Documentof The World Bank ReportNo. 38330-IQ TECHNICAL ANNEX FORA PROPOSEDCREDIT INTHEAMOUNT OF SDR 82.5 MILLION (US$124MILLIONEQUIVALENT) TO THE REPUBLICOF IRAQ FORAN EMERGENCY ELECTRICITY RECONSTRUCTIONPROJECT March6,2007 SustainableDevelopmentDepartment MiddleEast and NorthAfrica Region This document has a restricted distribution and may be used by borrowers only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENT (Exchange Rate Effective January 25,2007) Currency Unit =Iraqi Dinar US$ 1 = Iraqi Dinar 1,295 FISCALYEAR January to December ABBREVIATIONSAND ACRONYMS CCGT Combined Cycle Gas Turbine COE Commission of Electricity CPA Coalition Provisional Authority DFID Department for International Development ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FM Financial Management FMA Fiduciary Monitoring Agent GDP Gross Domestic Product GO1 Government of Iraq HFO Heavy FuelOil IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International Development Association ISN InterimStrategy Note ITF IraqTrust Fund KRG KurdistanRegional Government MIM Master ImplementationManual MOE Ministry of Electricity MOF Ministry of Finance MOPDC Ministry of Planning and Development Cooperation NGO Non Governmental Organization NDS National Development Strategy MW Megawatt MWH Megawatt Hours OFFP Oil for FoodProgram PHRD Policy and Human ResourcesDevelopment Fund PIM Project Implementation Manual PMT Project Management Team PP Procurement Plan RCC Revolutionary Command Council SCGT Simple Cycle Gas Turbine SBD Standard BiddingDocuments SPN Special Procurement Notice USAID United States Agency for InternationalDevelopment IVice President I Daniela Gressani Country Director JosephP. Saba Sector Director IngerAndersen Sector Manager Jonathan Walters Task Team Leader T'aarda P. Stormvan Leeuwen J FOR OFFICIAL USEONLY EMERGENCYELECTRICITY RECONSTRUCTIONPROJECT TABLE OF CONTENTS BACKGROUNDAND STRATEGY ......................................................................................................................... 1 COUNTRY BACKGROUND ................. ...................................... INTERNATIONAL RESPONSE ............. ................................... 1 THEELECTRICITY SECTOR ............... KEYISSUES SECTOR INTHEELECTRICITY BANKRESPONSE STRATEGY ............................................................................................................................. 4 AND LESSONSLEARNED INIRAQ ........................................................................................................................... DETAILEDPROJECTDESCRIPTION .................................................................................................................. 7 OBJECTIVES .............................................................................................................................................................. 7 PROJECT DESCRIP~ION ... .................... ........ 7 PROJECTCOSTS AND FIN ................................................................................................... 8 INSTITUTIONALARRANGEMENTSAND PROJECTIMPLEMENTATION ............................................... 9 PROJECT MANAGEMENT STRUCTURE DISBURSEMENT ....................................................................................................................................................... 12 FINANCIALMANAGEMENT.. 13 ENVIRONMENTAL SOCIAL SAFEGUARDS.......................................................................................................... AND 14 PROJECT SUPERVISION ............................................................................................................................................ 15 MONITORING EVALUATION AND 16 FINANCIALAND ECONOMIC JUSTIFICATION ............................................................................................. 16 RISKSAND BENEFITS .......................................................................................................................................... 17 Annex I: Results Framework and Monitoring ....... 21 Annex 2: Detailed Project Costs..................... .................................................................. 24 ................................. 27 Annex 5: Electricity Sector Background..... Appendix 6.2: Procurem Annex 7: Financial Management and Disbursement........................................................................................ 48 Annex 8: Environmental and Social Impact Assessment................................................................................... 55 Annex 9: Responsibility Matrix Annex 10: Economic Analysis .......................................................................................................................... 77 Annex 11: Project Files ..... Annex 12: Project Team.... Annex 13: Bank Projects in Annex 14: Iraq at a Glance This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. REPUBLIC OF IRAQ EMERGENCY ELECTRICITY RECONSTRUCTIONPROJECT TECHNICAL ANNEX TO THE MEMORANDUMAND RECOMMENDATION OF THE PRESIDENT MIDDLEEASTAND NORTHAFRICA MNSSD Date: March 6,2007 TeamLeader: TjaardaP. Stormvan Leeuwen Country Director: JosephP. Saba Sectors: Energy(100%) Sector Director: IngerAndersen Themes: Post-ConflictReconstruction Sector Manager: JonathanWalters ProjectID: PO87734 EnvironmentalScreening Category: A LendingInstrument: Emergency RecoveryCredit andWorld BankIraq Trust FundGrant I - ProjectFinancingData [ ] Loan [XI Credit [ X ] Grant [ ] Guarantee [ ] Other: I For Loans/Credits/Others: Total BankFinancing(US$ million): US$130.00million ProposedTerms IDA Credit: 35-year maturity with a ten-year grace period. FA-- World Bank Iraa Trust Fund: U S 6 millionon uant terms '2 FinancingPlan(US$ mil.) I Source I US$ 1 YO II I million BORROWER 20 I 13% INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) 124 83% World Bank IraqTrustFund 6 4% Total: 150 100% Borrower (IDA): Republicof Iraq Grant Recipient: Ministry of Electricity, Iraq ImplementingAgency: Ministry of Electricity, Iraq 11 DisbursementSchedulefor IDA Credit (BankFY/ US$ million) FiscalYear 07 08 09 10 11 Absolute 4.00 30.00 50.00 30.00 10.00 Cumulative 4.00 34.00 84.00 114.00 124.00 ExpectedEffectivenessDate: April 30, 2007 ProjectImplementationPeriod: January 15,2007 (advanceprocurement)to December 31,2010 ExpectedClosingDate: June 30, 2011 DisbursementSchedulefor ITFGrant (US$ million) FiscalYear 07 08 09 10 11 I Absolute 0.50 2.50 2.00 1.oo 0.00 Cumulative 0.50 3.50 5.OO 6.00 0.00 'The ITF Grant closing date assumes that the ITF termination date (currently set at December 31,2007) will be extended until December 31,2010. Should the ITFtermination date not be extended, the Recipient would need to seek additional sources o f financing for completing the activities funded from the grant. 111 ... REPUBLICOF IRAQ EMERGENCYELECTRICITY RECONSTRUCTIONPROJECT Credit,Grant and ProjectSummary Recipients: Republic of Iraq and Ministry of Electricity Beneficiaries: Electricity consumers throughout Iraq ImplementingAgency: Ministry of Electricity (MOE) LoadCredit/Grant: Credit and Grant Amount & Terms IDA Credit: SDR 82.5 million (US$124 million equivalent) with 35 years maturity and a 10-year grace period; and WorldBunk Iraq Trust Fund US$6 million on grant terms Objectives& Description: The objectives of the project are to: (i) alleviate the current power help supply shortfall by restoring the base load generation capacity of the Hartha Power Station Units 2 and 3 to 400 M W and (ii)lay the groundwork for improved power system planning and fuel supply by providing the tools and other support necessary to enhance in-house capability to prepare, implement and operate current and future projects. Benefitsand Risks: Benefits: The rehabilitation of the Hartha Power Station Units 2 and 3 will provide an additional 400MW to the national grid benefiting electricity consumers all over Iraq. The project is expected to directly impact approximately 1 million households for a period of 20 years and supply power to grid-connected industrial consumers. Risks: The main risks are the incidence of corruption due to a weak control environment, slow progress due to unfamiliarity with the Bank's guidelines and procedures, low level of competition and therefore high prices due to perception of poor security and a structure that i s not conducive to efficient operation of the sector. ProjectAppraisal This project has been prepared in accordance with Emergency Document: Recovery Assistance procedures (Operational Policy 8.50). As such, this Technical Annex provides the information normally available in a Project Appraisal Document. ClosingDate: The project closing date is June 30, 2011. ProjectID Number: PO87734 Map No. IBRD35243 REPUBLICOF IRAQ EMERGENCY ELECTRICITY RECONSTRUCTIONPROJECT TECHNICAL ANNEX BACKGROUNDAND STRATEGY Country Background 1. Large oil reserves and abundant natural and human resources enabled Iraq to attain the status of a middle-income country inthe 1970s. Income per capita rose to over US$3,600 inthe early 1980s. Today, Iraq's human development indicators are among the lowest in the region. Per capita income dropped to about US$770-1,020 by 2001. The 2005 income per capita of US$1,200 i s about one-third of what Iraqis enjoyed 25 years ago. Surveys suggest that poverty has worsened in recent years and unemployment i s estimated at about 30%. Today, most Iraqis have limited access to essential basic services, including electricity, water supply, sanitation, and refuse collection. Electricity supply, upon which essential services such as water supply, sanitation and hospitals rely, remains unreliable. In 1990, prior to the Gulf War, the total installed generating capacity was 9,295MW with a peak demand of about 5,100 MW. Approximately 87% of the population had access to electricity. A combination of wars, sanctions, looting and vandalism has, however, severely affected the entire power system infrastructure in Iraq. Duringthe 1991Gulf War the electricity system suffered severe damage: several transmission lines were put out of service, substations were damaged, and power generation equipment was the most severely affected. The available capacity was reduced to 2,325MW and power cuts of up to fifteen hours or more were common2. In some areas there was no supply at all. Currently available generating capacity i s inthe range of 3,600 to 4,50OMW, against a peak demand in the summer of 2006 of 9,600MW. Only about 80% of the population currently has access to electricity, and the reliability of supply i s poor. In November 2006, electricity available from the main grid averaged about 7 hours per day in Baghdad and about 10 hours a day nationwide. The situation has not substantially changed. InternationalResponse 2. During the summer of 2003, at the request of the international community, the World Bank and the United Nations produced a joint United Nations/World Bank Iraq Needs Assessment. The total reconstruction needs, excluding oil and security expenditures, were estimated at around US$35.8 billion. The report served as a basis for an International Donor Conference in Madrid in October of 2003, where donors pledged about US$32 billion for the period 2004-2007. The United Nations and the World Bank each established multi-donor trust funds. Most of the funds deposited in the trust funds have beencommitted to projects that are being implemented. 3. The major donor to the power sector i s the United States (US) which has earmarked about US$4.3 billion for the electricity sector3. About US$1.6 billion i s being spent on generation, US$1.7 billion on transmission and controls and about US$l billion on distribution. The United Nations Development Program through the UN Iraq Trust Fund (ITF) i s spending about US$170 million on various projects in the power sector, and Japanese bilateral grant assistancei s providing about US$200 2 United Nations/World Bank Joint Iraq NeedsAssessment: Electricity (p. 1) October 2003. The original allocation was US$5.5 billion, but US$1.2 billion was reallocated to address security issues. 1 million. The Japan Bank for International Cooperation has in principle allocated up to about US$1.5 billion to the electricity sector. The United Kingdom's Department for International Development currently has US$120 million committed to emergency infrastructure projects in power, water, fuel supply, and sanitation in southern Iraq. It i s expected that the power supply situation will improve as a result of these investments, particularly if the fuel supply can be appropriately addressed. However, the quantity and quality of supply remains highly unsatisfactory and major investment are still needed to restore power supply to acceptablelevels. 4.' The reconstruction of Iraqhas been hampered by a number of hurdles, includinggovernment bureaucracy, corruption, and security concerns. More than three years since the invasion, Iraqis still complain of a lack of electricity. 5. The Ministry of Electricity (MOE) reports that many of its projects funded by the Iraq Relief and Reconstruction Fund (IRRF) are still not fully completed. This i s due to a number of factors including project delays, cost overruns due to increased security cost, and the constant risk of insurgent attacks, which are diverting reconstructionresourcesto pay for security. 6. The Government of Iraq(GOI) i s preparing an "International Compact for Iraq" - as was done in the case of Afghanistan - to provide a framework for the country's economic transformation and integration into the regional and global economy, in partnership with the international community and based on a shared vision. The Government's reform program i s expected to be implemented with financial and technical support from the international community. The Electricity Sector 7. While some of the damage of the 1991 war was repaired and about 4,500MW of generating capacity was available in 2002, power supply remained unreliable throughout the 1990s and load shedding and unplanned power outages were frequent. In 2004, the situation deteriorated again, particularly during the summer when demand was at its peak. 8. In 1999, Iraqreorganized its electricity sector. The sector was separatedfrom the Ministry of Industry, and the Commission of Electricity (COE) was established on June 21, 1999. In 2003, the MOE was created to replace the COE. MOE i s responsible for both the policymaking and the electricity supply throughout the country. The operational functions (power generation, transmission, load dispatch and distribution) are no longer autonomous corporatized entities, but were reorganized into 18 geographically baseddirectorates within MOE. 9. The MOE i s working on the repairs and upgrading of the electricity system to provide its consumers with reliable electricity. In November 2006, MOE presented a new Master Plan for the sector for the years 2006-2015. The main objectives of the Master Plan are: Develop and increaseexisting system to cover the incremental power demand; Stop a further deterioration of the system by executing an efficient maintenance program and commencing comprehensive rehabilitation of the power plants as well as transmission and distribution networks; Improve the performance and efficiency of the electricity system by maintaining sustainability and stability of power supply and increasing the reliability; 4 / Presentedat the Governmentof Iraq/UNDPConference in support of the Electricity Master Planheldon November 5 to 7,2006 at the DeadSea in Jordan 2 Develop and expand the transmission and distribution systems throughout Iraq and executing projects that connect electricity to new residentialareas; Interconnect the electricity network with neighboring countries; Provide the best possible services to all categories of consumer (domestic, commercial, industrial, agricultural and governmental; Develop human resources and train themto provide high level of professional services; Increase per capita consumption of electricity from the present average of 1,100 kWh/year to 3,700 kWhlyear by 2009. 10. MOE estimates the total cost of the plan for the period 2006 to 2015 at about US$27 billion, of which US$15 billion would be required over the next three years. The available resources from the budget, donor funding and the private sector may not be sufficient and MOE may not have the capacity to implement this ambitious plan. However, it provides a comprehensive rehabilitation and reconstruction plan on the basis of which priority investments can be determined and feasibility and other economic studies be conducted. Key Issues in the Electricity Sector 11. Deteriorated Infrastructure and Unreliable and Inadequate Fuel Supply. The physical and operating conditions of the existing generation stations are such that many unitsneed refurbishment or even replacement. Some new generating units (mainly gas turbines) were installed, but they often cannot be operated because of fuel supply problems. The transmission and distribution networks suffered substantial damage duringthe 1991 war and since the 2003 conflicts. This situation combined with the lack of generating capacity makes it impossible to meet current demand. As a result, some networks are heavily loaded and are subject to repeated interruptions in addition to load shedding due to the lack of available generating capacity. Besides the security of pipelines, natural gas - which is the most efficient fuel types for most generation plants in Iraq- i s often not readily available. 12. Weakened Capacity. Iraqi staff has good skills in repair and maintenance. It has ensured continued operation of the power plants despite the shortage of standard spare parts and incomplete commissioning by contractors who had to evacuate when war broke out. However, there is a need to expose the staff to the latest technological developments and best practices in operation, maintenance, planning, design, and contract management to ensure efficient and sustainable operation of the power system. Equally important i s to train staff in conducting and overseeing feasibility and environmental impact studies. 13. Uncertainty of Availability of Funds and CumbersomeBureaucratic Procedures. Uncertainty about available budgetary allocations from the Government and donor funding has been an important factor for rehabilitation efforts not having yet led to the desired results. Inadequate coordination between projects financed from donors and from the MOE has also led to delays. Available funding from all sources is unlikely to be sufficient to fully implement the recently prepared needs-based electricity sector Master Plan. An additional issue i s the need to improve planning, project preparation, procurement, project management, and implementation. The Master Plan could also be further optimized to reduce the shortfall in financing. In the context of the proposed project, the Bank will provide assistanceinthis area. 14. Inadequate Tarifs, Low Cost Recovery, and Increased Cost of Doing Business. Prices of petroleum products, fuel, and electricity are still distorted and do not reflect production costs or international market prices. Although billing has been partially reinstated, collection remains difficult because of the current security situation. This problem i s further exacerbated by the fact that the cost of doing business has been increasing due to insecurity: security costs often amount to 30% to 50% of 3 the total cost of a project. In the long term, the adjustment of electricity prices to improve cost recovery and ensure rationale economic investment choices i s one of the key elements in improving the financial viability of the electricity sector. 15. Institutional Structure, Regulatory Reform and Colporatization. The currently centralized structure of the MOE may not be the best option for the future of Iraq electricity sector. Possible reforms could start with reverting back to the autonomous arrangements that were in place in 1999. However, modernization of the current legal and regulatory framework i s also requiredin view of the recent decision by MOE to open the electricity sector to private investment. Over time private sector participation in the construction and manufacturing companies will increase if conditions are right and the correct signals are given. MOE has to give careful consideration to moving away from direct management of the electricity utilities and instead focusing on formulating sound electricity policy for creating a favorable investment climate and a clear regulatory framework. The Bank i s providing assistance in this area through economic and sector work and through the Public Private Infrastructure Advisory Facility (PPMF). Bank Responseand Strategy 16. The World Bank Iraq Trust Fund (ITF) has financed fifteen projects amounting to about US$410million. Twelve of the ITF projects (for education, health, water supply/sanitation and urban services, community infrastructure, private sector development, social protection and a household survey), amounting to US$403 million, are implemented by the Government of Iraq and three are Bank-executed programs, of which two are for capacity building and one for assistance to the household survey. After a slow start, implementation i s accelerating. Contracts awarded from ITF grant money have doubled since January 2006 and now total about US$166 million. About US$ 74 million has been disbursed. Contracts for an additional US$ 150 million are in advance stages of tendering. This is a considerable achievement, considering that Iraq has pervasive implementation weaknesses regardless of the financing source and lacks recent experience with international donor procedures, and has not borrowed from the Bank for 25 years. An Iraqi consulting firm carries out fiduciary verification of the ITF projects and reports monthly on progress. Three IDA financed projects have been approved (the US$lOO million Third Emergency Education Project - November 2005, the US$135 million Emergency Road Rehabilitation Project -June 2006 and the US$40million Dokan and Derbandikhan Emergency Hydropower Project - December 2006), but these projects are not yet effective. The Bank i s making efforts with the Government to accelerate effectiveness. The Bank's implementing arrangements seek to ensure Iraqi ownership and strengthen institutional capacity, which contrasts with the implementation arrangements used by some donors which have bypassed Iraqi institutions. Those projects have often experienced serious operational deficiencies once "handed over" to Iraqi agencies. 17. The Bank prepared a Second Interim Strategy (ISN) for Iraq (discussed by the Executive Directors on September 15, 2005), which seeks to guide the development of efficient, transparent and accountable institutions as a means of supporting economic activity. The ISN stresses the need to restore basic service delivery. The importance of power to the provision of other basic services cannot be underestimated. Electricity i s central to sustainable economic, social and environmental development as well as to poverty reduction and is paramount to Iraq's overall development process. In this context, the Government of Iraq has asked the Bank's financial support for the Emergency Electricity Rehabilitation Project (EERP). Iraqreceived six IBRDLoans between 1950and 1973, the last of which closedin 1979. 4 18. As indicated inthe ISN, Government priorities for the US$500 million IDA allocation are for education, electricity, transport and water supply. As per the Government's request that 17 percent of donor support be earmarked for projects in the KRG, the KRG explicitly requested that its share of the US$500million IDA allocation be concentrated inpower (US$40 million) androads (US$45 million). The two IDAprojects for KRGhave now been both approved by the Bank's Executive Directors. 