November 2017). Page 17 of 43 The World Bank Egypt - Wind Power Development Project (P113416) due diligence assessments including undertaking additional wind measurements. These two factors delayed the selection of the developer by about two to three years. The third reason was the difficulty in reaching the BOO financial closure, which was initially premised on the use of a feed-in tariffs approach, which was suboptimal to enable attainment of the project’s financial closure. Eventually the approach was revised to a bidding process for the licenses, which attracted several developers and very low bids for tariffs. 49. The fourth cause of the delay is weak project management and implementing capacity. This resulted in delays in undertaking the transmission infrastructure activities post the project restructuring in 2014, with the contracts not awarded until 2018. Furthermore, these project implementation delays led to a loan cancellation of about US$22.59 million of the committed amounts7 as the associated activities could not be completed by the project closing date. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 50. The original PDO had eight indicators (paragraph 8) some of which were difficult to measure, such as total job creation in the wind industry (measured in number of people employed), supply chain development (US$, millions), public and private investments leveraged for transmission, and first BOO wind project. For example, it would require an economic study to assess total job creation in the wind industry outside the employees of the wind plant(s) as there would be a number of jobs created in the supporting industries. Similarly, the indicator related to supply chain development (with a target of US$198 million) would be difficult to assess at financial closure (PDO target). These indicators were later dropped at the first project restructuring. Another indicator related to projected GHG emissions reduction, initially related to emission reductions projected from 2,500 MW of new wind capacity, was later revised to projected GHG emission reductions from 750 MW of new wind capacity. 51. The PDO indicators and intermediate indicators adopted at the first and second project restructurings were easier to measure. Almost all the intermediate indicators could be tracked easily and thus used to monitor and evaluate the project progress. Six of the intermediate indicators were used to track progress of the transmission infrastructure, whereas four could be used to track progress of the BOO wind plant. M&E Implementation 52. The task team was proactive and used the project restructurings to revise the indicators as highlighted earlier. The original indicators were significantly changed at the first restructuring in 2014 and further adjustments were made in the second restructuring of 2017. Implementation Status and Results Reports (ISRs) were prepared twice a year and provided the status of the various indicators as well as comments on other aspects of the project. Usually, these ISRs were accompanied by Aide Memoires with more detailed information. During March 2016, a midterm review was also conducted, which noted that 7Of the total World Bank/CTF financing amount of US$220.50 million, the committed amount (signed contracts) was US$205.2, million out of which US$182.61 million was disbursed. Page 18 of 43 The World Bank Egypt - Wind Power Development Project (P113416) (a) the PDO remains relevant because of the continued need for increased transmission capacity to scale up wind energy in Egypt and the country’s commitment to private sector wind generation development; (b) the initial project implementation time frame of five years was overly ambitious, taking into account the BOO developer selection lead time; and (c) there was continued weaknesses in project management, including irregular preparation of project progress reports. An action plan was prepared to address the noted systemic challenges including appointing additional qualified project staff. M&E Utilization 53. The M&E information was used to discuss the progress of the project with the GoE and World Bank management. The M&E indicators were tracked regularly and used to monitor progress, including remedial actions required to improve project implementation. Justification of Overall Rating of Quality of M&E 54. The overall quality of M&E is rated Substantial. Though the initial M&E design had indicators that could not easily be tracked or/and in some cases were not that closely related to the PDO, the task team was proactive and used the project restructurings to address the weaknesses noted in the original M&E indicators. The utilization of M&E was satisfactory with the World Bank teams engaging in project implementation progress reviews and encouraging action on the issues that were delaying the project. The agreed remedial actions were not always implemented, leading to some of the transmission infrastructure activities not being completed8 by project closure. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 55. The project triggered OP/BP 4.01 requiring Environmental Assessment and a number of environmental and social (E&S) instruments for the transmission infrastructure were prepared. This infrastructure included the 280 km, 500 kV Ras Gharib-Samallout OHTL, two substations, and three OHTLs, which were financed from the project savings. The E&S instruments were cleared by the World Bank and disclosed publicly by the implementing agency and on the World Bank’s external website, in accordance with triggered operational policies. The significant impacts identified by the E&S instruments were occupational health and safety impacts during construction and operation in addition to the biodiversity impacts of the OHTLs. The instruments proposed adequate mitigation measures to minimize potential impacts. Quarterly progress reports were prepared. The main objectives of the progress reports were to identify any environmental or social issues, which might give rise to unexpected non compliances, and assess the project compliance with the E&S instruments. 