19. For the electricity sector, the Bank plans to support the Government with reconstruction and expansion assistance, as well as provide advice on several of the aspects affecting efficient operation and sustainability of the sector, as follows: As planned under this project, provide investment financing for reconstruction, rehabilitation and constructionof new facilities, as well as technical assistance for institutional development and capacity building. The Bank would also assist in ensuring that projects are prepared properly, the bidding process i s transparent and therefore attract the interest of donors, other financiers and possible the private sector. Advisory support to the Government, including: (i) review of the electricity sector structure and legal and regulatory framework to help the Government adopt a structure conducive to more efficient and sustainable operation; (ii)preparation of a strategy for private sector participation; (iii) preparation of a strategy for conversion from use of crude oil to natural gas for power generation; (iv) review of planning methodology and criteria to ensure least cost * development; and (v) design tariff reform to ensure tariffs are cost-reflective while protecting the poor. A long time relationship with the power sector in Iraq i s anticipated including possible additional World Bank lending to help with the implementation of priority projects in MOE's master plan Rationale for Bank Involvement 20. Inresponseto the tremendous needto rehabilitate and restore basic infrastructure facilities and services throughout Iraq, initial donor support was primarily directed to financing priority investments in the power and water sectors, as well as to improving key social services. Despite the relatively large resources channeled by the US and Japan for the reconstruction and rehabilitation of the electricity sector, current power supply meets only about 50% of the demand. 21. The proposed project is fully consistent with the World Bank's ISN for Iraq, which was prepared in consultation with the GOI, and submitted to the World Bank's Board of Directors in September 2005. The ISN, guided by Iraq's NationalDevelopment Strategy of July 2005, emphasizes the need for rapid rehabilitation of critical infrastructure services and institutional support as pre- requisites for long-term sustainable recovery. 22. The GO1selected the Hartha power plant based on a rapid result approach. The combination of rehabilitation and technical assistance will ensure an increase in generation capacity and stabilization of the national grid when the rehabilitation i s complete. This project will have the potential to add urgently needed capacity in a relatively short period of time and at an economical cost since: (i)most of the equipment required has already been procured under the O m , (ii) technical expertise is available on-site through sufficient domestic labor skills and experience, and (iii) the security conditions have been relatively stable inthe southern region. 23. ' In addition, the Bank's experience in capacity building and project preparation will help ensure effective future rehabilitation and sustainable performance of the plants. Assistance to improve 5 planning, project preparation and implementation, includingfuel supply will be provided as part of the proposed project. The Bank i s also providing advisory services that will assist in reforming the sector to ensure commercial operation and sustainable development. The most urgent tasks include: (i)a review o f the current institutional electricity sector structure; (ii) help with formulating a strategy for private sector participation; and (iii) assistance with formulating tariff policies to ensure they are cost- reflective while protecting the poor. The first two issues will be addressedthrough the Bank economic and sector work planned for the current fiscal year, together with a PPIAF financed study that will provide options for electricity sector reform and private sector participation. Issues related to the electricity tariff policy are being addressedas part of the Bank's broader dialogue on tariff and subsidy issues. 24. Given the Bank's experience with infrastructure reconstruction projects and institution building in conflict-zones, it is in a good position to assist the Government to complete the project successfully. It also permits the Bank to remain engaged with the Government's power sector rehabilitation and reconstruction plans, and to play a lead role in the donor community to attract other donor financing. LessonsLearned inIraq 25. Recent experience in Iraq has highlighted the importance of professional due diligence on projects prepared by Iraqis, and the need to bring them to a level of feasibility study at an early stage of preparation. If possible, assistance should also be provided to the Iraqis to prepare final designs and bidding documents, so as to ensure quick disbursements and rapid impact. Disbursement expectations should be realistic given the strategy of fostering ownership by the Government. 26. Additionally, focusing on implementation arrangements during project preparation has proven to be of great importance. The PMT concept utilized in previous projects has proven to be quite effective and i s being considered by other donors. The PMT consists of staff seconded on a full- time and/or on a part-time basis from various departments within the implementing agency, and supported from time to time by consultants. In that regard, it i s imperative to get high level support and the PMT appointed as early as possible inthe project preparation cycle. 27. It is also important to focus on how the supervision by the Bank will be optimized considering the restriction of Bank staff to travel to Iraq. The use of local engineers employed by the Bank to discharge this function i s one viable option that has been adopted by the ongoing water projects and local engineers will also be used for the proposed project. In addition, the Fiduciary Monitoring Agent (FMA) will support the Bank in its efforts by, inter alia, visiting project sites to check on physical progress, providing assistance to the PMT, monitoring compliance with procurement and financial management requirements for the components financed from the Iraq Trust Fund Grant. 28. Early collaboration with other donor agencies has proven vital in previous emergency operations, such as Afghanistan. Accordingly, the Bank will provide support to the MOE to strengthen its ability for donor coordination and management of reconstruction programs. In this regard, the Bank has organized several electricity sector donors' meetings, the last of which was held `/AUS$75,000grant from the Public Private Infrastructure Facility to review issues and options for private sector participation in generation has been approved and the study started in November 2006. 6 in Amman in September 2005, to discuss the role of each donor, coordination issues and outstanding sector issues. 7 29. In line with these lessons, the project design has been kept simple and the number of contracts will be kept to a minimum. Support and advisory services to the MOE and the PMT are included. In addition, the Bank has conducted generic training, including project management, procurement, financial management, and environmental and social safeguards, for staff members of ministries associated with infrastructure. This will continue duringthe coming months to ensure client readiness prior to project implementation. DETAILEDPROJECTDESCRIPTION Objectives 30. The objectives of the project are to: (i)alleviate the current power supply shortfall by restoring the base load generation capacity of the Hartha Power Station Units 2 and 3 to 400 MW; and (ii)lay the groundwork for improved power system planning and fuel supply by providing the tools and other support necessary to enhance in-house capability to prepare, implement and operate current and future projects. ProjectDescription 31. All units of the Hartha Power Station are designed to use natural gas as the primary fuel firing the boilers, but they can also use heavy fuel oil (HFO) as well as crude oil, if natural gas i s not available. MOE prefers the use of natural gas over HFO or crude, for both economic and environmental reasons. Natural gas i s not currently available, because of problems with the collection, processing and compression capacity, but the Ministry of Oil is working on restoringHFO supply to the Hartha power plant. Hartha Units 1and 4 are currently being operated on crude oil. Under the current fuel supply plan Hartha will be operated on HFO until suchtime as gas supply becomes available. The timingof this latter option remains uncertain. 32. The total cost of the proposed project is estimated at US$l50 million. It consists of the following components: Component 1: Rehabilitationof HarthaPower StationUnits2 and3 (US$144million) Component 1.1: Hartha power plant (800 MW) is located at the Shatt Al-Arab river, about 33km from Basra and 25km from the Iranian border, and was commissioned in 1979. Units 1and 4 have been running most of the time since then, but Units 2 and 3 have been mostly out of operation since the first Gulf War. Rehabilitation of Units2 and 3 was initiated with assistanceunder the OFFP and equipment for an estimated US$l20 million has been delivered to the site. The proposed project will consist of completing supply of materials, rehabilitation and commissioning of units 2 and 3 of the Hartha power plant to restore to as close as possible their original capacity of 400MW and ensure an additional operational life of 20 years. The tender document will take account of the equipment and materials already supplied under the OFFP. The main components comprise the boilers, condensers, turbines, governors, generators, transformers and control equipment. The bidders will be encouraged to form joint ventures with local contractors, which would reduce the project cost and create local employment. Most equipment will be replaced rather than repaired. 7 / Most donors active in the electricity sector, including the Bank, participated in the conference held in November 2006, where MOE presented its Master Plan (see footnote 3) 7 Component 1.2: Support in bid evaluation, construction supervision and further support to MOE up to the end of the defects liability period. Component 1.3: Implementation of the agreed recommendations of the Environmental and Social Management Plan (ESMP) Component 1.4: Incremental operational cost of the PMT such as office equipment, travel and per-diem but excluding salaries of IraqiPMT staff. * Component 2: Support Services (US$6 million) Component 2.1: Consultancy support and training to Iraqi MOE staff in the preparation of least cost reconstruction and expansion plans, feasibility studies and advisory services for future projects including projects related to securing fuel supply and reducing gas flaring. Priority will be given to assisting MOE with completing a feasibility study and related consulting services for the Mansuria Project (development of a gas field and the construction of a 2xl23MW simple cycle plant with a possible expansion to a combined cycle project) and other possible oil and gas field developments, in close cooperation with the Ministry of Oil. Support for least cost planning will complement the development of planning tools already provided or to be provided through alternative financing. Such tools would include software and measuring instrumentsfor all stages of power systemplanning. Component 2.2: Regional and overseas training for staff in the technical areas of operations, maintenance, planning, environment and general project management; as well as in financial, legal and general management aspects of power utilities. Component 2.3: Independent audits for the project. Component 2.4: Office equipment for the PMT in Baghdad and at Hartha, such as office equipment and operational costs such as travel and per-diembut excluding salaries and benefits of Iraqi PMT staff. Component 2.5: Miscellaneous short term consulting services that may be required for the Hartha project, such as an independent review of project implementation, as well as other advisory services for the power sector that may be required by the MOE. Project Costs and Financing Plan 33. The project will be implemented over a period of about 4 years, starting January 15, 2007 through December 31, 2010. The estimated total cost of the project is US$l50 million, and it i s proposed to be financed through: (i) US$124 million from IDA; (ii) million from the World US$6 Bank ITF ;and (iii) US$20 million from the GOI's resources. Project costs by component are shown in Table Ibelow. A detailed description of the project costs is shown inAnnex IV. * /The incremental cost of the PMT will first be financed from the ITF, but this provision has been included to be able to cover incremental PMT cost after the closing date of the ITF 9 /The ITF Grant closing date assumes that the ITFtermination date (currently set at December 31, 2007) will be extended until December 31,2010. Should the ITF termination date not be extended, the Recipient would need to seek additional sources of financing for completing the activities funded from the grant. 8 Table I-Project Costs by Components includingContingencies-andthe FinancingPlan - TotalCost - FinancingPlan Component Excluding Including % of IDA WB ITF GO1 Zontingencies Contingencies Total (US$) (US$) - Component 1: _ _ _ ~ . Rehabilitationof Hartha 110,000,000 132,000,000 88 112,000,000 20,000,000 Power Station Units 2 .. and 3 EngineeringServices 6,000,000 7,000,000 5 7,000,000 PartialImplementation of Environmental Mitigation Measures 4,000,000 5,000,000 3 5,000,000 andPMT support Component 2: Support 5,000,000 6,000,000 4 6,000,000 Services Physicaland price 25,000,000 contingencies - Total ProjectCosts 150,000,000 150,000,000 100 124,000,000 6,000,000 20,000,000 INSTITUTIONALARRANGEMENTSAND PROJECTIMPLEMENTATION ProjectManagement Structure 34. The MOE will be the implementingagency of the IDA Credit and the Recipient of the ITF Grant. A few other Iraqi institutions such as the Ministry of the Environment, the MOPDC and the MOF will be associated indirectly with the project for clearances and reviews in accordance with national requirements. The ISRB has reviewed and cleared the proposed project. The organizational structure of MOE i s provided in Annex V. ImplementationArrangements 35. The day-to-day functions of the project including procurement, financial management and administration will be the responsibility of a PMT reporting to the Minister of MOE. The PMT was recently established with core staff seconded, on a full-time and part-time basis, from existing technical and financial units. Many of these staff have attended initial training courses and workshops organized by the World Bank, UN agencies and other bilateral donors. The PMT will closely coordinate its daily activities with the different departments of the ministry, consultants and 9 contractors. The members of the PMT include a PMT Director, a project site director, two procurement specialists, two project engineers, one financial management specialist, one environmental safeguards specialist, one administrative assistant, and one legal advisor. 36. The PMT will be supported, from time to time, by consultants of different expertise to assist with final designs, tender documents, tendering evaluation, and supervision of works. The consultants will also provide on-the-job training. The support services component provides financing for additional professional training locally or with internationalinstitutions. 37. Internationalexperts were recruited to assist the MOE to complete the specification and tender document for rehabilitation of Units 2 and 3 of the Hartha Power Station. The tender document takes into account of the equipment and materials already supplied under the OFFP. Experts from DFID provided support to the Bank team for the review of alternative rehabilitation scenarios and possibilities for supplying natural gas fuel for the power station. 38. A MIMwas developed by the Bank in 2005 to assist Iraqi authorities with implementation of Bank-financed projects. A Project Implementation Manuel (PIM) relating to issues specific to the project will be prepared by the PMT and updated from time to time. 39. The Bank, as the Iraq Trust Fund Administrator, will supervise ITF-financed activities in accordance with the Bank's applicable policies and procedures. Until security conditions allow travel throughout Iraq possible for international Bank staff, donors require the Bank to engage a Fiduciary Monitoring Agent (FMA) to help ensure that donor funds are disbursed only for the purposes intended by the ITF and to support the Bank in carrying out its supervision function for donor-financed activities. The FMA is an independent consulting firm contracted to monitor the physical progress of ITF-financed activities and compliance with applicable Bank procedures. Procurement 40. General: Procurement for this project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. Detailed description of the procurement methods and consultant selection methods are specified in the Procurement Annex (Annex 6). The PP is also attached (Annex 6) and will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. A General Procurement Notice was published in the United Nations Development Business (UNDB) and dgMarket in October 2005. An SPN for pre-qualification for the Hartha Supply and Installation contract and two calls for Expression of Interest for the ESIA and consultancy services for Hartha have also been made. Advanced procurement of eligible contracts awarded between January 1, 2007 and the date of effectiveness of IDA Credit and ITFGrant would be allowed. 41. Procurement of Works and Goods: Works and Goods procured under the project will consist of supply and installation of equipment for Units 2 and 3 of the Hartha power plant using ICB procedures, supply of maintenance and control equipment usingICB and NCB procedures, and supply of office equipment needed for project implementation using national competitive bidding (NCB) procedures. For ICB of works and goods, the SBD of the Bank will be used. For procurement of goods costing less than US$500,000, the SBD for NCB of the MIM will be used. Simple works costing less than US$lOO,OOO will be procured following the procedures of procurement of minor works on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. Shopping of Goods will be used for supply contracts costing less than US$lOO,OOO. 10 42. Selection of Consultants: Consultants' services procured under this project will include: engineering consultants to supervise rehabilitation of the Hartha Power Station; specialized firms and individuals to assist the PMT in project implementation, including establishment of Monitoring aand Evaluation systems (M&E),training of MOE staff in procurement, financial management, and project management; procurement consultants to prepare procurement post reviews; auditors to prepare auditing of financial accounts; and other consultants for provision of specialized technical fields. Shortlists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 43. Operating Costs: To support the Project Management Team, the Grant will finance part of the expenditures directly related to project implementation. These could include: (i) transportation and travel includingper diem allowance for PMT staff in travel status; (ii) office equipment; (iii)expenses associated with fiduciary requirements such as audits and environmental matters; and (iv) any other project management support costs as agreed by MOE and the Bank, but excluding staff salaries and benefits. Some of these items will be procured using MOE administrative procedures for shopping, satisfactory to the IDA. Assessment of MOE Capacity with Procurement 44. Taking into account the existing information on the overall environment for procurement in Iraqand inparticular within the MOE, the overall procurement risk i sjudged to be high. 45. MOE is currently implementing projects financed by the Iraqinational budget (about US$700 million in 2006) as well as other sizable infrastructure projects financed by donors. This reflects that the MOE i s capable of implementing all project components financed under the IDNGrant using its own staff and facilities. Moreover, the PMT, with the assistance of Bank staff has prepared the pre- qualification document and carried out the pre-qualification process for the Hartha rehabilitation component of the project. The PMT has also, with the assistance of consultants, compiled the bidding document for the same component. The Bank, however, would work closely with the PMT and other staff of the MOE to build knowledge inBank procurement guidelines and procedures. 46. There i s no centralized procurement department in the current organizational structure of the MOE. Procurement is carried out by each department of the MOE through a specialized unit. International and local procurement are closely coordinated with the Department of Administrative Affairs and Department of Technical Affairs. 47. Procurement activities under the project will be carried out by the PMT. Qualified procurement staff has already been appointed to the PMT. Some have already been trained in Bank procurement procedures through attendance of workshops organized from time to time by the Bank in Amman. These training courses will continue to be made available. Alternatively, such training will be obtained through attending formal courses in international institutions that deliver training on Bank procurement. 48. Construction supervision and site progress reporting will be the responsibility of the project site director at the Hartha power plant near Basra. Overall procurement functions will be handled by the PMT in Baghdad. The project site director i s a member of the PMT. 49. Given that the procurement environment which prevailed in Iraq during the last two decades which was different from the norms of acceptable international practices and the legal and regulatory changes introduced by the then CPA, public procurement will predictably bear a high level of risk in 11 the near future. The risk lies essentially in the lack of good laws and regulations, absence of modern standard documentation, lack of training of concerned staff in procurement, lack of effective law enforcement which would increase the risk of looting and the damaging of facilities, and the inability of Bank procurement staff to supervise projects in the field. 50. On the positive side, however, Iraq has a wealth of procurement and engineering staff that may be retrained rapidly to operate a reformed procurement system and use new procurement documents and tools as they become available. About eight of the MOE staff already received training courses in procurement, financial, and project management that were organized by the World Bank in Jordan. Recommendations and Action Plan to BuildMOECapacity - Two procurement staff will be assigned to the PMT. These two officers will receive both formal and ad-hoc procurement training on efficient handling of the procurement activities underthe project. - An international consulting firm will be recruited to assist the PMT with the supervision of construction at the Hartha Power Station and in establishing a procurement monitoring and reporting system. - Series of training sessions and workshops will be carried out during project launch and throughout project implementation. The target audience would be PMT staff and other employees of the MOE. - The MIM would be adapted in the PIM to the particular circumstances of the project and MOE. The MIM provides standard procurement documents, evaluation reports, progress reports, and filing requirements that would be followed throughout project implementation. - The thresholds for prior review by the Bank are set at a low level, to allow Bank staff to provide hands-on training to the staff of the PMT. - A Project Launch Workshop would be held in Arabic (or with Arabic translation) soon after IDNGrant signing. All staff involved in the implementation should attend the workshop and it will be most critical that this staff be assigned on time. Disbursement 51. The IDA Credit and the ITF Grant are scheduled to close by June 30, 2011 and September 30, 2010'O, respectively. The counterpart funds for the project are allocated in the MOE's captial expenditure and operational budgets up to project completion. The Disbursement Section of Annex 7 shows the allocation of the three sources of finance proceeds by component and according to expenditure category, and provides a disbursement schedule. 52. The Bank's strategy in Iraq i s to ensure ownership and strengthen institutional capacity by financing operations that are implemented by Iraqi ministries and other recipient entities. Trained PMTs will facilitate implementation and help ensure compliance with the Bank's fiduciary and safeguards requirements. The project will finance specialized technical support in procurement, financial management, and other areas, as needed. IoThe ITF Grant closing date assumesthat the ITFtermination date (currently set at December 31,2007) will be extended until December 31,2010. Should the ITF termination date not be extended, the Recipient would need to seek additional sources o f financing for completing the activities funded from the grant. 12 53. As a further measure of control, disbursements will be made primarily through direct payments. Once authorized direct payments will be made by the World Bank directly to contractors', consultants', or suppliers' commercial bank accounts, or other financial intermediaries that are capable of receiving funds transferred through the international banking system. Retroactive financing of eligible project expenditures incurred from January 1, 2007 until the date of signing the Financing Agreement will be allowed up to an aggregate amount of about 20 percent of the Credit and Grant respectively. 54. Project management support activities and payments below the threshold of $75,000 normally will be made through payments by the Recipient from its own resources, which will be periodically reimbursed by the World Bank upon presentation of relevant supporting documents, including proof of payment, and signed withdrawal applications. Both PMTs and the main financial counterparts from the implementing agencies will be exposed to training in Bank disbursement procedures. 55. In accordance with the Country Financing Parameters approved for Iraq of September 2005, the IDA Credit and ITF Grant can finance up to 100 percent of project expenditures. For most contracts 100 per cent of expenditures will be paid, the exception i s the main rehabilitation contract, which will be jointly financed by IDA (up to 85 per cent) and MOE (15%). The MOE will also contribute to the project through the assignment of PMT staff and by covering part of the PMT operational cost. 56. The supporting documentation for the expenditures claimed through statement of expenditures (SOEs) will be maintained at the MOE and made available for review by Bank representatives upon request; any documentation relating to SOEs will be retained for up to one year from the date the Bank receives the final grant audit report. The PMT and the main financial counterparts from the MOE will be subject to intensivetraining inBank disbursement procedures. FinancialManagement 57. The project is multi-financed through three sources: an IDA Credit, an ITF Grant and a Government contribution. The MOF i s the representative of the Recipient of the Credit and will sign the financing agreement, while the MOE will sign the Grant agreement as the Recipient of the ITF Grant. This i s the first project inthe Iraqportfolio that would combine both ITFand IDA financing. In addition, it i s the first project to provide counterpart funds. These conditions are expected to create some additional challenges to the flow of funds and adoption of the FMarrangements. 58. A financial management assessment was undertaken through several meetings with representatives from the MOE for the purpose of determining whether the ministry's FMarrangements are acceptable to the Bank and to help in defining the areas that need additional arrangements or enforcement of controls. Based on the results of the assessment, the financial management risk, as a component of the fiduciary risk, and which i s a combination of country, sector and project specific factors i s high. In light of the Bank Second Interim Strategy Note covering ITF and IDA-financed projects executed by the Iraqi Government, the project financial resources, extended through the IDA Credit, will be managed through the framework of the MOE systems, regulations, controls, and as disclosed in the legal agreements. 59. Consequently, the following measures are introduced to help diminish the risk, simplify financial transactions, and ensure that the financial management systems at the MOE are fully responsive to the Bank's fiduciary requirements:(i) the engagement of a dedicated financial officer in Baghdad and an accountant at the Hartha site to follow on the project financial activities; (ii) payments to most contractors, consultants and vendors will be made through direct payment method, while 13 payments below the threshold of US$75,000 will be reimbursed to MOE upon presentation of supporting documentation and proof of payment; (iii) maintain close coordination and timely flow of information between the project site at Hartha and the PMT financial officer in Baghdad to ensure sufficiency of supporting documents for the malung of the payment from either source of funds; (iv) using a spreadsheet application to follow on the project accounts and to generate the project reports; (v) having a Fiduciary Monitoring Agent inside Iraq to monitor the project activities funded by the ITF. The support provided to the PMT by the FMA, will also help the PMT administrating the IDA- funded activities; (vi) the engagement of an independent auditor, with international experience acceptableto the Bank, to performthe project audit and issue an independent auditor opinion; and (vii) documenting project arrangementsin a chapter of the PIMbased on the MIM. 60. The project has been design in such a way that the joint financing of contract is avoided as much as possible. It is anticipated that only the main rehabilitation contract will be jointly financed from IDA and MOE's own budgetary resources. As part of the financial monitoring report, MOE will maintain quarterly disbursement plans to ensure that MOE's counterpart funds will be released in a timely manner. The financial management arrangements and identified risks are detailed in Annex 7. Environmental and Social Safeguards 61. This project is classified as a Category "A" under World Bank Safeguard Policies OP 4.01. In accordance with the revised Environmental and Social Screening and Assessment Framework of April 2006, and in view of the emergency nature of this project, a comprehensive Environment and Social Impact Assessment (ESIA) will be prepared during the implementation in accordance with OP 4.01. Approval by the Bank of the ESIA i s a condition for disbursement of funds for the main rehabilitation contract. Since Hartha units 1and 4 are now being operated largely with crude oil and given the potential adverse health impact resulting from the burning of crude oil, a rapid risk assessment has been carried out as part of project preparation, in addition to the preparationof the full ESIA.The Project will not involve resettlement. 62. The rapid risk assessment evaluated emission dispersion from the Hartha power plant. For this purpose, atmospheric dispersion modeling was used to define potential air quality impacts associated with the two currently operational units (units 1and 4 at a nominal capacity of 400 MW) as well as the impacts that may arise upon the rehabilitation of two additional units (units 2 and 3, reaching a combined capacity of 800 M W for all units operating together). Emissions were simulated for a complete meteorological year considering various scenarios (before/after rehabilitation, type of fuel used - crude oil, HFO, and natural gas emission control measures) to assess potential near-field exposure and health impacts at shodnear distances or within plant vicinity (up to 1.5 km) and at far field or long distances reaching the Kuwaiti and Iranian borders. The dispersion modeling was conducted usingprimary constituents of concern that are linked to power generation, namely, SOzand particulate matter (PM). 63. The contribution of the plant to SOzlevels can be significant at nearby distances representing a potential high risk that need to be alleviated in the evaluation of alternatives during the implementation of the ESIA (see below). This contribution added to the background levels, may exceedWorld Bank guidelines of daily concentrations of 125 micrograms/m3. The contribution risk of SOzbecomes less significant at receptors along the Iraqi-Iranian and Iraqi-Kuwaiti borders (far field simulations). 64. Similarly, the contribution risk of the plant to P M levels i s likely to be less significant than S02, at both the near and the far fields, because of the desert nature of the region which i s generally associatedwith high background P M levels in comparison to the plant's contribution and exceeding on 14 their own World Bank guidelines of daily concentrations of 70 microgramdm3. The ESIA will evaluate the suitability of the World Bank guidelines to the region given its desert nature that is characterized with elevated backgroundconcentrations. 65. An English and Arabic non-technical summary of the rapid risk assessment was disclosed in Iraq at MOE's website in November 2006 as well as in the Bank's info shop (see Annex 8). This was considered necessary to: (a) alert the public and the Board that such an approach is of a very exceptional nature in view of the situation in Iraq; (b) inform the MOE, local NGOs and various stakeholders of the potential health impacts of burningcrude oil and that the use of this fuel is of a temporary nature; and (c) minimize to the extent feasible any residual Bank exposure and risk of criticisms from such stakeholders. 66. A comprehensive ESIA will be carried out as a follow up to the risk assessment. The Terms of Reference (TOR) for the ESIA are included in Annex 8. A PHRD grant has been obtained in place to finance the ESIA and the consultants started their work in December 2006. The ESIA i s expected to be completed at the latest by April 2007. The outcome of the ESIA will be an Environmental and Social Management Plan (ESMP) including mitigation, monitoring, and capacity building-training as well as a timetable for its implementation. Inthis context, the various known elements of the expected mitigation measures may include a feasibility study for the remaining two units 1 and 4 which have been in operation for the past 25 years (rehabilitation vs. replacement with a new plant), improvement in fuel quality (less sulfur content) or the usage of alternative fuel (natural gas), or the installation of a scrubber system. The analysis of alternatives in the ESIA will examine such options taking into consideration the availability of funds at this time as well as future activities at the site. The full extent of the mitigation measures and the cost of such measures will not be known until after the ESIA is completed. However, an amount of US$ 5 million has been allocated to implement various elements of the EMSP during the rehabilitation of units 2 and 3 including the feasibility study related to units 1 and 4 to minimize the healthrisks. 67. In the event that funds currently earmarked for the implementation of the ESMP are insufficient including the possible use of contingencies in the IDA Credit, the Bank seek agreement, at negotiations, on a covenant obligating the Government to implement the agreed mitigation measures identified in the EMSP in accordance with a specific time table, possibly with World Bank funding in a next operation, with funding from other donors or from the Government's own resources 68. The project is located along the Shatt Al-Arab river, which forms the borders between Iraq and Iran, and hence is an international waterway. In accordance with OP 7.50 (International Waterways), the MNAVP has determined on October 14 2005 that the proposed project falls within the exceptions to the notification requirement under Paragraph 7 (a) of the Policy. Project Supervision 69. Considering the unfamiliarity of the Iraqi counterparts with Bank guidelines and procedures, strong supervision efforts including frequent field visits would be needed, particularly during the early stages of project implementation. Should the security situation prevent Bank staff and international consultants from traveling to Iraq during project implementation, project supervision would primarily rely on local staff and consultants and other donor partners in Iraq, supported by Bank staff and international consultants working from outside Iraq. Regional consultants with branch offices in Iraq could also be recruited to assist with project implementation.The PMT will prepare quarterly progress reports in a format agreed with the Bank. The FMA will support the bank in carrying out the supervision with respect to the activities financed from the ITF. 15 70. Reporting to ITF Donors. The Bank will maintain separate records and ledger accounts in respect of the funds deposited by the donors with the Bank under the ITF. Within ninety (90)days of the end of each quarter (March 31, June 30, September 30, and December 31), the Bank will prepare, on a cash basis, an un-audited statement of receipts, disbursements, and fund balance with respect to the ITF and forward a copy to each donor. Each such statement will be expressed in United States Dollars, the currency in which the ITF funds will b e maintained by the Bank. In addition, within one hundred and eighty (180) days of the completion of all disbursements relating to activities financed from the ITF, the Bank will prepare on a cash basis an un-audited financial statement of receipts, disbursements, and fund balance with respect to the ITFand forward a copy to each donor. The Bank will furnishto the donors: (a) on a semi-annual basis, a consolidated report describing the operations of the ITF (including contributions, disbursements, and implementationprogress inthe preceding six months; and (b) on an annual basis, a management assertion, together with an attestation from the Bank's external auditors, concerning the adequacy of internal control over cash-based financial reporting for trust funds as a whole. 71. The Bank will require a financial statement audit of the ITF to be performed by the Bank's external auditors on an annual basis. The costs of such an audit, including the internal costs of the Bank with respect to the audit, will be charged to the ITF. The Bank will provide each donor with a copy of the auditor's report. 72. The Bank will maintain close consultation and coordination with the donors. The Bank will provide each donor to the ITF with semi-annual reports on its quarterly ex-post evaluation of the activities undertaken by the FMA. Within six months of completion of the activities, or of full disbursement of the contributions, whichever comes later, the Bank will provide a final progress report to each donor, together with a copy of the independent review of the performance of the FMA. Upon request by any donor, the Bank will send to such donor the draft and final reports received by the Bank from the FMA on the activities financed by the contributions Monitoring and Evaluation 73. Performance indicators for the project have been identified during project appraisal and will be measured annually during supervision (Annex 2). The MOE will work with consultant(s) to establish a monitoring baseline against which performance can be measured. Annual reviews by the MOE would be carried out to track compliance with IDNGrant conditions and highlight lessons from implementation. A mid-term review i s scheduled for June 2008 and a final project review i s scheduled for June 2010 to evaluate overall project accomplishments. Furthermore, an independent MA has been appointed and funded by the World Bank to assess compliance with the Grant Agreement, as stipulated in the Trust FundConditions. FINANCIAL AND ECONOMICJUSTIFICATION 74. The analysis in Annex 10 shows that, among the relevant alternatives considered, the rehabilitation of the Hartha power station i s the most effective way of delivering the electricity needed. This preliminary economic analysis compares the levelized energy cost (US cents/ kWh) of rehabilitating of Hartha (400 MW) with that of a new 390 MW Combined Cycle Gas Turbine power plant. 75. The hypotheses usedin the calculations are shown inAnnex 9. The prices usedfor heavy fuel oil and natural gas are border prices, and are much higher that the current transfer costs from the 16 Ministry of Oil to the Ministry of Electricity which are reportedly the equivalent of a few US cents per barrel. 76. The hypothesis has been made that both Hartha and the combined cycle power plant will use heavy fuel oil to generate electricity. Natural gas may be an option in the future but there i s uncertainty about its availability. 77. Equipment cost in Iraq can be relatively high mainly due to the security situation. About US$120 million worth of equipment has already been purchased and i s available at the site of Hartha power station. This cost can be considered as a sunk cost and has no bearing on the decision of whether to proceed with the rehabilitation of Hartha or build a new combined cycle power plant. 78. The project will help in the acquisition of needed additional equipment and installation to refurbish Units 2 and 3. Bidding for this additional equipment may yet turn out lower than what was forecast. Recent bids for the rehabilitation of Hartha ranged from US$95 million to US$145 million. US$130 has been usedinthe analysis. Results 79. The results of the analysis are shown inthe following table: Hartha 4.92lkWh 5.07lkWh 80. Hartha has the lowest levelized cost per kWh at 12% discount rate than a comparable size combined cycle power plant. With a capital cost increase of lo%, the levelized cost for Hartha remains the lowest. 81. Other benefits not quantified include: (i) the existence of a competent workforce familiar with the operation of steamplant at Hartha; and (ii) no additional land acquisition is necessary. RISKS AND BENEFITS 82. This projectwill be implementedina very highriskand conflict prone environmentwith elements of both localized civil conflict and post conflict reconstruction. The major risks to the project are the: (i) security issues, (ii)administrative turnover due to political changes, (iii)limited institutional and implementation capacity, (iv) project sustainability (financial), and (v) unfamiliarity with Bank safeguards and procedures (accountability, FM, and procurement). To mitigate these risks, the project design of each module will be kept simple. The project will include training and planning and implementation support components to minimize fiduciary risks. Administration changes inMOE- Building relationships at the technical level with jeopardizing current commitment to project H current officials to ensure continuity in event of design and inputs. changes. 17 100% financing for most contracts and firm Deterioration of fiscal conditions - allocation for the project in MOE's capital budget sustainability problems for operations. assures that implementation will not be delayed by MOE fiscal constraints. Administrative and political stability limiting The technical assistance i s focused on planning , capacity to absorb institution building H project preparation and execution rather than on assistance trving to address all institutional issues Sabotage of the plant or the transmission I network H MOE to improve security of its facilities From 4 ,mponentsto Outputs Security conditions deteriorate making access IUse o f local contractors and local staff for by contractors to site and supervision H supervision, plus carefully crafted monitoring difficult. arrangements by directorate MOE assigned staff. Possibility of high prices due to high demand Planning will include generous provision for price on local construction industry and local H and other contingencies. Competitive bidding may inflation (including fuel costs). also help minimize this. Difficulty in hiring expatriate support Support services will focus on local staff. Where services consultants wherever local expertise possible backing from international support i s lacking. services will be provided through virtual meetings, and meetings outside Iraq. Use will be made of local consultants contracted to The Bank's inability to carry out in-country assist in supervision. In addition, special supervision. S monitoring instruments will be designed for the use of MOE implementation staff and these supervision consultants. P )curemel Risks Lack of adequate laws and regulations, H Prior review thresholds have been set at relatively absence of modern standard documentation, low levels. Frequent training for PMT will be and persistent poor procurement habits provided by the Bank and consultants. Close acquired previously may take time to modify. monitoring o f procurement activities by project team, local ETC of the Bank and qualified consulting firm s for project implementation. Lack of experience using the Bank's The Bank and consultants will provide training procurement guidelines and sound and support to the PMT on World Bank international procurement practices. procurement guidelines, bidding document preparation, and bid evaluation. Close supervision by Bank staff and consultants. A project launch workshop in ArabicEnglish is planned soon after IDA and ITFAgreements are signed. Inability of internationalBank staff to Post reviews and other procurement matters will supervise the project in the field. be covered in the first instance by the local ETC of the Bank. An independent local firm may be contracted to conduct physical inspection of projects. Delays o f project effectiveness due to delays Close follow up by Bank management with senior inratification of IDA and ITFAgreements Iraqi officials on ratification procedures. Possibility of high prices due to security Price and physical contingencies have been conditions in Iraa. provided in the project cost estimates.. Security conditions deteriorate, making A clause in the bidding document will be access by contractors/suppliers to sites and introduced requesting bidders to provide a supervision difficult. methodology for accessing the site and conducting installation, testing and commissioning. DamageAooting of project sites. Insurance by contractors will provide cover until project i s completed and handed over to the client. 