56. The capacity of the implementing agency to undertake environmental monitoring of the project’s sites at an earlier stage of the project was low. In addition to appointing dedicated staff, to enhance the capacity, the EETC hired an independent environmental consultancy firm to monitor the E&S performance of the various contractors. This, combined with regular World Bank team implementation support, gradually improved the E&S compliance implementation and monitoring. Where noncompliance was noted, contractors were requested to undertake correctives measures. Key issues of concern included 8All the original project infrastructure and a great majority of the infrastructure added during restructuring were completed. About 87 percent of the loan was disbursed. Page 19 of 43 The World Bank Egypt - Wind Power Development Project (P113416) unsatisfactory on-site environmental (including occupational health and safety) contractors’ performance. The EETC with support from the World Bank’s safeguards team dedicated additional efforts to address these concerns. Gradual improvements were observed in all the project’s sites from an E&S compliance perspective. 57. The E&S instruments highlighted that three of the transmission lines financed from the project proceeds would be located within birds’ migratory routes and proposed installation of bird diverters/flappers as a mitigation measure to minimize the impacts. Also, the instruments proposed carrying out post construction monitoring. This compliance activity was delayed and by project closure procurement of the diverters (flappers) was ongoing. As an enhanced measure, the EETC hired an environmental consultancy firm to carry out the post construction monitoring for the coming two migration seasons, not only for the project-financed lines but also covering the existing 220 kV line (Ras Gahrib-Gebel El Zeit). The World Bank will continue to monitor the progress made in installing the diverters and the post construction monitoring. 58. The transmission lines and the substations were built almost entirely in desert areas where the land belongs to the Government and is mostly uninhabited. However, a Resettlement Action Plan (RAP) was prepared for the OHTL from the Gulf of Suez Substation to the Samallout Substation as the line included land taken for tower footings and temporary crop damage during construction around the inhabited areas at the Nile River crossing. The land acquisition for the tower footings was acquired on ‘a willing seller-willing buyer basis’, whereas compensation for damaged crops was based on prevailing assessed market rates. No significant disputes were recorded by the project grievance redress mechanism (GRM). Cases received by the GRM were mainly associated with requests for clarification regarding the calculation of the compensation rates. No RAPs were prepared for the substations as these were all built on government-owned uninhabited desert land. C. BANK PERFORMANCE Quality at Entry 59. The quality of the project at entry is rated Satisfactory. The project was strategic and embedded a demonstrative effect design that has enabled a major paradigm shift and a transformative approach in the subsector, facilitating private sector entry into wind power development. This was mainly achieved by the holistic approach of providing tailored technical assistance and the blended finance (CTF and IBRD) to lower the borrower’s cost of financing, among others. The project was overly optimistic about the implementation lead time with regard to the selection of the BOO developer, but this underestimation did not negatively affect the project. Quality of Supervision 60. The quality of the World Bank supervision is rated Satisfactory. World Bank supervision and assistance in implementation of the project was good. Emerging issues were identified, and corrective actions proposed. This was in part enabled by the continuity of the task team leadership and having field- based staff on the task team (social, environment, financial management, procurement, and technical specialists). There were regular implementation support missions, including a midterm review. Aide Memoires and ISRs were issued regularly. Two restructurings were done, and the task team was proactive Page 20 of 43 The World Bank Egypt - Wind Power Development Project (P113416) to use the same to enhance the efficacy and efficiency of the project. Though the restructurings slowed down implementation by introducing new activities, they also provided an opportunity to achieve the PDO related to the BOO wind power plants, which was significantly delayed. 61. There were no major environmental or social issues as the transmission lines met Egyptian environmental standards and almost all the land on which construction took place was Government- owned uninhabited desert land. 62. Financial management was adequately undertaken with timely submission of both interim financial statements and annual project audited accounts. 63. Procurement aspects were on average rated Satisfactory throughout the project implementation period although there were significant delays related to the time needed to undertake the various selection processes, especially regarding the infrastructure investments added during the 2014 restructuring. Costs were significantly less than appraisal cost estimates. This was mainly attributable to the open international competitive procurement process that was used, which attracted international, qualified firms and resulted in competitive prices. Justification of Overall Rating of Bank Performance 64. The overall rating of World Bank performance is Satisfactory in view of (a) the project’s strategic and demonstrative effect design that resulted in a major paradigm shift which enabled increased private sector investments in the subsector and (b) proactivity in the implementation support, including revising the project results indicators at the project restructuring. D. RISK TO DEVELOPMENT OUTCOME 65. The risk to the development outcome is considered to be Low. The BOO model has attracted several developers and the competition is yielding competitive tariffs.9 Furthermore, the project has resulted in having in place the requisite transmission infrastructure connecting to the national transmission grid and thus reducing any risk with respect to power evacuation. V. LESSONS AND RECOMMENDATIONS 66. Preparation of a transformative ‘first-of-a-kind’ project, involving the private sector and the Government, requires substantial lead time to undertake the required due diligence to ascertain the project’s technical and financial robustness. The project preparation underestimated the time required from the developer selection to financial close, as the selected developer needed to undertake independent assessments such as additional wind measurements, which take considerable time. Whereas the project preparation forecast the first plant to commence commercial operation within two to three years from project effectiveness (2013‒2014), it took up to October 2017 to reach the project financial 9 Several proposals with a combined capacity of about 1,250 MW (Orascom/Toyota [500 MW], Lekela [250 MW], and Marubeni [500 MW]) have been submitted for consideration, accepting the same terms and conditions as those developed for the first BOO. In addition, for the ongoing submitted proposals, the prices have fallen from the initial US₵3. 8 per kWh to about to US₵3.1 per kWh. Page 21 of 43 The World Bank Egypt - Wind Power Development Project (P113416) close. Though part of the delay is attributed to the country’s political turmoil (2011‒2014), it is worth noting the time required to undertake detailed technical, contractual, and commercial assessments and associated due diligence before attaining financial closure. 67. Borrower ownership is key to the project success, especially when there is clarity in the anticipated benefits. The project passed through a major political transition, but given the need to diversify the country’s energy generation mix following the 2011‒2014 energy crisis, the project continued to get political buy-in and support from the subsequent Government post 2014. Overall, at the country level, there was an appreciation of the project’s role in supporting both the country’s energy security and sector’s sustainability by attracting additional private sector financing. To advance these country strategic objectives, the country has approved and adopted several policy, legal, and regulatory procedures that not only supported the project’s success but also enhanced its sustainability. 68. A holistic approach and strong design can facilitate having an enabling environment to attain the desired demonstrative impact. The project’s strategic rationale was to facilitate a paradigm shift by attracting private sector investments in a subsector that hitherto had been dependent on limited public financing. The holistic approach included (a) providing technical assistance to undertake preliminary technical assessments, transaction support services, and operations training support; (b) investments to address the associated off-taker infrastructure risk; and (c) blended financing to lower the cost of borrowing. This support ensured that the counterparts got the support needed to engage the private developers and had the readiness to integrate the new technology in the generation mix and grid operations. On the other hand, the project support attracted credible developers as they knew the beneficiary would be supported by reputable international expertise in addition to having the key off- taker risk supported by the project investments. 69. World Bank Investment Project Financings have positive impacts as they enhance governance in the procurement processes and maximize competition and certainty of funds, which bolster project savings/competitive prices. Cost savings were not only in this project but have also been realized in similar other World Bank Investment Project Financing projects of Ain Sokhna Power Project (P100047), the Helwan South Power Project (P117407), and the Giza North Power Project (P116194). Specifically, for this project, the actual bid price of the 280 km, 500 kV Ras Gharib-Samallout OHTL was about half of the estimated cost at appraisal. Though this could be partially attributed to a decline in equipment costs because of the global recession, open international competitive bidding led to substantial cost savings as opposed to the country’s limited competitive bidding process (preferred bidders) approach. 