18 Consulting firms may not be able to conduct H 1International consulting firms will be encouraged work within Iraq. to team up with local and regional consultants. I Meetings with some international consultants' staff could be arranged outside Iraq. Overall RiskRating H Financ 11Manag nent Risks Country Level The limited knowledge of the Bank's policies H Use of MOE controls, when acceptable, and guidelines by the MOE, the high strengthened by the PMT verification, using a PIM turnover of the PMTs' staff experienced so basedon the MIM,parallel accounting system, far, the security conditions not allowing visits mainly the Direct payment method, hiring of to the project, being a high-risk low-control external auditors with international experience, environment, and the banking system having a Fh4A monitor the ITF-fundedactivities. inefficiencies. Proiect Level Limited capacity in general to meet the H The use of a PMT, with a competent FO and project's FMrequirements due to accountant on board, using a procedure manual inexperience with Bank guidelines and (PIM) based on the MIM, frequent training, and requirements. close support. The administrative difficulties of multi- H Parallel-financing contracts as much as possible. financing, their allocation to contracts, When joint-financing ensure appropriate book- difference in their conditions and duration, keeping and payment claiming. and possibility of erroneously charging either of the financing sources. Counterpart financing and the possibility of H Ensuring that the counterpart funds are allocated in delay inbudget allocations thus affecting the related years' budgets. Preparing a detailed project implementation. This is the first quarterly disbursement plan that helps inproviding project to have a counterpart funds. data needed for timely release of counterpart funds and getting MOPDC/MOF commitment. Depositing the first two budgetary allocations in the MOE account Not being able to maintain a project account H PMT ensuring that the account is opened when the for small payments (less than US$20,000) project start. through out the life of the project leading to shortages and pause of payments and reimbursements. Difficulty of proper monitoring of long-term M Clear controls (PIM), direct payments. contracts and possibility o f cost overruns. Limitation o f the accounting and reporting M Parallel accounting and fixed assets records and systems of providing timely and reporting requirements. Following the MIM. comprehensive information, including fixed assets management svstem. Lack of independent verification function. M Having a comprehensive audit TORS with SOE review. FMA to monitor the ITF-fundedcontracts. Overall FMRisk H PROJECTOVERALLRISKS H H=HighRisk;S =Substantial Risk; M=Modest Risk;N=Low or NegligibleRisk 83. Given the electricity supply shortagesin Iraq, the insufficiency of donors' support to the sector, and the huge gap between MOE's own capital budget and its strategic and operational targets, the project will increase the Hartha power plant's capacity, which is currently supplying electricity to the national grid. The rehabilitation of Units 2 and 3 will further strengthen and increase the plant's contribution, thereby benefiting cities severely affected by power shortages across Iraq. 19 Once completed, it would provide 400MW of additional power generation potentially providing electricity to over a million households for a period of 20 years and/or supply power to industrial consumers connected to the grid (e.g. refineries, ports, industries,etc). 20 Annex 1: ResultsFramework and Monitoring PDO Outcome Indicators Use of Outcome Information Reduce power supply shortfall by Original capacity of Units2 and 3 To track progress of projected project restoring the base load generation o f the Hartha Power Station i s outcomes and identify corrective capacity of the Hartha Power Station restored to 400MW by end of measures as needed. Units 2 and 3. project. Development of local capacity through Consultancy support, and regional and overseas technical training for staff in operations, maintenance, and project management. Lay the groundwork for improved Development of in-house capacity power system planning and fuel supply to support the implementationof by providing the tools and other the Ministry of Electricity's Power support necessary to enhance in-house Master Plan comprising the capability to prepare, implement and preparation of feasibility studies, operate current and future projects. environmental impact assessments and bid documents for high priority projects inparticular the Mansuria Gas Development Project. Development o f in-house capacity for power system planning and staffing resulting in an updated Power Master Plan. Intermediate Results Results Indicators for Each Use of Results Monitoring One per Component Component Component One: ComponentOne: ComponentOne: Rehabilitation o f Hartha Power Hartha Power Station Units 2 and 3 Track implementation progress and, Station Units2 and 3 are completed and operational with incase of delays, be able to take a capacity of about 400MW. corrective action Component Two: ComponentTwo : Component Two: Support services to improve long-term Improved ability to prepare least Track implementation progress and, sustainability o f the sector cost reconstruction and expansion incase of delays, be able to take plans and feasibility studies for corrective action future projects. Increased ability and efficiency in the use o f planning tools Increased staff proficiency in technical areas o f operations, maintenance, planning, and project management; as well as in financial, legal and general management aspects of power utilities 21 + h h+ ccr N Annex 2: Detailed Project Costs Ta' e A: Costsby Components and Fir ncingPlan Total Cost FinancingPlan - GO1 Component Excluding Including % of IDA WB ITF Contingencies Zontingencies Total (US$) (US$) - Component 1:Rehabilitation 110,000,000 132,000,000 88 112,000,000 20,000,000 of HarthaPower Station Units2 and 3 . Engineering Services 6,000,000 7,000,000 5 7,000,000 1 Partial Implementation 4,000,000 5,000,000 3 5,000,000 of Environmental Mitigation Measures and PMT support Component2: Support 5,000,000 6,000,000 4 6,000,000 Services Physicaland price 25,000,000 contingencies - Total ProjectCosts 150,000,000 150,000,000 100 124,000,000 6,000,000 20,000,000 24 Annex 3: Detailed Project Description 1. The objectives of the project are to: (i) alleviate the current power supply shortfall by restoring the base load generation capacity of the Hartha Power Station Units 2 and 3 to 400 MW, and (ii) the lay groundwork for improved power system planning and fuel supply by providing the tools and other support necessary to enhance in-house capability to prepare, implement and operate current and future projects. Rehabilitation of Hartha would be a first step towards a long term solution for the power plant, including units 1and 4. Inamving at the long term solution, the environmental implications of continuing to runthe units on HFO and as steam cycle only will be studied. A possible option would be to convert the rehabilitatedpower plant to combined cycle and thus achieve an efficiency of over 50%, compared to under 35% achievable on steamcycle only mode. ProjectDescription 2. All units of the Hartha Power Station are designed to use natural gas as the primary fuel firing the boilers, but they can also use heavy fuel oil (HFO) as well as crude oil, if natural gas i s not available. MOE prefers the use of natural gas over HFO or crude, for both economic and environmental reasons. Natural gas cannot currently be made available, because of problems with the collection, processing and compression capacity, but the Ministry of Oil i s working on restoring HFO supply to the Hartha power plant. Hartha Units 1and 4 are currently being operated on crude oil. Under the current fuel supply plan Hartha i s expected to continue to be operated on HFO, but it is not yet sure when the supply of natural gas can be resumed, but over the mediumterm this might be possible. 3. The total cost of the proposed project i s estimated at US$l50 million, over 90% of which would be for rehabilitation of Hartha Power Station. It consists of the following components: Component 1: Rehabilitationof Hartha Power Station Units2 and 3 (US$144 million) 1.1 Hartha Power Station (800 MW) is located at the Shatt Al-Arab river, about 33km from Basra and 25km from the Iranian border, and was commissioned in 1979. Units 1and 4 have been runningmost of the time since then, but Units2 and 3 have been mostly out of operation since the first Gulf War. Rehabilitation of Units 2 and 3 was initiated with assistance under the OFFP and equipment for an estimated US$120 million has been delivered to the site. The proposed project will consist of completing supply of materials, rehabilitation and commissioning of units2 and 3 of the Hartha Power Plant to restore to as close as possible their original capacity of 400MW and ensure an additional operational life of 20 years. The tender document will take account of the equipment and materials already supplied under the OFFP. The following are the main components to be supplied, installed and commissioned: 0 two boilers, each with 660 t/h steamcapacity; 0 six sets of feed pumps; 0 two 250MVA transformers; 0 two thyristor self-excitation systems with excitation transformer; 0 two generator voltage bus ducts; 0 equipment for a complete water treatment plant of 100m3/h; 0 auxiliary equipment, requiredfor connection of boilers with existing turbines and generators; 0 one fuel oil pump; 0 two process control systems; 0 DistributedControl System (DSC) for all four units; 0 steel structure for boilers, taking into account that 20% of the steel structure of boiler (2) i s already constructed; 25 H.P.vessels and pipes for boilers (2)&(3); all auxiliaries such as air-flue gas ducts, valves, etc; completion of 2 set oil tanks each of (10000)m3 and fuel pump station the related parts for intake water; 0 all electrical and automatic control mechanical equipment together with necessary structures and miscellaneous works inside the plant area; 0 all remaining civil works such as foundations, buildings, stores, roads, parking area, landscape, path, etc, inside the plant area necessary for the proper functioning of the station; all necessary electrical installations and lighting systems; W A C systems necessaryfor the buildings; major overhaul maintenance and operation of turbine generators nos. 2&3; 1.2 Support in bid evaluation, construction supervision and further support to MOE up to the end of the defects liability period. 1.3 Implementation of the agreed recommendations of the Environmental and Social Management Plan (ESMP). Component 2: Support Services (US$6 million) 2.1 Consultancy support and training to Iraqi MOE staff in the preparation of least cost reconstruction and expansion plans, feasibility studies and advisory services for future projects including projects relatedto securing fuel supply and reducing gas flaring. Priority will be given to assisting MOE with completing a feasibility study and related consulting services for the Mansuria Project (development of a gas field and the construction of a 2xl23MW simple cycle plant with a possible expansion to a combined cycle project) and other possible oil and gas field developments, in close cooperation with the Ministry of Oil. Support for least cost planning will complement the development of planning tools already provided or to be provided through alternative financing. Such tools would include software and measuring instruments for all stages of power system planning 2.2 Regional and overseas training for staff in the technical areas of operations, maintenance, planning, environment and general project management; as well as in financial, legal and general management aspects of power utilities. 2.3 Independent audits for the project. 2.4 Office equipment for the PMT in Baghdad and at Hartha, such as computers, office equipment and operational costs such as travel and per-diem but excluding salaries of Iraqi PMT staff. 2.5 Miscellaneous short term consulting services that may be required for the Hartha project, such as an independent review of project implementation, as well as other advisory services for the power sector that may be requiredby the MOE. 26 Annex 4: Project Implementation Arrangements 1. The Bank's strategy for Iraq seeks to ensure local ownership and strengthen institutional capacity by financing operations that are implemented by Iraqi institutions. Based on experience gained through the ITF-financed projects, the proposed management structure for the EERP will be similar. It adopts the PMT model, whereby staff from various departments within the implementing ministry and its agencies is seconded on a full-time and/or on a part-time basis to work in the PMT, with support from outside consultants. The PMT model will provide the skills needed for effective project implementation, and yet permit the reintegrationof PMT staff. 2. The Ministry of Electricity (MOE)will be the implementing agency of the IDA Credit and the Recipient of the ITF Grant. A few other Iraqi institutions such as the Ministry of the Environment, the Ministry of Planning and Development Cooperation (MoPDC), and the Ministry of Finance (MOF) will be associated indirectly with the project for clearances and reviews in accordance with national requirements. The organizational chart of MOE i s provided inAppendix 4.1. 3. The PMT will be responsible for managing all project activities, including contract management, supervision and quality control, reporting, and administration of project funds. Making payments to suppliers, consultants and contractors, and ensuring that funds are disbursed according to Bank guidelines and procedures will also be the responsibility of the PMT. 4. The PMT was recently established with core staff seconded, on a full time and part time basis, from existing technical and financial units of MOE. The members of the PMT include a PMT Director, a project site director, two procurement specialists, two project engineers, one financial management specialist, one environmental specialist, one administrative assistant, and one legal advisor. Some of the core staff has attended initial training courses and workshops organized by the World Bank, UNagencies, USAID, and other bilateral donors. All contracts financed through the IDA Credit and ITF Grant will be signed by the Minister or a senior manager of MOE officially designated by the Minister. 5. The PMT will be supported by experienced consulting firms to assist with pre- contracts award services and construction supervision. Expressions of Interests for such services have been advertised and recruitment of qualified consultant(s) is expected in early 2007. The consultants will also provide on-the -job training to the PMT and other MOE staff. 6. International experts were recruited to assist the MOE to prepare pre-qualification documents and to complete the technical specifications and tender documents for the principle contract for rehabilitation of Units 2 and 3 of the Hartha Power Station. A total of seven firms and joint ventures applied for pre-qualification, however, only one company was judged to meet all the prequalification requirements. To encourage wider competition from qualified companies, the MOE is recommending to proceed with open tendering using modified post qualification requirements. The project team i s preparinga revised submission to the OPRC endorsing the request of the Client. 7. A MIM was developed by the Bank in 2005 to assist Iraqi authorities with implementation of Bank-financed projects. A PIM relating to issues specific to the project will be prepared by the PMT and updated from time to time. 27 7 ' S * u 3 Annex 5: Electricity Sector Background Background 1. In 1999, Iraq, as one of the leading countries in the region, reorganized its electricity sector. The electricity sector was separated from the Ministry of Industry and the Commission of Electricity (COE) was established by the Revolutionary Command Council (RCC) Decree No 195 on 21st June 1999. Under the Decree, the sector remained a Government monopoly with COE responsible for the supervision and management of all the activities related to electricity including a stable and reliable electricity system. The COE was headed by a Commissioner, who reported to the Council of Ministers and was responsible for policy making, strategic planning and regulation. COE also provided corporate services and operate the National Dispatch Centre. Reporting to the COE were three regional generating and transmission (400KV and 132KV) companies and four regional distribution companies, as well as four other companies responsible for power construction, manufacturing of equipment and IT. Key decisions on tariffs and large projects were taken by the Council of Ministers, but once the annual budgets were approved, the companies had a reasonabledegree of autonomy. However, in 2004, this structure was abolished and the electricity sector i s now run as one Government department. The COE became the Ministry of Electricity (MOE). Reportedly, the Ministry now employs about 50,000 persons. 2. MOE recently prepared a Master Plan" 2006 to 2015, which aims at restoring reliable electricity supply throughout the country and having a reserve generation margin of about 10% by 2015. Close coordination on fuel supply issues with the Ministry of Oil is envisaged. The total costs of implementing the Master Plan are estimated at about US$27 billion over the period 2006 to 2015. The Master Plan anticipates improvements inbilling and collection, tariffs, efficiency of supply, organizational structure of the power sector, capacity building, the legal and regulatory framework and private sector participation, but not much work has been done so far to formulate detailed plans. In the initial years, cost recovery i s expected to be modest and successful implementation will heavily depend on Government budgetary resources. The Ministry of Electricity i s aware of the need to seek additional from funding official donors and through private sector participation if it wants to achieve the targets specified in the electricity master plan. Improving MOE's capacity to implement projects i s another constraint, which need to be addressed. 3. The challenges that Iraqfaces inthis sector are not only physical innature; apart from the issues related to security, there are also financial, economic, and institutional issues, which are hampering effective planning and strategic management of sector activities. Current Situation 4. The reported total installed generating capacity in Iraq i s about 11,12OMW, of which 40 per cent are thermal steampower plants largely fuelled by HFO or in some cases crude oil, 38 per cent natural gas power plants and 22 per cent hydro power plants. However, over the last few years, the available generating capacity has only been in the range of 3,600Mw to 4,5OOMw, against a recorded summer peak demand in 2006 of about 9,600MW. Fuel supply problems are also severely affecting generation capacity availability. Average daily load shedding ranges The Master Plan was presentedat a workshop organizedby the Government of Iraq and UNDP held at the DeadSea inJordanfrom November5 to 7,2006 29 between 12 to 16 hours a day. The Baghdad area i s most affected because of prevailing security situation and sabotage of the 400kV transmission system. 5. The main transmission voltages are 400kV (with a primary transformer capacity of 16,000 MVA) and 132kV with a length of about 4,000 and 12,000 km respectively. The distribution network has about 12,000 km of 33kV lines and 71,000 km of llkV lines. The Baghdad area i s the main load center in the country and it consumes about 27 per cent of the total load. The Basra area consumes about 9 per cent of the load. About 58% of the energy is consumed by households and about 16 percent by the government and its agencies. About 14 percent i s industrial load, 8 percent commercial and 4 per cent agriculture load. The average per capita consumption has reduced to about I100 kWh/per person per year. Master Plan for the Electricity System 6. In 2006, the Ministry of Electricity prepared a master plan for the electricity system, which was presented at a conference organized by the Government of Iraq and UNDPat the Dead Sea inJordan. The Executive Summary of the plan is attached. 30 Master Planfor the Electricity System YCUS2006 -2015 Presentedat the Electricity Conference, November 2006, Amman ExecutiveSummary 1.0Background Imge oil reserves and abundant natural and human rcsoufces enabled Iraq to atKain the status of a middle-income country in the 1970s. However three MWS and international economic sanctions have stifled economic growth and development and dcbilitated basic infrastructure and social services. The above factors, combined with deIiberatelooting and vandalism has inflicted significant damage to Iraqi infrastructure including the electricity system. The electric power system in Iraqhas deteriorated from one of the best in the Middle East region to a condition where the system has become extremely inreliable. The average per capita electricity consumptionhas reduced to about 1100 kWh/person ptsr year, which is much less than the average per capita electricity consumption of neighboring countrieb. Compounding the overall lack of genetation, the Iraqigrid suffers deficiencies in the transmission and distribution sectom. The dramatic reduction in availability of electricity supply to people in Iraq has significantly affected their day to day life and ixidu&al, agiculturnl, commercial andother sectorsheavily dependon elemicity are getling worse and worse. Inorder to provide secure and adequate power supply to people in Iraq, a MHster Planhas been preparedby Ministryof Electricity WOE)to cover the pcriod2006-2015. The plan has been prepared in spite of the cxtrcrne difficulties in obtaining relatcd information and powerrequirementsunderthe prcsentcircumstancesprevailingin the country. 2.0 Objectives of the Master Plan The following objectives havebeenidentified in the MasterPlan. Rehabilitalion of existing power generationplants, transmissionand distribution networks Generation capacity addition and to strengthen transmission and distribution network to meet future load demand. 0 Provisionof securepower supply with adequatecapacityto aU consumerswhile opertttingpower systemeffectively andefficiently. * Capacity building of MoR staff to managetheimplementation of the Master Plan. Interconnecting Iraqipower system with neighboring countries. 3.0 Focusedarea--of the MasterPlan The Master Plan addresses rehabilitation, development and expansion requirements of the following areas. (1) Power Generation (2) Power TransmissionSystem (3) Power DistributionSystem (4) Control and Communications (5) Environmental Impact Assessment on the FormulatedProjects. 31 (6) Capacity building o iMuEstaff. 3.1 Power Generation The Iraqi power grid suffers larger power shortage due to several reasons, such as the suspension of implementation of larger generation projects. deterioration of generation capacity of existing power plants due to scarcity of spare parts, p r maintenance, sabotage of fuel lines and lack of trained skills and abilities of the technical staffs. The situation has risen to such a level that the h y i power grid could supply only about 4500 MW of power which i s well below the national power demand of 9600 MW for the year 2006. Hcncc, load shedding is still very common and insome areas supply i s available only for a few hours per day. 3.1.1 LoadForecast The pdniary factor for formulation of power system expansion proposals and their timing is based on the load forecast. Thcreforc it is important that the load forecast should be reasonably accurate and the growth rates applied are waiistic. Thus the Master Plan is sensitive to the load forecast, yet thc forecast is the most difficult assessment to be madedue to presenceof severaluncertain factors. The maximumload of the electricity system for tie year 2006 is about 9600 MW includingloads of KRG (Erbil, Sulaymania, andDuhok). The presentgeneratingcapacity could mect only 50%of thc load demand at present. The shortage in power leads to impose load shedding and the situation could bring back to nomialonly after year 2009 with the implementation of proposalsin the Master Plan. Analysis has shown that the compound loads will grow at a rate of 7% pcr annum as an average. With this growth rate, the present demand will double at the year 2015. I"ig.3.1 d-kowsthe power balance for the year 2006 to 2015 while Fig. 3.2 depicts the devclupmenl of generation, demand and power shortage. 1I 28ar)01 i . . . . . . . . . . . . . --....-..... ._ .-. ........ . . . . . . . . . . . . . . . . ................. Year Fig. 3.1: Electricity Power BalanceIoor20M-2015 32 Fig. 3.2: Powergeneration, demandand loadshcdding for 1980-2010 3.1.2 RehabilitationandConstructionof new Power Projects Thc following proposals have been identified in thc Master Planfor the rehabilitation and expansionof powergenerationplants. Table 3.1: Rehabilitation of PowerPlaits No. of units to be 1 Plant type I___ ~ 'fable 3.2: New Capacity Addition Capacity Additioti I_ I__"- 33 3.1.3 ic'uclSupply Requirement for the Operationof Power Plants 'I'he Ministry of Oil (MOO) has reviewed the 10-year Masrer Plan, particularly the fuelloil requirement for generation plants prepared by the MoE. MOOhas wmslyxed the requirement of various types of oil, fuel andgas for the operationof existing andproposedpower plantsup to the year 2015. MoEandMoO have closely coordinated the plant retirement plans of power stations arid refineriedgas stations and prepared the fuel supply plans accordingly. MOOhas prcparedcost estimates and investment plans to reinforce and develop the oil processing and distribution facilities to meel the fuel/oil requirement of MoEprojects. 3.2 Power Transmission la order to provide the clectricity to customers, the bulk power from generating stations has to be transmitted to grid substations which are situated away from Generation stations. The transmission network in Iraq is configured to receive supply through 400 kV and 132 k V lines. The mnsmission network i s prcscntly expmlencing several problems such as frequent failures due to lack of maintenance, overloading of some lines espially durmg outages. A large number of substations, originally planned and designedgeographically to cover most of the load centers in the areas are old and badly vandalized during and after the disturbances. Hence, the transmission network inIraqshould be rehabilitated and upgraded to bringthe generatedpower from the existing as well proposed power plants to the Ioad mnters. Necessary upgrading and new line additions have been identified in the Mkqtcr Plan and the summary of the proposed lransmissionsystem is given intable 3.3 & table 3.4 below. Table 3.3: Yew Substation Requirement Substations bksting 400 / 132kV (4 x 2%) M V A Capacity including -__. Po\ccr StationsNccvvorks 22 Table 3.4 New Lint;Requirement 3.3 Dish.ibutionSystem The distribution systemconsists of 33 kV, 11k V *andlow voltage (400 V) lines. The responsibilities of Distribution General Directorates are delivery of power supply to consumers in all categories; domestic, industrial commercial, agricultural and governmental, according to the consumer agreement and opcration and maintenance of the distribution network to ensure continuous and stable power supply to the consumers. However, the distribution system has suffered severely from a lack of spares, little or no preventive maintenance for a number of years and insufficient augmcntation to cater for new loads. As a result, supply is stili extremely unreliable. Network voltage levels are ofm outside accepted limits, technical and non-technical losses itrt: very high and bwakdowns are carnmonplace. Properly planned 34 rehabilitation, developrncnt and expansion of Iraqi electricity distribution system have become of the utmostimportance. Inorder to addressthe aboveproblems following proposals havebeen identified in the MasterPlan. Table 3.5: Requireinent for upgrading distributionnetwork 3.4 Controlandcommunications The control and communications system plays a vital role in power system operation. The control centers monitor andcontrol electrical substations, power plants and transmission lines inthe substations while the communication system ensure the ffow of information to the control centers for their operation. The requirement of a proper control and communication system is addresscd in the Master PIan and following proposals have been included to establish a National Dispatch Center and 3 Regional Control Centers (KCC) during 2006-2010. Furthermore, wireless microwave systems for entire country and communication system for RCCs also are identified in the Master Plan. During 2011-2015, it is proposed to establishFiber Optic Round Wire (FOGW) communication systemfor MoE. 3.5 EnvironmentalImpact Assessment of the formulated Projects Importance of environmental impact assessment during construction and operation o f elechical installations in the power systmi (generation, transmission and distrihntion) to achieve sustained development of the power sector has been recognized. MoE has a separate department which addresses on environmcnttil issues and officers are stationed at appropriate facilities to monitor environmental related activities. Hence, MoE has committed to review the activities related to environment by closely monitoring and introducing proper solutions to the proMems in all the activities concerned such as construction, optxation and maintenance of pawer plants, to caoperate with national institutes involved in the environmental issues and to buildcapacity of the MoEpersonnelworking in the related areas to manageenvironmental impacts control plans. 3.6 Capacity 'Building In order to ensure thc rehabilitation and sustained development of electric power system in Iraq, the skills of the MoE!staff, amounting to about 7500, nced to be improved while investment activitics are being conducted in parallel, This has been identified as a priority, since most efforts made so far are being targeted on the execution of projects in Ihe generation, transmission and distribution systems. A plan has been developed and prepared for training of staff in electricity generatian, transmission and distribution a~asfor the execution of rehabilitation and new projects. Required facilities for training 35 centers including tools and equipment have been identified for central, regional and governorate establishments. 3.7 InvestmentPlanfor Generation,Transmissionand Distribution. Thc estimated investment required to implement thc projects idcntiEed k thc Master Plan for & the 3ectors, generation, transmissionand distributioni s given in table 3.6 while Fig. 3.3 shows the graphical presentationof investment plantogether with capacity addition. Table3.6: Investment Pianfor Genemhn,Transmission&kDistribution 6000 6000 r-l 5000 41300 E 2 e 3000 8ul e 2M30 1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ~ c w S t c n m & G f l sOOen.Rehab. ONewTrans. %Dist.URehab,ofTr. &Dst. ClHydroGon. Fig. 3.3: Investmcn:ntPlar andCapacity Addition 36 Annex 6: ProcurementArrangements Procurement ArrangementsandProcurementSchedule 1. Procurement for this project will be carried out in accordance with the World Bank's Guidelines: Procurement under IBRD Loans and IDA Credits, dated May 2004, Guidelines: Selection and Employment of Consultants by World Bank Borrowers, dated May 2004, and the provisions stipulated in the Financing Agreement. For each contract to be financed by the Credit and the ITF, the procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are reflected in the Procurement Plan (PP). The PP will be updated, as required, to reflect the actual project implementation needs and improvements in institutional capacity. A General Procurement Notice was published in the United Nations Development Business (UN Development Business on-line) on October 31, 2005 and will be revised after the project i s approved by the Bank's Board of Executive Directors. 2. To simplify the procurement process, the number of contracts will be minimized. To facilitate project implementation, MOE will hire qualified consulting firms and individual consultants to assist them to implement all project components, including training on procurement and project management, supervision of the principle contract for rehabilitation of Hartha Power Station and supervision of goods and works contracts for the environmental mitigation measures. 3. Procurement of Works. Works procured under this project will include the supply and installation of equipment for rehabilitation of Units 2 and 3 of the Hartha Power Station using ICB procedures, and supply and installation of goods for the environmentalmitigation measures. Procurement of works will be mainly carried out using ICB and National Competitive Bidding (NCB) procedures. Works estimated to cost more than US$5 million equivalent per contract will be procured using International Competitive Bidding (ICB) procedures. The NCB standard bidding documents for procurement of works, which were prepared as part of the MIM, will be used for other works. Simple works costing less than US$lOO,OOO will be procured following procedures of minor works on the basis of quotations obtained from three qualified contractors in responseto a written invitation. 4. Procurement of Goods. Goods procured under this project will include control and testing equipment, equipment for the environmental mitigation measures, IT and office furniture, vehicles, and other equipment and supplies needed for project implementation. Procurement will be done using the Bank's Standard Bidding Documents (SBD) for all ICB. The NCB SDB for procurement of goods, which were prepared as part of the MIM, will be used for contracts estimated to cost less than US$200,000. Shopping procedures will be used for procurement of goods of small value estimated at US$lOO,OOO or less per contract. 5. Selection of Consultants. Consultants' services procured under this project will include: (i) selection of consultants to provide engineering services, such as reviewing, updating and finalizing detailed designs, preparing tender documents, and construction supervision; and (ii) selecting specialized consulting firms and individuals to assist the PMT in project implementation, and training of staff on procurement, financial management, project management and other technical fields, as needed. The selection method will mainly be a Quality and Cost-Based Selection (QCBS) and advertising for expressions of interest (EOI) in the UNDB and local newspapers. International consulting firms may not be interested in some contracts while the security situation i s volatile. Accordingly, it i s possible that shortlists for consultants' services for some contracts may be composed entirely of nationallregional consultants. It i s also expected that consulting offices associated with local universities may be included in the shortlists. University-based consultants will not be given preference over private consultants. Shortlist of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provision of paragraph 2.7 of the Consultant Guidelines. 37 6. Oueratinz Costs To support the Project Management Team,'the Grant will finance part of the expenditures directly related to project implementation. These could include: (i) transportation and travel including per diem allowance for PMT staff in travel status; (ii) office equipment; (iii)expenses associated with fiduciary requirements such as audits and environmental matters and (iv) any other project management support costs as agreed by MOE and the Bank, but excluding staff salaries and benefits. Some of these items will be procured using MOE administrative procedures for shopping, satisfactory to the IDA. 7. Assessment of MOE Capacity to Implement Procurement. An assessment of the MOE capacity to implement procurement was prepared by Nazaneen Ali, local procurement staff, and reviewed by A. Amir Al-Khafaji, PAS. This assessment is based on discussion with MOE staff and the findings of the .OPRfor Iraq prepared in 2005. The standard agency procurement assessment report is available in the ProjectFile. 8. Procurement Risk Assessment, The procurement risk i s rated high. The risks with procurement were identified and documented inthe MOE procurement capacity assessment. They included: (i) the lack of adequate procurement laws and regulations, and of modem documentation practices; (ii) poor habits acquired by procurement staff from the previous era, which will take time to modify; (iii) limited experience of procurement staff in the use of Bank procurement guidelines and international sound procurement practice; (iv) limited access of international Bank procurement staff to supervise the project in the field; (v) delays in implementingthe procurement plan due to lack of experience in procurement planning and the volatile security conditions in Iraq; (vi) increase in prices of contracts due to limited competition; (vii) possible looting/damage of construction sites; and (viii) delays inbid submission and/or implementationdue to poor security conditions. 9. Corrective measures that have been agreed include: (i) assigning two procurement officers at the PMT on a full-time basis; (ii)recruiting a consulting firm to assist the PMT in pre-contract award services, establish procurement monitoring and reporting systems, and carry out construction supervision; and (iii) usingthe MIMto develop a PIM. See procurement risk table below. ProcurementsRisks Risk IRating Mitigating Measures Lack of adequate laws and regulations, H Prior review thresholds have been set at relatively low levels. absenceof modern standard Frequent training for PMT will be provided by the Bank and documentation, and persistent poor consultants. Close monitoring o f procurement activities by procurement habits acquired previously project team, local ETC of the Bank and qualified consulting may take time to modify. firm s for project implementation. Lack of experience using the Bank's H The Bank and consultants will provide training and support to procurement guidelines and sound the PMT on World Bank procurement guidelines, bidding international procurement practices. document preparation, and bidevaluation. Close supervision by Bank staff and consultants. A project launch workshop in ArabicEnglish is planned soon after IDA and ITF Agreements are signed. Inability o f international Bank staff to H Post reviews and other procurement matters will be covered supervise the project in the field. inthe first instance by the local staff of the Bank. An independent local firm may be contracted to conduct physical inspection of projects. Delays of project effectiveness due to Close follow up by Bank management with senior Iraqi delays in ratification of IDA and ITF officials on ratification procedures. Agreements Possibility of high prices due to security H Price and physical contingencies have been provided in the conditions in Iraq. project cost estimates.. 38 Security conditions deteriorate, making A clause inthe bidding document will be introduced access by contractordsuppliers to sites requesting bidders to provide a methodology for accessing the and suDervision difficult. site and conducting installation, testing and commissioning. DamageAooting of project sites H Insurance by contractors will provide cover until project is completed and handed over to the client. Consulting firms may not be able to H International consulting firms will be encouraged to team up conduct work within Iraq. with local and regional consultants. Meetings with some international consultants' staff could be arranged outside Iraa. OverallRisk Rating H Legend: L:Low M:Medium S: Substantial H:bgh Additional Provisions for National Competitive Bidding: Inorder to ensure economy, efficiency, transparency and broad consistency with the provisions of Section Iof the Guidelines, the following criteria shall be followed inprocurement under National Competitive Bidding procedures: 1. Standard bidding documents approved by the World Bank shall be used. 2. Invitations to bid shall be advertised in at least one widely circulated national daily newspaper and bidding documents shall be made available to perspective bidders, at least 28 days prior to the deadline for the submission of bids. 3. Bids shall not be invited on the basis of percentage premiumor discount over the estimated cost. 4. Bidding documents shall be made available, by mail or inperson, to all who are willing to pay the required fee. 5. Foreign bidders shall not be precluded from biddingand no preference of any kind shall be given to national bidders. 6. Qualification criteria (in case pre-qualifications were not carried out) shall be stated in the bidding documents, and if a registration process is required, a foreign firm determined to be the lowest evaluated bidder shall be given reasonable opportunity of registering, without any hindrance i.e. no non-registrationstatus should be considered as a non-eligibility-to-bid criterion. 7. Bidders may deliver bids, at their option, either inperson or by courier service or by mail. a. Bids shall be opened in public in one place preferably immediately, but not later than one hour, after the deadline for submission of bids. 9. Evaluation of bids shall be made to strict adherence to the criteria disclosed in the bidding documents, ina format, and within the specified period, agreed with the Bank. 10. Bids shall not be rejected on the basis of a comparison with an official estimate without the prior concurrence of the Bank. 11. Split award or lottery in award of contracts shall not be carried out. When two or more bidders quote the same price, an investigation shall be made to determine any evidence of collusion, following which: (A) if collusion is determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder, and (B) if no evidence of collusion can be confirmed, then fresh bids shall be invited after receiving the concurrence of the Bank. 39 12. Contracts shall be awarded to the lowest evaluated bidder within the initial period of bid validity so that extensions are not necessary. Extension of bid validity may be sought only under exceptional circumstances. 13. Extension of bid validity shall not be allowed without the prior concurrence of the Bank (A) for the first request for extension if it is longer than eight weeks; (B) for all subsequent requests for extensions irrespective of the period. 14. Negotiations shall not be allowed with the lowest evaluated or any other bidders. 15. Re-biddingshall not be carried out without the Bank's prior concurrence and all contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor's or a supplier's performance security shall apply to a specific contract under which it was finished. 16. All contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor's or a supplier's performance security shall apply to a specific contract under which it was furnished. 40 Appendix 6.1: Procurement Thresholds A. General 1. Project Information: Country: Republicof Iraq Recipient: Ministry of Electricity Project Name: Emergency Electricity ReconstructionProject Credit No.: IDA Credit Amount: SDR 82.5 million (US$124.00 million equivalent) ITF Amount US$6.00 million Project ImplementationAgency (PIA): Ministry of Electricity 2. Bank approval of the procurement plan: January 24,2007 3. Date of General Procurement Notice: October 31,2005 4. Period covered by this procurement plan: 48 months B. Goodsand Works and Non-ConsultingServices 1. Prior Review Thresholds: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1to the Guidelines for Procurement: ProcurementMethod Prior Review Threshold Comments 1. ICB (Goods) All 2. NCB (Goods) >= US$100,000 and first two contracts irrespective of the value 3. ICB (Works) All 4. NCB (Works) >= US$200,000 and first two contracts irrespective of the value 5. Shopping (goods and works) >= US$lOO,OOO and first two contracts irrespective of the value 6. Direct contracting All 2. Pre-qualification: Pre-qualification of contracts will be conducted for works contracts estimated to cost more than US$10 million. It i s expected that pre-qualification will be conducted for one works contract. 3. Reference to (if any) Project operationaWrocurement Manual: The Project Management Team (PMT) will prepare a Project Implementation Manual (PIM) by the start of the project. The PIM will be based on the Iraq Master Implementation Manual (MIM) financed under the Capacity Building Trust Fundfor Iraq. 4. Any Other Special Procurement Arrangements: Advance procurement and retroactive financing under this project i s allowed for eligible contracts awarded from January 1, 2007 until effectiveness of the IDA Credit and ITFGrant. 5. Other Special Procurement Arrangements: None. 41 6. Procurement Packages with Methods and Time Schedule: It i s expected that one civil works contract will be procured using ICB procedures. Other works contracts will be procured using NCB. However, given the security conditions in Iraq, internationalhegional contractors may be reluctant to submit bids, and local contractors, which do not have a history of producing financial statements or providing information on their financial performance, may not be in a position to satisfactorily respond to bids' financial criteria. This may need to be taken into consideration during the preparation of bidding documents by, for example, reducing the financial requirements for qualifying bidders. Goods will be procured using ICB, NCB or shopping, depending on contract value. There i s no domestic preference under the project. A detailed procurement plan i s attached (Appendix 6.2). C. Selectionof Consultants 1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated inAppendix 1to the GuidelinesSelections and Employment of Consultants: Selection Method Prior Review Threshold Comments a. Competitive Methods (Firms) >= US$lOO,OOO and first two contracts irrespective of the value or the selection method b. Single Source (Firms) All c. Individual Consultants >=US$50,000 d. Single Source (Individual) All 2. Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$200,000 equivalent per contract, may comprise entirely national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 3. Any Other Special Selection Arrangements: None. 4. Consultancy Assignments with Selection Methods and Time Schedule are indicated in the procurement plan. D. ImplementingAgencv Capacity BuildingActivities with Time Schedule 1. The agreed Capacity BuildingActivities are listed with time schedule. Expected outcomelActivity Estimated Duration Start Date Comments Description Training of PMT procurement, Several training sessions, January 2007 Training activities technical, and financial staff and on the job training are includedinthe during the project's scope of works of implementationperiod the principle contract for engineering services (C02/06). Other consultants will be recruited for specialized procurement, financial and other training: 42 - L %9 E 0 0 8 p sc p 8a m ! Y a s .I I h I a a rn I Appendix 6.3: Assessment of MOE Capacity to Implement Procurement 1. An assessment of the MOE's procurement capacity has been carriedout by the project team. This assessment is based on discussions with MOE staff inIraq and during the pre-appraisal mission inJuly 2006 as well as the findings of the OPR for Iraq prepared in 2005. The standard agency procurement assessment report i s available in the project file. 2. MOE i s one of the largest employers in Iraq. It has about 10,000 employees. MOE i s currently implementing projects financed by the Iraqi national budget (US$200 to US$300 million in 2006) as well as other sizable infrastructure projects financed by donors. Large projects (US$50- 100 million) were implemented by MOE during the OFFP, following un procurement guidelines. Experience, however, during this period i s predominantly in procurement of equipment and machineries. National and international tender documents and technical specifications are usually prepared by the design and planning departments of MOE and evaluations are carried out in accordance with national procedures. There i s no specialized procurement department in the current organizational structure of MOE. International procurement i s carried out by the directorate for planning and economy. Local procurement i s carried out by each directorate of MOE through a specialized unit. International and local procurement are closely coordinated with the directorates of administrative and financial affairs. There are separate committees for bid opening, and bid analysis and study, which are most often standing committees with members having 6-month appointments; however, the latter may be formed on an ad-hoc basis. The bid opening committee opens and tabulates the bids. The analysis and study committee evaluates the bids and recommends selection of a preferred bidder. However, national regulations allow negotiations to take place concurrently with the three lowest evaluated bidders. Once negotiations are completed the committee seeks approval from management and the minister, before the commercial department executes the contract. Procurement activities under this project will be carried out by the project management team (PMT) reporting to the minister. The pmt will be staffed entirely of MOE staff that i s transferred from their existing departments to work, on full-time or part-time basis, as pmt staff. The pmt will closely coordinate its daily activities with the different departments of MOE. Given that the procurement environment which prevailed in Iraq during the last two decades was different from the norms of acceptable international practice and the numerous legal and regulatory changes introduced by the CPA, public procurement will predictably bear a high level of risk in the near future. The risk lies essentially in the lack of good laws and regulations, absence of modem standard documentation, lack of training of concerned staff on bank procurement guidelines, unfamiliarity with sound international procurement practices, and inability of bank procurement staff to supervise projects inthe field. On the positive side; however, Iraq and MOE have a wealth of procurement and engineering staff that may be retained rapidly to operate a reformed procurement system and use new procurement documents and tools as they become available. Some MOE staff has already receivedtraining courses inprocurement, financial, andproject managementthat were organized by the World Bank inJordan. Recommendations and Action Plan to Buildthe Agencies Capacity At least one procurement officer will be assigned full-time to PMT. He or she will receive both formal and ad-hoc procurement training to efficient handling of the procurement activities under the project. 