70. Targeted use of project savings. Substantial project savings provide an opportunity to scale up the project impact. This project had substantial savings and the borrower requested to undertake additional activities to scale up the project’s impact by reinforcing the transmission network. Though these activities led to extended project implementation duration, they have enabled to address further the risk associated with the lack of adequate off-taker transmission infrastructure. The availability of adequate transmission infrastructure has been catalytic to an increased number of upstream wind generation projects and thus an overall enhanced project impact and sustainability. 71. Adequate project management and implementation arrangements. It is important that the Project Implementation Unit (PIU) contains adequate and experienced staff with the head of the unit at the senior management level mandated to take decisions. Despite the remedial actions identified by the World Page 22 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Bank task team and numerous follow-ups, including through project management letters, adequate measures were not taken to have an effective project management team. The heads of the PIU changed quite often during project implementation and not all project activities were anchored in the unit, which slowed decision-making and effective project management. For example, the design, planning, and supervision activities were undertaken by departments not reporting directly to the PIU. This led to two main problems: (a) delay in the scope, identification, and preparation of the bidding documents and (b) ineffective contract supervision. . Page 23 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: To develop transmission infrastructure and business models for scaling-up wind power in Egypt Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Financial close of first private Yes/No N Y Y sector investment in wind power (250MW) 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved.The Project Agreements were signed October 31, 2017 following attainment of all Conditions Precedent including Finance Close. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Projected GHG emission (MT Metric ton 0.38 0.38 82.00 1.30 Page 24 of 43 The World Bank Egypt - Wind Power Development Project (P113416) annually) reductions from 15-Sep-2010 10-Jun-2019 10-Jun-2019 10-Jun-2019 750MW of new wind capacity Comments (achievements against targets): Achieved.The two BOO power plants, the Toyota plant of 250 MW which is operating and the 250MW Lekela Plant under construction, have projected CO2 emissions of about 0.9MT per year which with the 0.38 Million tons attributed to the existing government owned plants means that total emissions would be reduced by about 1.3MT of CO2. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 1466222.00 1466222.00 15-Sep-2010 10-Jun-2019 10-Jun-2019 Female beneficiaries Percentage 0.00 49.00 49.00 Comments (achievements against targets): Achieved.The wind power generated is connected to the national grid and thus benefiting all the connected equivalent households of which 49 percent of the household dwellers are women. Objective/Outcome: Increase transmission capacity in targeted areas Page 25 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in transmission Gigawatt-hour 0.00 3.00 3.00 infrastructure capacity to (GWh) evacuate 3,000 MW of wind power 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. Construction of the 280km,500KV Ras Gharib-Samalaut transmission line completed March 2017. A.2 Intermediate Results Indicators Component: Transmission Infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Contruct 500 kV transmission Percentage 0.00 100.00 100.00 line from Suez Gulf to Samallout 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. Construction of the 280km,500KV Ras Gharib-Samalaut transmission line completed March 2017. Page 26 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Install a new 500kV/220kV Percentage 0.00 100.00 100.00 transformer at Samallout 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. The substation is used to interconnect the 220KV Suez Gulf transmission line network to the 500KV line constructed under the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Construct 220KV Percentage 0.00 100.00 90.00 transmission line from Ras Gharib to Gabel El-Zait 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Partially Achieved. The Line construction progress was about 90 percent completed by the Project Closing date. The line construction was later completed and line commissioned in November 2019. Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Formally Revised Completion Page 27 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Target Construct 220 kV Percentage 0.00 100.00 90.00 transmission line from North Hurghada to El-Qusair 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Partially achieved. Construction progress at about 90 percent by the Project Closing Date. Line completed and commissioned November 2019. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Transmission lines Kilometers 0.00 430.00 430.00 constructed or rehabilitated under the project 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Partially achieved. Supply of materials for the reinforcement of about 330 km of existing 220KV lines competed October 2018 under the project: (i) Aswan Connection/ Selwa (94km); (ii) Selwa/ El-Naqra (66km); (iii) El-Naqra/ Aswan (78km); and (iv) Suez 2/ Badr (80km). EETC has the responsibility t undertake the line reinforcements, which activity was not completed by the project closing date. Further, the construction of 280km (500KV) was completed whereas about 150km (220KV) were about 90 percent completed by the Project Closing Date. Component: Technical Assistance to support the expansion of Egypt's wind generation program Page 28 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Procedures developed for Yes/No N Y Y wind power integration by system operator 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Grievance Redress Yes/No N Y Y Mechanism In-place 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. This was put-in place for the construction of the 280km,500KV Ras Gharib-Samalaut transmission line Component: Gulf of Suez 250 MW BOO Proiect Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 29 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Bid Document for first BOO Yes/No N Y Y developed 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. The Bid documents developed were used to solicit for bis documents for the 250MW BOO project that attained Finance Close in October 2017. In addition, there is a pipeline of additional projects with a capacity of about 1250MW following the same terms and conditions as those developed by the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Progress in implementing Percentage 0.00 750.00 250.00 750MW Wind Power Competitive Bidding Program 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. In addition to the first 250MW BOO plant that attained finance close, there is a pipeline of additional projects with a capacity of about 1250MW following the same terms and conditions as those developed by the project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Displacement of Diesel Gigawatt-hour 0.00 87.60 87.60 Page 30 of 43 The World Bank Egypt - Wind Power Development Project (P113416) Generation (GWh) 15-Sep-2010 10-Jun-2019 10-Jun-2019 Comments (achievements against targets): Achieved. Target is equivalent displacement of 20MW of diesel which is less than the 250MW wind generation capacity that has been commissioned. Page 31 of 43 The World Bank Egypt - Wind Power Development Project (P113416) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Develop business models for scaling up wind power in Egypt 1. Financial closure of first private sector investment in wind power (Target 250 MW) 2. Projected GHG emission reductions from 750 WM of new wind capacity (Target 0.82 MT Outcome Indicators including existing plants) 3. Direct project beneficiaries (Target: 1,466,422 persons) 4. Female beneficiaries (49 percent) 1. Bid document for first BOO developed 2. Procedures developed for wind power integration by system operator Intermediate Results Indicators 3. Displacement of diesel generation 4. Progress in implementing 750 MW wind power competitive bidding program 1. First private plant (250 MW) operating Key Outputs by Component 2. Second private plant under construction, third private plant in advanced stages of preparation (linked to the achievement of the 3. GHG emission reductions about 1.32 MT including existing plants Objective/Outcome 1) 4. Beneficiaries 1.23–1.47 million 5. 49 percent of beneficiaries are female Objective/Outcome 2: Develop required transmission facilities for scaling up wind power in Egypt Outcome Indicators 1. Increase in transmission infrastructure capacity to evacuate 3,000 MW of wind power 1. Construct 500 kV transmission line from Suez Gulf to Samallout 2. Install a new 500 kV/220 kV transformer at Samallout Intermediate Results Indicators 3. Construct 220 kV transmission line from North Hurghada to El Qusair 4. Transmission lines constructed or rehabilitated under the project 5. GRM in place Page 32 of 43 The World Bank Egypt - Wind Power Development Project (P113416) 1. 500 kV OHTL from Gulf of Suez to Samallout constructed, operating, and capable of carrying 3,000 MW. Key Outputs by Component 2. Samallout Substation expanded and Gulf of Suez Substation built (linked to the achievement of the 3. Connector lines for Toyota 1 and Lekela built Objective/Outcome 2) 4. North Hurghada to El Qusair 220 kV line constructed 5. North Hurghada substation expansion, Qusair substation largely complete Objective/Outcome 3 Increase transmission Capacity in targeted areas Outcome Indicators None Intermediate Indicators None Key Outputs by Component 1. Thermal conductors with all accessories supplied to 220 kV system Page 33 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Paul Baringanire Task Team Leader(s) Luis R. Prada Villalobos Procurement Specialist(s) Wael Ahmed Elshabrawy Financial Management Specialist Mark M. Njore Team Member Elisabeth Maier Team Member Ehab Mohamed Mohamed Shaalan Environmental Specialist Mohab Awad Mokhtar Hallouda Team Member Amal Nabil Faltas Bastorous Social Specialist Hebatallah Mohamed Mady Abdelz Aboelleil Team Member Marwa Mostafa Mohamed Mohamed Khalil Team Member James Sayle Moose ICR, Primary Author B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY09 4.520 50,288.69 FY10 49.029 400,272.36 Total 53.55 450,561.05 Supervision/ICR FY11 24.055 135,512.38 FY12 21.736 153,119.81 Page 34 of 43 The World Bank Egypt - Wind Power Development Project (P113416) FY13 18.332 90,145.40 FY14 39.445 222,648.52 FY15 19.074 229,076.52 FY16 16.630 149,884.89 FY17 18.638 87,875.39 FY18 21.307 133,095.37 FY19 28.322 153,380.19 FY20 11.624 86,806.52 Total 219.16 1,441,544.99 Page 35 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 3. PROJECT COST BY COMPONENT Components Amount at Actual at Project Percentage Approval Closing of Approval (US$, millions) (US$, millions) Transmission Infrastructure 350.2 277.0 79 Technical Assistance to Support the Expansion of 3.0 2.6 87 Egypt’s Wind Generation Program Gulf of Suez 250 MW BOO Proiect 450.0 380.0 89 Total 803.5 659.6 82 Page 36 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 4. EGYPT WIND AND SOLAR ENERGY DEVELOPMENT - A PRIVATE SECTOR-LED APPROACH 1. Because of the continued rapid increase in energy consumption not matched by installed capacity, in addition to the depletion of domestic gas resources, Egypt started experiencing electricity supply deficits in 2009 that peaked in 2014. In addition, following the 2011 revolution, the power supply disruptions potentially fueled citizen dissatisfaction. In response, the GoE took bold steps, including adoption of an energy diversification strategy, focusing on increased development of renewable energy, especially wind and solar. Several laws and regulations were put in place to attract increased private sector investments in renewable energy development, which are summarized in figure 4.1. Figure 4.1. Egypt Renewable Energy Regulations Source: NREA Annual Report 2016–2017. 2. The laws and regulations have provided several investment mechanisms: (a) Independent power producers: projects implemented by private sector investors either to feed their own loads or to sell it to their own consumers. (b) Net metering: grid-connected solar PV projects up to 20 MW. (c) Auctions: projects announced by the state and the award will be made according to the lowest price. (d) Feed-in tariff: the EETC invites private sector companies to bid for projects and sell electricity to the grid. (e) BOO: the EETC invites private investors to submit their offers for specific capacities and the award will be made to the lowest kWh price. (f) Engineer, procure, and construct: Governmental projects tendered and owned by NREA for design-supply and construction of projects. Page 37 of 43 The World Bank Egypt - Wind Power Development Project (P113416) 3. This multipronged approach has led to increased investment in renewables, as summarized in figure 4.2. Figure 4.2. Egypt Wind and Solar Energy Development (2019) 3,500 3,000 2,500 2,000 MW 1,500 1,000 500 0 Installed Under Construction Under Development Solar Wind Private Source: NREA Annual Report 2019. 4. The increased role of wind and solar in the country’s energy mix is underpinned in the country’s energy strategy—ISES2035—adopted in October 2016. ISES2035, which builds on previous strategies, emphasizes the importance of renewable energy. ISES2035 has set targets for renewables to make up 42 percent of the country’s electricity mix by 2035, based on rapid solar and wind deployment (figure 4.3). Figure 4.3. Forecasted Generation Mix Source: ISES2035. Page 38 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 5. EFFICIENCY ANALYSIS 1. At appraisal, the project’s economic efficiency was calculated based on the transmission infrastructure component only (not including the wind power plant) as the project was financing the transmission part of the project and not the wind power plant. The methodology used to calculate the economic efficiency of the project (transmission only) was to estimate the benefits from the increase in electricity supplied and subtract from them all the costs including capital costs, operating costs, and losses and the costs of purchasing power from the wind power plants. It was assumed that the first wind plant would be 250 MW in capacity and that after that plant, other wind plants would enter operation building to a total of 3,000 MW of wind power. The benefits were taken to be the value of the electricity delivered to the final consumer and the social value of decreasing carbon dioxide emissions. The consumer’s WTP, derived from a demand function, was used as the value of the electricity consumed. Several different values were used for the social value of reducing carbon dioxide emissions.10 These ranged from US$0 to US$50 per ton of carbon dioxide eliminated. 2. Because WTP is measured at the consumer level, total costs included the cost of the investments, operating costs of transmission and distribution, and losses in transmission and distribution are subtracted. An additional cost is the estimated cost to the EETC of buying the energy generated by the privately owned wind power plant(s). This cost was taken to be US₵6.4 per kWh in nominal terms (that is, not adjusted for inflation) plus US₵1.6 per kWh in real terms and thus a starting total cost of US₵8 per kWh. This tariff applied to all wind plants for the first 20 years and was thereafter assumed to drop to US₵5 per kWh. 3. The economic analysis also used two discount rates as a basis for assessing the economic viability of the proposed project. The first discount rate is 10 percent, which is generally considered to be the OCC for government investments in Egypt. The second discount rate reflects the inclusion of the CTF concessional financing and results in an OCC of 5.7 percent. 4. Several ERRs were derived in the Project Appraisal Document (PAD) for two scenarios: (a) including only the WTP benefits of increased power supply and (b) WTP benefits including the different assumed levels of carbon prices. These ERRs range from 2.6 percent to 21.1 percent. The base case scenario was chosen as the higher set of WTP estimates and no value for the reductions in carbon dioxide emissions, which gives an ERR of 9.2 percent which is slightly below the OCC. The appraisal highlighted that even if the ERR is marginal, the project was economically attractive due the low concessional CTF financing. Therefore, the CTF concessional loan played a critical role in mitigating risks and thereby improving prospects of attaining economic viability of the investment. 