45 An internationalconsultingfirm will be recruitedto assist the PMT with preparation of tender documents as well as associatedprocurement activities. Training sessions and workshops on procurement will be carried out throughout project implementation. The target audience would be PMT staff and other employees of MOE. A Master ImplementationManual (MIM)for Iraq was prepared by Bank consultants in 2005. .The MIM would provide standard procurement documents, evaluation reports, progress reports, filing requirements that would be followed throughout project implementation. The thresholds for prior review by the Bank are set at a low level, to allow Bank staff to provide hands-on training to staff of the PMT. A Project Launch Workshop would be held in Arabic (or with Arabic translation) soon after Credit signing. All staff involved inproject implementation should attend the workshop. 46 I Annex 7: FinancialManagement and Disbursement Financial Management (FM) FMAssessment 1. An assessment of the financial management (FM) arrangements at MOE and those proposed for the project was undertaken, remotely, during meetings in Beirut and Amman. The purpose o f the assessment was to determine whether these arrangements were acceptable to the Bank in providing reasonable fiduciary assurance that the proceeds of the both the ITFGrant and IDA Credit are used for the purposes for which they were granted with due regard to economy, efficiency and the sustainable achievement o f the project's development. The documentation o f the assessment i s available in the project files. 2. Based on the result o f the assessment, the FM risk, as a component o f the fiduciary risk, and which i s a combination o f country, sector and project specific factors is high. In light of the Bank Second Interim Strategy Note covering ITF and IDA-financed projects executed by the Iraqi Government, the project financial resources, extended through the IDA Credit, will be managed through the framework o f MOE financial systems, regulations, and controls, where they do not contradict the legal financing and grant agreements. Consequently, a number o f measures are introducedto mitigate the weaknesses identified and render the MOE FMarrangements acceptable for the proposed project. Paragraph 5 below reflects these arrangements. 3. Country FM Risk: A Country Financial Accountability Assessment (CFAA) has not yet been undertaken for Iraq; however, Iraq has been defined as one o f the "high risk-weak control environment countries" that requires special attention, from the Bank, at various levels. Major reasons for this categorization are the impact o f the security conditions and years o f isolation, the weaknesses o f the public FM system, the inefficiencies o f the banking system, the very low ranking in the Corruption Perception Index for 2005, and the various reports issued by independent auditors and other donors, including the InternationalMonetary Fund-World Bank April 2005 report on Iraq Public Financial ManagementI2. 12EnhancingSound PFM-Short- to Medium-TermReforms. 48 4. Project FM Risk: The most recognized risks are: Project Risk Rating MitigatingMeasure Limited capacity in general to meet the project's H The use of a PMT, with a competent FO FMrequirements due to inexperience with Bank and accountant on board, using a procedure guidelines and requirements. manual (PIM) based on the MIM,frequent training, and close support. The administrative difficulties of multi- I H I1Parallel-financing- contracts as much as financing, their allocation to contracts, difference possible. When joint-financing ensure intheir conditions and duration, andpossibility of appropriate book-keeping and payment erroneously charging either of the financing claiming. sources. Counterpart financing and the possibility of delay H Ensuring that the counterpart funds are inbudget allocations thus affecting project allocated in the related years' budgets. implementation. This i s the first project to have a Preparing a detailed quarterly disbursement counterpart funds. plan that helps in providing data needed for timely release of counterpart funds and getting MOPDC/MOF commitment. Not being able to maintain a project account for H PMT ensuring that the account is opened payments less than US$75,000 through out the when the project start. life of the project leading to shortages and pause of payments and reimbursements. Difficulty of proper monitoring of long-term M Clear controls (PIM), direct payments, and contracts and possibility of cost overruns. special commitment. Limitation of the accounting and reporting M Parallel accounting and fixed assets records systems of providing timely and comprehensive and reporting requirements. Following the information, including fixed assets management MIM. system. Lack of independent verification function. M Having a comprehensive audit TORSwith SOE review. FMAto monitor the ITF- funded contracts. Overall FM Risk H H =High Risk; S =Substantial Risk; M =Modest Risk; N =Low or Negligible Risk 5. MOE FMArrangements Background: The M O E has three major general directorates whose functions are Power production, distribution, and transmission. It has over 21 directorates distributed all over Iraq. At the Ministry HQ,nine departments exist, including departments o f Communication and Control, Planning and Studies, Economical and Commercial Affairs, Administrative and Finance, Training and Development, and legal. MOE follows the Iraqi public FM laws, including the Unified Accounting System that sets the rules o f the accounting books, periodic reports, pre-disbursements controls and auditing requirements. The Administrative and Finance department has four sections: General Budget, Expenditures, Payroll, and Fixed Assets. It has about 11employees. The Internal Control department, that does both ex-ante and ex-post audits, reports directly to the Minister. The Inspector General function exists in MOE as an independent system responsible for execution, adaptation o f rules deterring financial fraud and corruption. Projects implemented by MOE are financed through advances maintained by the projects accountants and disbursed upon the authorization of the DG at the directorate where the projects are held. Foreign currency denominated payments can only be authorized by the Minister, while the DG at the 49 directorate can authorize IQD payments up to an equivalent of US$500,000. These advances are replenished based on trial balances submitted by the accountants to the Administrative and Finance department, in addition to expenditures supporting documents. The Administrative and Finance department reviews all projects' trial balances, consolidates them, and send them to the MOF. Budget allocations are made by the MOF to the MOE quarterly; however, delays are frequently experienced. For investment budget, the allocations are made based on instructions from MOPDC. The MOE investment budget reached about US$700 million in 2006, while the operating budget is usually around US$SO million. The MOE maintains one US$ account at Trade Bank of Iraq, another one at Rafidain Bank, and three IQD accounts at Rafidain and Rasheed Bank. Bank accounts are also maintained at the governorates. 6. Project FM Arrangements 6.1. Internal Control: 6.1.1.Staffing: The PMT is supported by an experienced Financial Officer (FO), assisted by an accountant that will be located at the Hartha site. The FO will undertake the responsibilities of maintaining financial records including contracts' payments, ensuring timely payments authorization, submitting withdrawal applications to the Bank, and preparing periodic reports and financial statements. The accountant will provide the FO with periodical monitoring reports neededto processpayments. 6.1.2.ClearDocumented Procedures: The PMT will draft and use a PIM based on the MIM prepared for all Bank projects implemented in Iraq. The manual will clearly disclose each PMT member job description, the payment verification, authorization and execution processes, authority limits, as well as physical control of assets, especially spare parts, and equipment. 6.1.3.Zndependent VeriJication: The Fiduciary Monitoring Agent (FMA) will monitor and report on the ITF-fundedproject activities (see paragraph 12).The external auditor will report, in his management letter, on any deficiency in the project FM system and controls that i s considered pertinent, and will provide recommendations for its improvement. 6.2. Budgeting: The PMT will maintain a project budget and detailed disbursement plan per quarter. This plan will be developed based on the initial procurement plan and estimated payments cycles, and revised upon need. It will be used as a determinant to the timing of the budget allocations and as a monitoring tool to analyze budget variances and managecash. 6.3. Accounting: Based on the number of the contracts and the frequency of payments, spreadsheet applications will be used to record the project's financial transactions and generate reports. Proceduresfor protecting the data and preventing losses will be maintained. 6.4. Financial Reporting: The PMT will be responsible for preparing the following: 6.4.1.QuarterZy Interim un-audited financial reports/FMRs as part of the quarterly project progress reports, and submittingthem to the Bank within 30 days from the quarter then ended. The proposed format of the reports will be agreed upon by the negotiations. These reports consist of a statement of sources and uses of funds by component; statement of uses of funds by category of expenditure; both comparing actual and planned expenditures; and list of contracts' commitments. 50 6.4.2.AnnuallyProject Financial Statements (PFS), and submitting an audited PFS with the independent auditor opinion having to the Bank not later than six months after the end of each fiscal year. The PFS include: (i)statement of sources and uses of funds by component, (ii) statement of uses of funds by category of expenditures; and (iii) list of contracts' commitments. 7. Funds Flow - DirectPayment Contractors, Suppliersand Cnnsiiltmts Flow of Funds -.-.-.-.-+ Flow of documents 8. Counterpart funds flow: Counterpart funds will mainly be allocated in the main rehabilitation contracts. Periodic budget allocation requests will be sent to MOF to satisfy payment requirement. 9. Auditing Arrangements: An external independent auditor acceptable to the Bank and with international experience will be engaged to carry out the project audit in accordance with international standards of auditing, issue the required independent opinion, and prepare the management letter. The audit TORSinclude performing an SOE review for the audit period covered. The audit report and management letter will be submitted by the PMT to the Bank not later than six months after the end of eachfiscal year. An escrow account will be usedto pay the auditor after the project's closing date. 10. Fiduciary Monitoring Agent (FMA): As required by the term of the ITF, the Bank engages an independent firm to operate as FMA for all ITF-financed projects. The FMA staff will be granted regular access to the project documents and sites by MOE in order to perform its duties for the ITF- financed activities of the project. The FMA i s engagedby the Bank to: - Monitor the physical progress of ITF-financed activities; 51 - Verify that the projects' financial management and procurement arrangements and internal controls are being implementedin line with Bank procedures; - Provide advice and technical support to the PMTs relating to the projects' financial management and procurement arrangements and the generation of periodical and reliable financial reports for ITF-financed activities. The FMA has already been carrying its responsibilities in the entire current ITF-financed project and generating usefulreports. 11. Supervision: Where security conditions make travel to Iraq impossible for Bank staff, supervision missions will be undertaken from an alternative location. Close monitoring of financial management arrangements will be conducted through out the project life. Supervision during the first year will be conducted about 3-4 times a year. The FO and accountant will get an intensive training on FM arrangements before the project start and also will attend all the capacity building workshops conducted by the Bank for all projects. FMAction Plan Preparea detailedquarterly disbursementplan MOEPMT March 31, 2007 Opening a project account with a sufficient advance amount to be MOEPMT March 31,2007 used for small operatingpaymentsand IQDpayments. Engagingan externalindependentauditor MOEPMT June 30,2007 PrepareFinancialChapter of PIM MOEPMT July 31, 2007 52 Disbursement 1. The Banks strategy in Iraq i s to implement projects though the Iraqi Ministries (rather than Project Implementing Units outside government structures), ensuring that appropriate and effective financial controls are in place over the use of funds provided by the Bank, while at the same time working together to strengthen the Ministries' own financial control processes and procedures. Taking into consideration the high risk environment assessed for the project, including the assessed high financial management risk, the disbursement arrangements will compensate by continuing to use appropriate disbursementmethods. The disbursement methods used will be: o Direct Payments to suppliers and consultants for eligible expenditures, for disbursements over US$75,000. reimbursement to the MOE for eligible expenditures paid from the MOE resources. The MOE will submit monthly reimbursement applications, or whenever expenditures reach US$75,000 or more. o Special Commitments to facilitate payments under Letters of Credits for prior review contracts for the importation of goods as agreed inthe procurement plan. 2. These are the disbursement methods that have been approved for both the ITF and IDA- financed projects under implementation. Extensive training will be provided to the existingMOE PMT FO and accountant. Supporting documents, e.g., copies of invoices and receipts, or Statement of Expenditures (SOE) are required to be provided with all requests to disburse funds. The SOE thresholds are detailed in the Disbursement Letter. The original copies of the supporting documentation will be maintainedby the MOE and made available for review by Bank representatives upon request. 3. In accordance with the Country Financing Parameters approved for Iraq of September 2005, the IDA Credit and ITF Grant can finance up to 100 percent of project expenditures. For most contracts 100 per cent of expenditures will be paid, the exception i s the main rehabilitation contract, which will be jointly financed by IDA (up to 85 per cent) and MOE (15%). The MOE will also contribute to the project through the assignment of PMT staff and by covering part of the PMT operational cost. 53 Table A: Allocation of IDA Credit and ITF Grant Proceeds Amount inUS$ Expenditure Category Finance I D A ITF Percentage (1)Works for Part 1.1of the Project 110,000,000 85% (2) Works for the Project other than Part 1.1. 900,000 100% (3) Goods & equipment 4,000,000 500,000 100% (4) Consultants services and training 5,000,000 3,500,000 100% (5) Incremental operating costs 100,000 1,000,000 100% (6)Unallocated 4,000,000 1,000,000 TOTAL AMOUNT 124,000,000 6,000,000 Table B: Disbursement Plans FiscalYear 07 os 09 10 11 Absolute 4.00 30.00 50.00 30.00 10.00 Cumulative 4.00 34.00 84.00 114.00 124.00 CalendarYear 2007 200s 2009 2010 I 2011 Table B-2DisbursementSchedulefor ITF Grant (US$ million) 54 Annex 8: Environmental and Social Impact Assessment Iraq: Proposed Emergency Electricity Reconstruction Project Summary of Rapid Environmental Risk Assessment of the Rehabilitation of the Hartha Power Plant, inBasra, Iraq DECEMBER 2006 Introduction Worldwide electric power is considered as an important factor for the development of national economies. Its availability and reliability have significant positive impacts on the national economic output (GDP), energy security, and quality of life. However, electric power generation using fossil fuels i s inherently associatedwith the release of air pollutants that have potential adverse effects on the environment and public health. The combustion of fossil fuels at power plants to generate electricity produces significant amounts of air pollutants in the form of sulfur oxides (SO,), particulate matter (PM), nitrogen oxides (NO,), volatile organic compounds (VOCs), metals, etc. all emitted in the smoke stack of a power plant. A large number of studies worldwide linked these emissions to a wide range of adverse environmental and health effects. In this context, The World Bank, in coordination with the Iraqi Ministry of Electricity (MOE), has agreed to finance the rehabilitation of two generating units (currently out of order) in an already existing power plant located inAl-Hartha, South of Iraq. The operation of these additional two units is expected to increase overall plant emissions and potential exposure, but since they will be usingmore efficient technology compared to the original units,the overall environmental impact i s expected to be less, if compared to the operation of the four original units. Moreover, the proposed project will displace distributed generation usingdiesel which have a higher negative environmental impact. A rapid risk assessment of potential exposure of stack emissions before and after the rehabilitation of the plant was conducted with the primary goal to define far field exposure risk along the Iraqi international borders with Iran and Kuwait. The results of this assessment are anticipated to be used as guidelines for a planned full Environmental and Social Impact Assessment (ESIA) for the proposed plant rehabilitation. Project description Al-Hartha power plant (HPP) i s located inA1Hartha area, Basra Governate, South of Iraq. The plant i s about 20 km north of Basra city and 25 km west of the Iranian border. Shatt A1 Arab river passes in the immediate vicinity of the plant. Cooling water for the generation units is diverted through a water intake along the river. The plant was first commissioned in 1979 and consists of 4 generation units (200 MW each) with a total designcapacity of 800 MW.Each unit has a separate emission stack that i s connected to an independent boiler. Units 1 and 4 are currently operational and produce about 195 and 150 MW, respectively. In contrast, units 2 and 3 have not been in use since the first Gulf War in 1991. The Iraqi Ministry of Electricity (MOE) is currently negotiating with the World Bank to finance the rehabilitation of units 2 and 3 with the goal of adding 400MW to the national grid. The rehabilitation of the Hartha Power station, the major component of the Emergency Electricity Reconstruction Project of which the total cost i s estimated at US$l50 million. It i s proposed to be financed from: (i) an IDA Credit of US$124 million; (ii) a US$6 million grant from the World Bank Iraq Trust Fund (ITF) and; (iii)US$20 million from the MOE's capital budget resources. The plant was initially designed to operate on natural gas as the primary fuel. In the absence of natural gas, the units can be operated usingeither heavy fuel oil (HFO) or crude oil. Currently, due to the difficulties 55 inproviding adequatequantities of natural gas for the operation of the plant, the two worlung units (1 and 4) are operated on crude oil with a sulfur content of 3.7%. As such, the plant may be associated with relatively high emissions which will increase with the introduction of two additional units. Atmosphericdispersionmodeling The risk assessment was conducted to evaluate emission dispersion from the Al-Hartha power plant. For this purpose, atmospheric dispersion modeling was used to define potential air quality impacts associated with the two currently operational units (1and 4) as well as the impacts that may arise upon the rehabilitation of the two additional units (2 and 3, reaching a combined design capacity of 800 MW for all units operating together). The BREEZEISC GIS Pro model, an advanced Windows based version of the U S Environmental Protection Agency Industrial (USEPA) Source Complex Short Term 3 (ISCST3) model, was used to assess the impact of gaseous emissions on ambient air quality in the region. The model, which is commonly used for regulatory and impact assessment purposes, incorporates features that enable the user to estimate concentrations from a wide range of sources and can simulate an unlimitednumber of sources, source groups, and receptors. Emissions were simulated for a complete meteorological year considering various scenarios (before/after rehabilitation, type of fuel used-crude oil, HFO, and natural gas-, emission control measures) to assess potential near-field exposure and health impacts at shodnear field distances or within plant vicinity (up to 1.5 km) and at far field or long distances reaching the Kuwaiti and Iranian borders. The dispersion modeling was conducted usingprimary constituents of concern that are linkedto power generation, namely, SO2and particulate matter (PM). Other indicators such as NO,, VOCs, PMlo, PM2.5,or others will be simulated as neededin the full ESIA. Note that emission dispersion simulations are limited by the accuracy of the input data and the inherent limitations of the specific models used. While site-specific data were used to the extent possible to develop emission and air quality modeling inputs, data were not available at times and, thus, assumptions were adopted as needed. Since no on-site emission testing was available, emission rates of SO2were estimated on the basis of the fuel quantity and quality. The SO2emission rates were found by assuming that the HFO and crude oil sulfur content will be entirely convertedto SO2.On the other hand, emission rates of total particulate matter were calculated in accordance with the AP-42, Emission Factor document, UUEPA.These emission factors will be measured and ascertained during the implementation of the full ESIA and the simulations repeated with the values obtained, if significantly different. Backgroundair qual& In the past two decades, air quality monitoring in Iraq has been limited and intermittent, mainly focused in Baghdad. The limited data revealed consistently high levels of PM in the atmosphere (annual average of 225 to 603 pg/m3 with maximum daily levels reaching 1,249 to 8,800 pg/m3, probably during desert sand storms), while levels of SO2(annual average of 26 to 47 pg/m3)remained generally acceptable. In the absence of detailed quantitative data of emission sources and environmental quality, a recent study assessed air quality in the cities of Baghdad, Basra, and Mosul by using a Decision Support System (DSS). While reportedfor different years, simulated levels of P M (annual average of 10 to 30 pg/m3)and SO2(annual average of 70 to 90 pg/m3)were inconsistent with previous measurements ascertaining the need for field monitoring and validation with comprehensive data at the time of the study. 