5. Restructuring. In the 2014 Restructuring Paper, the economic appraisal was changed to adjust for the substantially lower estimated cost of the OHTL based on the contract for that line which had been signed. Ten scenarios were considered and the various ERRs increased by 0.5‒2.1 percent. In five of the ten scenarios, the ERR is above the 10 percent OCC threshold. The ‘base case’ ERR (with the higher WTP and no value assigned to the decrease in carbon dioxide emissions) increased from 9.2 percent to 10.5 10The PAD (paragraph 67) notes that, “With respect to the value of avoided GHG emissions, forecasts of long term prices for carbon credits and the assumptions on which they are based vary so widely that it is impossible to set a single figure, or even a narrow range, as the basis for judging the viability of the project.” Page 39 of 43 The World Bank Egypt - Wind Power Development Project (P113416) percent, which is above the OCC. Thus, the project was viewed as marginally attractive even without concessionary financing. 6. ICR. The ICR economic analysis considers the actual project costs of the transmission investments and the actual costs of purchased power from the wind power plants. The estimates of WTP for electricity are the same as those used in the base case in the PAD and wind generation is assumed to increase to 3,000 MW over time to be consistent with the approach used in the PAD. The actual price paid by the EETC for electricity from the Toyota Power Plant 1 is US₵3.82 per kWh—less than half of what was estimated at the time of the project appraisal (US₵8.0 per kWh). The same price applies to the Lekela Power Plant but for the Toyota 2 Plant, the cost of electricity falls to US₵3.1 per kWh. It is assumed that energy purchases from future wind power plants will also be US₵3.1 per kWh. This very large decrease in the energy purchase cost has a major impact on the ERR. 7. In the ICR ‘base case’, with no value assigned to the reductions in carbon dioxide emissions and using the same estimates of WTP as used at appraisal, the ERR for the project is 35 percent. In another scenario, the ICR analysis takes into account reductions in carbon dioxide emissions following the methodology provided in the World Bank’s Paper ‘Guidance Note on Shadow Pricing of Carbon in Economic Analysis, November 12, 2017’. Using the paper’s low case estimates for the social value of carbon dioxide emission reductions, the ERR for the project rises to 40.6 percent. Both scenarios indicate the project to be economically quite attractive. Table 5.1.Project ERR Base Case Scenarios Case Value Assigned To ERR (%) Net Present Value at 10% Carbon Dioxide US$, millions Reductions Appraisal base case 0 9.2 ‒278 ICR base case 0 35.0 3,258 ICR case with carbon emission Low values provided by 40.6 4,464 reductions the World Bank Guidance Note Page 40 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Technical Observations and Comments 1. Key factors during implementation. The bird migration surveys contributed to the project implementation delays as it required to be undertaken at specific times of the year during the migration periods, which had an impact on the project milestones. 2. Environmental and social (a) E&S instruments for the transmission infrastructure. The transmission line infrastructure included the 280 km/500 kV Ras Gharib-Samalaut OHTL, two substations, and three OHTLs. The E&S instruments were prepared, cleared by the World Bank, and disclosed publicly by the implementing agency and on the World Bank’s external website. (b) E&S monitoring and compliance. The EETC, with support from the World Bank’s safeguards team, dedicated additional efforts to address the World Bank’s concerns. Gradual improvements were observed in all project aspects from an E&S compliance perspective. The E&S instruments determined that three of the transmission lines financed from the project would traverse birds’ migratory routes. The EETC will procure and install diverters (flappers) on the line sections around the migratory routes. In addition, the EETC has hired a consultant to carry out the post construction monitoring for the coming two migration seasons. (c) GRM. No significant disputes were recorded by the project GRM. In addition, no RAPs were prepared for the substations as these were all built on Government-owned land. (d) There were no major E&S issues as the transmission lines met Egyptian environmental standards and almost all the land on which construction took place was Government-owned uninhabited desert land. 3. The quality of World Bank Supervision is rated Satisfactory. 4. Project financial and administration aspects. The financial and administrative data contained in the report are identical to what has been implemented in the project as follows: (a) Total amount of US$182,612,935 was withdrawn from the loan/grant amount of US$220,490,000. (b) A total amount of US$37,877,065 was cancelled (unused savings), because of the expiration of the loan withdrawal validity on June 30, 2019. 