56 Azkqualz;tystandards Recent Iraqi ambient air quality standards for PM and SO2have been proposed by the Ministry of Environment. They are higher than the World Bank recommended guidelines as outlined below and therefore the Bank guidelines were used in the risk assessment and will be adopted during the implementation of the ESIA. World Bank Proposed Iraqi Air Quality Guidelines Standards Daily Annual Daily Annual Indicator Average Average Average Average SO2(pg/m3) 125 50 262 52 PM(pg/m3) 70 50 350 150 Results It i s important to recognize that all simulated concentrations represent incrementalincreasesassociated with the operation of the HPP and as such do not account for background or other nearby sources in the study area since such data are not available. Background levels at various locations in the plant region will be measured during the implementation of the full ESIA. At this time, background levels outlined above for Baghdad are outlined below in the summary of simulated results as guidelines that needto be better defined. Summary of simulated SO2and PM levels at Al-Hartha and Basra with no emission control and crude oil Al-Hartha Basra Daily Annual Daily Annual Scenario I so2 HPPcontribution j 85.93 beforerehabilitation units 1 and 4 HPPcontribution 171.89 7.6 I 78.77 16.19 after rehabilitationunits 1, 2, 3, and4 Background level in Baghdad 26 to 90 1 26to90 PM (pg/m3) PM (Pg/m3) HPP contribution 6.32 0.27 2.89 0.59 before rehabilitation units 1 and4 HPP contribution 12.65 0.56 5.79 1.19 afterrehabilitation units 1, 2, 3, and4 Background level in Baghdad 225 to 603 225 to 603 The contribution of the plant to SO2 levels can be significant at nearby distances representing a potential high risk that need to be alleviated in the evaluation of alternatives during the implementation of the ESIA. This contribution added to the background levels, may exceed World Bank guidelines. 57 The contribution risk of SO2becomes less significant at receptors along the Iraqi-Iranian and Iraqi- Kuwaiti borders (far field simulations). Similarly, the contribution risk of the plant to P M levels i s likely to be equally less significant, at both the near and the far fields, because of the desert nature of the region which is generally associated with high background PM levels in comparison to the plant's contribution and exceeding on their own World Bank guidelines. The ESIA will evaluate the suitability of the World Bank guidelines to the region given its desert nature that i s characterized with elevated background concentrations. Future activities The rapid risk assessment forms a basis for further simulation and sensitivity analysis for PM and SO2 as well as other indicators of concern, whereby, site-specific data, stack emission characterization, background air quality monitoring, and meteorological conditions are essential to obtain in order to better define potential exposure and ascertain simulated results. In this context, a comprehensive Environmental and Social Impact Assessment (ESIA) for the Hartha plant will be conducted prior to initiating of construction activities. The ESIA shall include an examination of the direct and indirect effects of the proposed Project as well as an analysis of alternatives to develop an Environmental and Social Management Plan (ESMP) that provides mitigation, monitoring, and institutional strengthening-capacity building-training actions to be integrated into the design and implementation of the Project. As part of this process, it i s plannedthat a series of public consultations will be undertaken and that environmental and social studies be disclosed to the public. Note that while the full extent of the mitigation measures will not be known until after the ESIA is complete, an amount of US$2 million has been allocated to implement various elements of the ESMP during the rehabilitation of units2 and 3 including the feasibility study relatedto units 1and 4. 58 Terms of Reference for the Environmental and Social Impact Assessment for the rehabilitation of the Hartha Power Station inBasra, Iraq, September 2006 A. INTRODUCTION 1. The Iraqi Ministry of Electricity (MOE) is responsible for both policymaking and the electricity supply throughout the country. The actual shortfall in generation capacity approached 50% last summer (4,500MW vs. a demand of approx. S,OOOMW), despite the ongoing major rehabilitation and maintenance works on existing generating plants as well as transmission and distribution systems. To date, most repair programs have been of a short term nature and focused on improving generation, transmission and distribution reliability of existing assets. The MOE's current priorities are to (i) improve power supply through power import, (ii)improve gas fuel supply (through the Ministry of Oil), (iii)develop new thermal generation, and (iv)rehabilitate existing thermal generation and combustion turbine generation. In this context, the World Bank i s currently in discussions with the MOE to finance the rehabilitation of the Hartha Power Plant (Units 2 & 3) with the goal of adding 400MW to the national grid. This project will be supplemented with consultancy services for engineering and project management, the supply of testing equipment, and support services for least cost development planning to promote future projects. 2. Environmental screening 3. The project will be processed as an Emergency Recovery Project. Considering the emergency situation and the current security conditions in Iraq, the Environmental and Social Screening Assessment Framework designed for Iraq will be used for this project. The main component of the Project i s the financing of Units 2 and 3 of the Hartha Power Station and the Project i s therefore rated as category "A" with no direct adverse social impacts and no land acquisition will be required. However, the Environmental and Social Impact Assessment (ESIA) will also include the existing units 1 and 4 which are under operation and are presently using crude oil. Under Bank guidelines for emergency projects, the ESIA will be prepared during project implementation and before initiation of construction activities. The Bank has conducted a rapid assessment encompassing a preliminary air quality dispersion modeling to assess under the present design assumption the potential health risks and trans-boundary pollution to Iran or Kuwait using particulate matter emissions as an indicator due to the burning of crude oil. The ESIA consultant will have access to the rapid assessment will be required to conduct further simulations for testing various mitigation scenarios and conducting a comprehensive sensitivity analysis that will ensure the environmental safety of the plant emissions under any operating condition including variations in number of stacks, fuel type, emission control technologies, as well as meteorologicalchanges. 4. Scope of Analysis The analysis shall include an evaluation of the alternatives to the proposed Project, includingthe "no- action alternative" and an examination of the direct and indirect effects of the proposed action. It shall also include the development of a comprehensive Environmental and Social Management Plan (ESMP) that provides a proposed framework for mitigation, monitoring, and institutional strengthening-capacity building actions to be integrated into the design and implementation of the Project. As part of this process, it is planned that a series of public consultations will be undertaken and that environmental and social studies be disclosed to the public. 5. World Bank Environmental and Social Policies The TOR have been prepared to support the preparation of an ESIA that is in compliance with the environmental and social policies and procedures of the World Bank. World Bank Safeguard Policies involve mechanisms for integration of environmental and social issues into decision-making and are 59 complemented by a Policy on Disclosure of Operational Information. The WB Safeguard Policies encompasses two main types of policies namely, environmental and social. Environmental policies include Environmental Assessment, Natural Habitats, Forestry, Pest Management, Safety of Dams, and Projects involving international waters; while social policies include Indigenous People, Cultural Property, Involuntary Resettlement, and Projects inDisputedAreas. B. OVERVIEW OF APPLICABLEWORLD BANK SOCIAL & ENVIRONMENTAL SAFEGUARDPOLICES AND RELATED REQUIREMENTS 6. The ESIA Consultant shall conduct a full review of the Bank's Social and Environmental Safeguard Policies and related requirements. A preliminary review of the proposed Project indicates that several World Bank Environmental Policies might be triggered. OP4.01 Environmental Assessment - Category "A" environmental assessment i s required since the project may be associated with diverse and significant environmental impacts during the construction and operation phases. The environmental assessment should include an analysis of the potential positive and negative physical, biological, socio-economic, and cultural property impacts from the proposed Project. It should identify and evaluate direct, indirect and cumulative impacts from the proposed Project inthe zone of influence to be definedby the Consultant and would extend beyond the plant area to include also trans-boundary pollutants as the power plant is near the Iranian and Kuwaiti borders. Under current procedures of the World Bank, all environmental assessments for category "A" projects require that the studies be prepared by an independent consultant that has no conflict of interest resulting from having been the lead consultant and/or member of a consortium or joint venture responsible for undertaking the feasibility and designstudies for the proposed project. OP4.12 International waters - The Al-Hartha Power Stationpumpscooling water from the Shatt Al-Arab waterway and discharged it back after usage to the same location. Shatt Al-Arab i s considered an International waterway between Iraq and Iran thus triggering the Bank's Safeguard policy OP/BP 7.50 on the subject matter. Therefore, it i s requiredto ascertain whether riparian agreements are inplace and to ensure that riparian states are informed of and do not object to project interventions. It should be noted that the volume of pumped water and the quality of discharged effluent are not known or have not been reported to be at issue between the riparian countries inthe past. 7. Inaddition, another World Bank policy or consideration that i s necessary in a project of this scope include: BP 17.50 -Disclosure of OperationalInformation The proposed Project i s subject to the provisions of this Policy and other related World Bank requirements concerning the disclosure of environmental and social information. These requirements include making the ESIA and its supporting studies available in draft and final versions at the World Bank, Washington, D.C., and with involved governmental authorities (Ministries of Electricity, Oil, Environment, Water and Agriculture) within Iraq. Key documents should be made available in both Arabic and English. 60 C. SCOPEOFWORK 8. Overall Outputs The ESIA report shall be concise and comprehensive. The main text shall focus on findings, conclusions and recommended actions, supported by summaries of the data collected and citations for references used in interpreting those data. Detailed or un-interpreted data are not appropriate in the main text and shall be presented in appendices or a separate volume. Unpublished documents used in the assessment that may not be readily available, shall also be assembled in an appendix. The ESIA report shall be organized according to the outline below: Executive Summary for the ESIA which will summarize the project description, the applicable safeguard policies, the environmental impacts ,the Environment and Social Management tables and the summary o f the consultation process Policy, Legal and Administrative Framework Description o f the Proposed Project Environmental and Social Baseline Conditions Significant Environmental and Social Impacts Analysis of Alternatives (Including the `No-action alternative') Environmental and Social Management Plan - Resettlement and LandAcquisition Policy Framework/ Resettlement and Land Acquisition Plan, if applicable. - EnvironmentalManagementPlan: Mitigation Measures Monitoring Plan Capacity Building, Training and Institutional Strengthening Plan - Summary o f the Environmental and Social Management Plan - Summary o f the results o f the consultation process L i s t o f References Appendices - L i s t o f Environmental Assessment Preparers - RecordsofInteragencyMeetings - RecordsofPublicMeetings - Public Consultationand Disclosure Plan for the ImplementationPeriod - Data and Unpublished Reference Documents - Archaeological and Historical Sites Surveys (if applicable) - Archaeological Chance FindProcedures (if applicable) - Resettlement and Land Acquisition Policy Framework (if applicable) - Resettlement and Land Acquisition Plan (if applicable) - Detailed Location Maps for Key Baseline Data and Constraints, including all Project Facilities - Detailed Location Maps for all Mitigation Measures and Recommended Actions, including all Project Facilities - Copies o f Clearances from Concerned Authorities (if applicable) 9. Objectives of theAssignment The objective o f this assignment i s to conduct an EISA o f the Proposed Project that will: Be in conformity with the World Bank safeguard policies, taking into consideration the environmental and social procedures o f the Government o f Iraq Be based on information and data from previous technical studies, original field surveys, and investigations as appropriate Recognize the environmental, social, and economic impacts o f the proposed project, recommend 61 control, mitigation and monitoring measures to be addressed during the implementation of the project Conduct a formal process of public participation and consultation, including public information meetings and consultation on the scope of work for the ESIA, and timely disclosure of draft and final ESIA Reports. 10. As part of this process, the Consultant shall be responsible for reviewing and analyzing available information regarding the proposed Project and collecting site specific field information related to social and environmentalissues. 11. Primary Study Area and ExtendedArea of Znjluence The primary study area encompasses the overall site of the Hartha Power Station with associated piping, pumping stations, boilers, chimneys, fuels storage tanks, water treatment units, water intake along Shatt Al-Arab, water discharge to Shatt Al-Arab, auxiliary equipment (pressure, flow, temperature control and monitoring etc.), access roads, and other structures/facilities that are directly related to the operation and maintenance of the Power Station. The primary study area also includes the lands adjacent to the Power Station, which might be subject to potential social and environmental impacts. The extended zone of influence consists of the main zones of communities, affected positively or negatively by the project, includingurban and rural areas and natural habitats (terrestrial and/or aquatic) surrounding the site proper including trans-boundary air pollution to Iran or Kuwait and should be defined by the Consultant. It will include the areas affected by emissions from the Power Station and in terms of improved electricity availability and potential decrease in the electricity bill. 12. Approach and Phasing of the Study Process The duties of the consultant should be carried out in two phases as detailedbelow: Phase I- Overview and Preparatory Work (represents about 30 percent of the level of effort) Phase 11-Project Specific EISA (represents about 70 percent of the level of effort) PHASE I-OVERVIEW AND PREPARATORYWORK 13. The Consultant shall use the existing data, collect and gather supplementary baseline information, and assure a full and open public consultation process. The required procedures for completing this preparatory phase is highlightedbelow: TASK1.DEVELOPCONSULTATION & COMMUNICATlONSPROGRAM, INCLUDING PUBLIC CONSULTATION A 14. In the context of the Power Station rehabilitation project, consultation of stakeholders as well as the general public constitutes an important step that shall be accomplished by the consultant during project implementation. The main objective of the consultation process i s to inform stakeholders about the project and allow them to articulate various views, concerns and values. This process will ensure better transparency and accountability in decision-making. In this respect, the consultant with the aid of concerned governmental authorities shall organize public consultation meeting(s) during the preparation of the ESIA report in order to capture the views of the various stakeholders and the general public, and address them within the ESIA to the extent technically and economically feasible. 15. In close cooperation with the MOE, the Consultant shall prepare a Consultation and Communications Program including activities that involve inputs from public consultation and participation to the environmental and social assessment process. The Consultation and Communications Program shall describe how the substantive issues will be discussed in a two-way manner with stakeholders from national and local government, residents of the Project area of influence, academic and applied research institutes, non-governmental organizations and interested 62 individual citizens. Meetings shall involve representatives of various stakeholders. For each meeting, a formal record shall be made includingthe agenda, a list of participants, and a summary of the issues discussed. Copies of materials describing the Project shall be provided to the participants. 16. It i s proposed that consultation and participation meetings be conducted at several locations inthe greater Project area particularly where significant impacts are expected (positive or negative). These locations are to be determined once the ESIA i s initiated. 17. The Consultation and Communications Program shall continue during the Project implementation process, especially in conjunction with major construction activities. Although the Consultant may no longer be involved at that stage, the Consultant will need to train appropriate staff in the MOEand the Power Station to continue the consultation process during Project operation. TASK2. ASSISTMOE IN IMPLEMENTING THE CONSULTATIONAND COMMUNlCATlONS PROGRAM 18. The Consultant shall assist the MOE in implementing the Consultation and Communications Program. The Consultant shall also provide, through the MOE, factual inputs for use by the World Bank. The Consultant shall also provide assistance to the MOE in complying with the World Bank's policies on disclosure of Project related environmental and social documents. This Policy requires that the environmental and social documentation for proposed projects be made available to the public at accessible locations inthe project area and at the World Bank inWashington, D.C. 19. The various draft and final reports shall be disclosed as follows: the Executive Summary of the ESIA shall be made available in Arabic and English; the Main Report of the ESIA in English; the Social Assessment, if required, in Arabic and English; the Resettlement and Land Acquisition Framework and Resettlement and Land Acquisition Action Plan(s), if required, inArabic and English. Provisions shall also be made for the disclosure of information to local communities before the constructionphase of the Project. TASK3. PROJECT DESCRIPTION 20. The consultant shall provide a detailed description of the proposed rehabilitation project. The Project description shall include diagrams, maps, tables, and descriptive text based on the existing information. It shall be updated throughout the preparation of the ESIA. The Project description shall address the following components, but i s not limited to: a. Power Station complete layout usingappropriately scaled maps b. Fundingand implementing agencies C. Identification and brief description of villages, towns, natural areas surrounding the Power Station d. Land use surveys of areas surrounding the Power Station (at least 2 to 3 kmradius) e. Identification of areas to be expropriated, if applicable f. Structuraldesign ofthe chimneys (diameter, material, expected gasflow, etc.) usingappropriately scaled maps g. Structural design of the water intake and discharge along Shat Al-Arab (width, depth, diameter, liningmaterial, etc.) using appropriately scaled maps h. Structuraldesign of water treatment units and fuel storage and separation facilities 1. Fuel specifications used at the Power Station of the crude oil, heavy fuel oil (HFO), diesel and natural gas or a combination thereof j. Nature and duration of construction and operation activities k. Nature and quantities of materials neededduringthe constructionphase 1. Schedule and description of construction activities 63 m. Staffing and support n. Facilitiesand services 0. Operation and maintenance activities p. Financial requirements for the implementationof the project TASK4. OVERVIEW OFPOLICY, LEGAL, ADMINISTRATIVEFRAMEWORK AND 21. The existing policy, legal and administrative framework in Iraq related to the construction and operation o f the proposed project shall be reviewed by the consultant and included within the ESIA report. Relevant WB Safeguard Policies (listed in Section B) shall also be reviewed to ensure compliance o f the project with both local and WB regulations. 22. The rehabilitation of power stations may require the involvement of several ministries (Electricity, Oil, Environment, Water and Agriculture) along with various governmental agencies. A statement of the mission o f each shall be included by the consultant in the ESIA report and within the context o f the proposed project. 23. In Iraq, while existing environmental laws and regulations may not be integrated within a well- articulated environmental policy framework, analysis o f environmental management and legal- institutional frameworks and capacities shall be conducted by the consultant and included within the ESIA report. It i s important to outline sector-specific environmental laws and regulations and put in the context o f the proposed project. Iraqi ratified international conventions of relevance to the proposed project shall also be presented and analyzed in the ESIA. 24. In the context o f the proposed project, several standards may be adopted including ambient air quality, occupational noise exposure limits, noise guidelines in different zones, effluent quality river discharge standards, water and soil quality standards, etc. As such, the consultant shall identify, summarize, synthesize, and analyze relevant Iraqi environmental standards and will also use the guidelines set forth the World Bank's on pollution abatement and prevention handbook (PAAH) which ever are the strictest. Annex A provides the general guidelines extracted from the PAAH. The Consultant i s also required to consult the chapter on power plant described in the PAAH. Relevant international standards shall also be described and adopted where feasible and applicable provided that they are stricter than the PAAH and acceptable by the Government o f Iraq. Such standards could be promulgated by the World Health Organization (WHO), the European Commission (EC), the US Environmental Protection Agency (USEPA), the Occupational Safety and Health Administration (OSHA), the Federal Highway Administration (FHWA), etc. 25. The consultant shall review relevant World Bank Safeguard Policies as listed in Section B and ensure their integration within the framework o f the ESIA. TASK5. DESIGN AND CONDUCT OFA SOCIALASSESSMENT 26. While minimal social impacts are expected, a Social Assessment shall be conducted as part o f the ESIA to determine how the Project will affect local communities and serve as a broader analysis of Project related social issues beyond those concerning potential impacts and risks. The Consultant must seek advice from World Bank social specialists to resolve issues in interpretation of good practice guidelines (http://www. worldbank.org/socialanaly sis). 