5. The following are lessons learned from the project experience and should be avoided in future: (a) The project cost estimates should not only depend on historical data available in the country sectors for similar projects but must also depend on global market prices and their Page 41 of 43 The World Bank Egypt - Wind Power Development Project (P113416) expected situations. Where an expected cost for the project exceeded what was already contracted, those contractual savings in the project packages caused large unused savings of the loan. (b) It was possible to derive benefits from these loan savings in the event of preemptive procedures and activities prepared in advance for contractual procedures that would have speeded up implementation of the project and helped withdraw the sums available before the loan’s expiry date and thereby maximize the benefit from the project. (c) The need to pay attention in choosing the PIU manager and the PIU team efficiently. It is the responsibility of the project manager to ensure successful implementation of the project through permanent follow-up to the project implementation stages. The project manager is a focal point between the World Bank and other sectors involved in the project. Changing the project manager during implementation period had a negative impact on the performance before the end of project where all activities such as designs, planning, and supervision of implementation were done through the sectors concerned with the project and were not presented as reports to the PIU, which led to delays in contracting and deficiencies in the effective supervision of the implementation of contracts. EETC Recommendations (as provided to the ICR mission team) 6. Government guarantees. Each of the private wind power project contracts negotiated by the EETC required a guarantee from the Central Bank of Egypt that the EETC would make the payments required by the contract. These contracts therefore amount to quasi-sovereign debt as the Government would be required to make the payment in case the EETC defaults. The EETC recommended that for future projects an effort be made to avoid a requirement for a government guarantee. The ICR mission discussions noted that it may take time for this to be feasible, as the EETC would need to establish a track record of financial viability. Alternatively, if an electricity market is created with substantial purchases and sales of power and has been operating for a while, it is probable that some developers would be willing to build plants to provide electricity to this market. It is also possible that a private developer would build a plant if it had a long-term contract with a well-known and reliable off-taker. That contract would then be used to help finance the project. 7. Power purchase and other associated legal agreements. The EETC recommended that there should be standard documents. The EETC acknowledged the uphill task to comprehend the various provisions of the contractual documents. Page 42 of 43 The World Bank Egypt - Wind Power Development Project (P113416) ANNEX 7. SUPPORTING DOCUMENTS (IF ANY) • Arab Republic of Egypt, Ministry of Electricity and Renewable Energy, Egyptian Electricity Holding Company. Annual Reports FY09, FY10, FY11, FY12, FY13, FY14, FY15, FY16, FY17, FY18 (2019 Annual Report not yet available). • Clean Technology Fund Grant Agreement (Wind Power Development Project) between the Arab Republic of Egypt and the International Bank for Reconstruction and Development (acting as implementing entity of the Clean Technology Fund) November 2010. • Clean Technology Fund Loan Agreement (Wind Power Development Project) between the Arab Republic of Egypt and the International Bank for Reconstruction and Development (acting as implementing entity of the Clean Technology Fund) November 2010. • CTF Grant Agreement for the Wind Power Development Project Amendment to the CTF Grant Agreement October 2014. • CTF Loan Agreement for the Wind Power Development Project Amendment to the CTF Loan Agreement October 2014. • New and Renewable Energy Authority (of Egypt) Annual Report 2018. • World Bank. May 19, 2010. Project Appraisal Document (PAD) on a Proposed Loan in the Amount of US$70 million, A Clean Technology Fund Loan in the Amount of US$149.75 million, A Clean Technology Fund Grant in the Amount of US$0.25 Million to the Arab Republic of Egypt for a Wind Power Development Project. • World Bank. November 2010. Loan Agreement (Wind Power Development Project) between the Arab Republic of Egypt and International Bank for Reconstruction and Development. • World Bank. November 2010. Project Agreement (Wind Power Development Project) between EETC and the International Bank for Reconstruction and Development. • World Bank. June 2014. Restructuring Paper on a Proposed Project Restructuring of the Wind Power Development Project, IBRD Loan 79270-EG/ CTF Loan TF690930-EG/ Grant No. TF690929-EG for the Arab Republic of Egypt. • World Bank. October 2014. Loan Agreement for the Wind Power Development Project, Amendment to the Loan Agreement. • World Bank. October 2014. Project Agreement for the Wind Power Development Project, Amendment to the Project Agreement. • World Bank. 2017. Restructuring Paper on a proposed project Restructuring of the Egypt Wind Power Development Project to the Arab Republic of Egypt. • World Bank. April 2019. Performance and Learning Review of the Country Partnership Framework for the Arab Republic of Egypt for the period FY15–FY19. • World Bank. November 2015. Country Partnership Framework for the Arab Republic of Egypt. • World Bank. 2012. Interim Strategy Note for the Arab Republic of Egypt. • World Bank. Aide Memoires FY14–FY19 on Wind Power Development Project. • World Bank. ISRs, December 2013–June 2019, on Wind Power Development Project. Page 43 of 43