27. The Consultant shall conduct a literature review and collect relevant information available at various Government ministries and agencies. This would entail: 0 Collecting copies o f important thematic atlases and maps 64 Defining a methodology to collect information from various stakeholders that combines focus group discussions and in depth case studies Clarifying and assessing the most relevant issues through discrete sampling and focus group techniques in the primary study area and the extended zone of influence. PHASE 11-PROJECTSPECIFIC ENVIRONMENTAL SOCIAL ASSESSMENT AND TASK6.DESCRIBE PROJECT-SPECIFIC ENVIRONMENTAL SOCIALCONDlTlONS THE AND 28. Baseline conditions define the characteristics of the existing and projected future environment with or without the project implementation. Elements of the environment include its physical (climate and meteorology, surface and groundwater quality, geology and soil, topography, noise levels, air quality, traffic, rivers and waterways, coastal parameters), biological (terrestrial, marine, and riverine biodiversity including flora, fauna, rare or endangered species, sensitive habitats, significant natural sites), and socio-economic characteristics (population, land-use, planned development activities, community structure, employment, distribution of income, goods and services, recreation, public health, cultural properties, customs, aspirations, and attitudes). 29. Existing basic documents (such as topographical and geological maps, technical documents on climate and meteorology, geology, hydrogeology, road characteristics, water quality/quantity, etc.) shall be collected, reviewed, synthesized, and analyzed. Additional information shall be sought from various government agencies, academic or research institutions, and/or consulting firms. To the extent feasible residents and professionals shall be consulted to validate information from other sources and identify potential gaps in the technical data. Field surveys shall also be conducted where existing site- specific information i s expected to be inadequate or incomplete. 30. It i s particularly important to accurately identify any additional lands that could be required by the GO1 for the Project. In such case, it is essential to identify any involuntary relocation of people and any individuals whose livelihoods may be affected by the Project. The numbers, locations, and socio- economic conditions of the affected people shall be fully documented, to assist the GO1in meeting the objectives of World Bank OD 4.12. TASK7.ANALYZEPOTENTIAL ENVIRONMENTALAND SOCIALIMPACTS 3I.The potential anticipated environmental and social impacts associated with the proposed project both at the construction and operational phases are typically associated with air quality, noise, traffic, seawater/ surface water, groundwater and soil, biodiversity, landscape, waste generation, resource use, health and safety, and socio-economics. The consultant shall use both qualitative and quantitative (using analytical and mathematical means) approaches to assess the potential impacts. In addition, the consultant shall distinguish between significant positive and negative impacts, direct and indirect impacts, and immediate and long-term impacts as well as identify impacts, which are unavoidable or irreversible. 32. The assessment of impacts i s directly related to the definition of sensitive receptors. As such, the consultant shall identify sensitive receptors located on-site and its surroundings and assess each potential impact separately in the air shed and watershed of the project 33. For each impact being identified,the following shall be provided: Description of the major issues Documentationof the cause and effect relationships between planned project activities Identification of secondary or higher order effects, with clearly defined pathways of impacts from higher order effects 65 Description of methods usedto predict impacts Assessment of significance of predicted direct, indirect, cumulative and trans-boundary impacts and their relative risks Methods or approachesto assigning impact significance Justification for the choice of methods used to predictenvironmental impacts 34. Although not exhaustive, the following factors, which may have environmental impacts, shall be considered in the ESIAfor all phases of the project namely, construction and operation. Task 7.1. Air quality 35. The consultant shall assess at least the following air quality impacts using three types of fuel or a combination thereof; Namely crude only, HFO and natural gas. The Consultant will also carry out a dispersion model of the major pollutants ( PMlO and PM2.5, SOX, NOx, and Polycyclic aromatic hydrocarbons ( PAH) Emissions from construction activities Emissions from construction equipment and trucks Stack emissions The introduction of natural gas to the Power Station is expected to have significant positive impacts on the environment, notably on air quality, by replacing other fuels which combustion i s inherently associatedwith highemission rates of a variety of air pollutants (carbon oxides, sulfur oxides, nitrogen oxides, particulate matter, hydrocarbons, etc). Inthis respect, the consultant shall assess the positive impact on air quality resulting from shifting the power station to natural gas. Accidental gas / fuel leaks at pipelines, compressor stations, and regulating stations Task 7.2. Noise 36. The consultant shall assess at least the following noise impacts: Noise generatedby powered mechanical equipment (PME) employed duringthe constructionphase Trucks transporting material inand out of constructionsites Noise generatedat pumping and compressor station sites, chimneys, etc. duringthe operation phase Task 7.3. Traffic 37. The consultant shall assess at least the following traffic impacts: Increased traffic in the neighborhood of construction areas due to the movement of trucks Task 7.4. Seawater1Surface water 38. The consultant shall assess at least the following surface water impacts: Suspension of sediments from water pumping and discharge along Shat Al-Arab waterway including alteration in water flow, quality, and biodiversity in the waterway Chemical contamination from wastes and accidental spills Hydrology: describe any changes in the water balance which may be introduced with the power station cooling cycle Describe water effluent dischargesform the power station and their ultimate fate 66 Task 7.5. Groundwater and soil 39. The consultant shall assess at least the following soil and groundwater impacts: 0 Erosion, runoff, and sedimentation from construction, and grading for access roads Chemical contamination from wastes and accidental oil spills 0 Contaminationfrom pipeline or storage tank leakage or rupture Task 7.6. Biodiversity 40. The consultant shall assess at least the following biological impacts: 0 Habitat and organism loss along the Shat Al-Arab waterway due to water pumpingand discharge 0 Affecting soil and plant areas due to gas emissions deposition Task 7.7. Landscape 41. The consultant shall assess at least the following impacts on landscape: 0 Presenceof equipment or material, soil heaps, and borrow pits during the constructionphase 0 Potential loss of trees and vegetation duringoperations Task 7.8. Solid waste and wastewater generation 42. The consultant shall assess at least the following impacts: Solid waste and wastewater generation linkedwith construction and operation activities 0 Treatment and discharge of the cooling water during operation 0 Treatment and discharge of contaminated wastes and or wastewater Task 7.9. Resource use 43. The consultant shall assess at least the following energy consumption impacts: 0 Energy and water consumption linked with construction activities 0 Energy and water consumption linkedwith the operation of the power station Task 7.10. Health and safety 44. The consultant shall assess at least the following health and safety impacts: 0 Improper handling and storage of constructionmaterials as well as accidents occurring with the operation of moving equipment and with trucks moving on-site 0 Pipeline and/or storage tanks fracturing, leakage, as well as explosion and fire hazards 0 Potential sabotage: risk assessment and emergency response 0 Health benefits resulting from shifting towards natural gas 0 Emergency response Task 7.11. Socio-economics 45. The consultant shall assess at least the following socio-economic impacts: 0 Interference with activities along the shat Al-Arab waterway as a result water pumpingand discharge including effects on fisheries 0 Induced secondary development duringconstructionin the surrounding areas 67 Potential damage or loss of agricultural land as well as crop damage by emissions deposition Impacts on the regionallevel, associatedwith the shift to natural gas particularly potential economic savings and reduction inemissions Population perception of risk in residentialareas close to the Power Station An assessment of changes to demographics includingincreased burdens on social services and/or existing infrastructure), land use and land use plans, water resources, economy and cultural resources as appropriate. TASK8.ANALYZEALTERNATIVES 46. The consultant shall describe the alternatives that were examined in the course of developing the proposed project and identify other alternatives, which would achieve the same objectives. The concept of alternatives extends to fuel type and specifications, design, technology selection, constructiontechniques and phasing, and operating and maintenance procedures. 47. The consultant shall compare alternatives in terms of potential environmental impacts, capital and operating costs, suitability under local conditions, and institutional, training, and monitoring requirements. To the extent possible, the costs and benefits of each alternative shall be quantified, incorporating the estimated costs of associated mitigation measures. In this respect, a set of selection criteria shall be considered to achieve a balance between environmental impacts, the level of interference with human activities, technical constraints, as well as capital and operational costs. The "No Project" scenario shall be considered inthe analysis of alternatives. TASKSTO 11- DEVELOP ENVIRONMENTAL SOCIALMANAGEMENTPLAN (EskfP) 9 AN AND 48. The ESMP consists of the recommended actions to mitigate both the environmental and social issues. The ESMP consists of two discrete sections. which are described in detail below: Resettlement and Land Acquisition Plan EnvironmentalManagement Plan Task 9. Resettlementand Land Acquisition Policy Framework and Plan 49. If OD 4.12 i s triggered, the Consultant shall develop a project-specific Resettlement and Land Acquisition Policy Framework, as well as a Resettlement and Land Acquisition Plan. This Policy Framework will provide a detailed review of the potential need for involuntary resettlement and the general approach, procedures and general principles of compensation for residents, relocations, compensation for the involuntary acquisition of land, compensation for temporary disruption, compensation for damage to crops, and compensation and/or costs for removal and replacement of plantings. The Resettlement and Land Acquisition Plan shall also provide detailed involuntary resettlement cost estimates (including entitlements of different categories of affected people) that need to be included in the project and incorporated into the overall project budget. 50. Any required land acquisition additional to that already owned by the Power Station shall be included in the Resettlement and Land Acquisition Plan by the Consultant so as to comply with World Bank OP 4.12 on Involuntary Resettlement. The Resettlement and Land Acquisition Plan shall be based on up-to-date and reliable information regardingthe scale of the proposed resettlement and land acquisition and its impact on the affected people, including legal issues involved. At a minimum, the Plan shall cover the following elements: (a) an inventory of lands to be acquired and the numbers of affected persons and assets; (b) description of compensation and other resettlement entitlements to be provided; (c) consultations with affected people about acceptable alternatives; (d) institutional responsibility for implementation; (e) a timetable and budget; (f) participation of affected people in the 68 design and implementation of the resettlement program; (8) grievance redress system; and (h) monitoring and evaluation of resettlement implementation. Task IO. Environmental Management Plan 51. The consultant shall prepare an Environmental Management Plan (EMP) to identify: (1) the mitigation measures that address the identified potentially adverse impacts, (2) the monitoring program that verifies compliance with the recommended mitigation measures and that monitors for unanticipated impacts that might arise, (3) the institutional structure, strengthening and training required to implement the mitigation and monitoring plans. The Consultant shall use the format provided as an attachment for the preparation of the different EMPtables (Annex B). TASK10.1.ENVIRONMENTAL MITIGATION PLAN 52. The primary adverse environmental impacts that are expected with the construction and operation phases can be eliminated or minimized by careful planning and staging of construction activities, the adoption of proper management practices during operation, and relying on effective environmental monitoring and training to support management decisions. The consultant shall devise a mitigation plan to propose several potential impact-mitigation or control measuresthat shall earn the project more acceptability, by reducing or eliminating to the extent possible many of the expected impacts that were outlined above. Mitigation measures are intendedto reduce the effect of potentially significant impacts on the environment. Thus, they are highly dependent on the significance of the predicted impact, the nature of the impact (permanent vs. temporary), or the phase of the project (construction vs. operation). 53. For each negative environmental and social impact (during both the construction and operation phases), the consultant shall identify and describe (wherever applicable): Corresponding protectionmeasuresto mitigate or offset damaging impacts from project activities Costs and benefits for eachrecommended mitigation measure developed to resolve a significant environmental issue Appropriateness and cost effectiveness of mitigation measures Technology usedin each mitigation measure, including information regarding its prior effective use, the range of environmental conditions under which it i s effective, and the level of skills requiredto operate and maintainthe technology Time schedule for implementation of each mitigation measure, showing that it will be in use before the project impacts are felt Interventionlocation(s) for each of the proposed mitigation measures (on an appropriately scaled map) Concerned parties responsible for implementing the mitigation measures and the required personnel Definingcompensation to affected parties for impacts which cannot be mitigated TASK10.2.ENVIRONMENTAL MONITORING PLAN 54. The development and implementation of a continuous, long-term monitoring plan is a crucial step towards ensuring the sustainability of the Power Station and associated infrastructure within the surrounding environment. Establishing a database that will be continuously updated will provide a clear indication of potentialenvironmental degradation that will allow remedial action at an early stage thus limiting irreversible damage. The consultant shall develop a monitoring plan within the ESIA report. The monitoring plan should be implemented at the construction phase and be maintained throughout the entire lifetime of the project. The main objectives of the monitoring plan include: 1) 69 monitoring the performance of the Power Station and associated infrastructureand the effectiveness of mitigation measures; 2) identifying the extent of the environmental and social impacts predicted in the ESIA on sensitive receivers; 3) determining project compliance with regulatory requirements; and 4) recommending further mitigation measuresif found to be necessary. 55. Monitoring indicators of air quality, noise levels, traffic, surface and groundwater quality, soil, biodiversity, landscape, waste management practices, resource use, health and safety, and socio- economics shall be proposed by the consultant. For certain indicators, sampling and chemical analysis are necessary in order to assess the extent of the impact, while other indicators require visual inspections and photographic documentation by experienced and specialized personnel. As such, indicators to be monitored, monitoring locations, analysis methods, equipment required, frequencies, field procedures, responsibilities, implementingparties, as well as relevant standards and budgetary requirements shall be defined by the consultant. Monitoring locations shall be depicted on detailed maps. TASK10.3.INSTITUTIONAL STRENGTHENING-CAPACITY BUILDING 56. The consultant shall review the authority and capability of institutions at local, provincial, regional, and national levels and recommend steps to strengthen or expand them so that the management and monitoring plans in the ESIA can be implemented. The recommendations may include the preparation of new laws and regulations, new agency functions, inter-sectoral arrangements, management procedures and training, staffing, operation and maintenance training, budgeting, and financial support. 57. Appropriate environmental management, in the context of the Power Station, dictates that construction and operation be implementedinaccordance to the current state of the art and knowledge regarding environmental protection. This can be accomplished by hiringcompetent personnel with the appropriate educational and professional background and instituting periodic and systematic training programs with site-specific plans that are adequate for protecting the general public and the environment contributing to the mitigation of potential environmental impacts as well as raising environmental awareness among contractors and operators. For this purpose, the consultant shall develop an environmental training course whereby personnel who will be involved in the construction and operation of the various components of the proposed project will be required to attend prior to the initiation of project activities. Similarly, personnel involved in monitoring activities during both construction and operation shall attend similar courses and workshops to ensure their ability to implementthe monitoringplan. TASK11.SUMMARY OF ESkfP-SCHEDULE, RESPONSIBILITIES,AND COSTS 58. The Consultant shall provide: a) a description of activities and a time-line schedule for implementing the Resettlement and Land Acquisition Plan (if applicable) and the Environmental Management Plan, with breakdown to the sub-activities of mitigation measures, institutional strengthening, and monitoring activities that are recommended for the Project, showing phasing and coordination with overall Project plans from construction to operations; b) the entity responsible for each activity, and to whom they report functionally and legally; and c) the capital and recurrent cost estimates and sources of funds for implementing the ESMP. 59. An ESMP Monitoring Consultant shall be appointed by the GO1 to provide assurance and technical advice on effective implementation of the ESMP. The scope of work and proposed budget level to appoint and remunerate an ESMP Monitoring Consultant for the construction and implementationphases of the proposed Project shall be prepared. The ESMP Consultant would report directly to the representative of the GO1 and coordinate closely with Government environmental officials. 70 60. The Summary of the ESMP shall cover enough years to take into account the scope of work for the ESMPConsultant, and all related mitigation, training and monitoring activities. D. REPORTING 61. Progress Reports (10 copies): Progress reports shall be submitted in English to the MOE on a monthly basis and when needed following contract signature. The progress report shall present a very brief overview of progress incompleting the task dates, difficulties in achieving the work as described in the contract, proposed alternate means to achieve the Project objectives, status of budget and major scheduled milestones, and any proposed modifications to the contract mandate. It i s anticipated that progress reports would be 1-3 pages maximum inlength. 62. Consultation and Communications Program (10 copies): The Consultation and Communications Program shall be submitted to the MOE according to the time schedule set out below. The objectives and content of this Programare described above inTask 1. 63. Annotated Outline of ESZA Report (10 copies): The Annotated Outline of the ESIA Report shall be submittedto the MOE according to the time schedule set out below. The Annotated Outline shall consist of the full table of contents to be used for the ESIA, complete with chapter titles, annex titles, numbering format, main author responsible for each section, main technical issues to be addressed in each section, issues that require MOE clarification or cooperation for each section, type of MOE input to each section, and approximate page length for each section. An initial outline for the table of contents has been presentedabove in Section C, inthe paragraph entitled Overall Outputs. 64. Preliminary Draft ESZA Main Report (10 copies).The Preliminary Draft ESIA shall be submitted to the MOE according to the time schedule set out below. This report shall provide the first draft text on the details of all surveys, interviews, consultations, sampling, analyses, and other data collected. The preliminary draft information shall be compiled in formats that can easily become part of the draft reports or draft technical annexes of the ESIA Report. These preliminary draft texts are to be updated as the study progresses and based on comments of the WB, MOE or other relevant governmental ministries or agencies. 65. Draft ESZA Reports with Executive Summary (10 copies). The Draft ESIA Report shall be submitted within the time schedule set out below. The objective of the ESIA Report i s to present key findings and the most relevant information and data, rather than general and non-specific information. The Draft ESIA Report shall be concise and limitedto significant social and environmental issues. 66. The Executive Summary shall indicate community/agency consultations undertaken and the budget levels and source(s) of financial support for implementation of the recommended actions. The Executive Summary shall be not more than 30 pages of text, but shall in addition contain tables, figures, and/or maps as necessary. 67. The Main Report shall focus on findings, conclusions, and recommended actions, supported by summaries of the data collected and citations for any references used in interpreting those data. Liberal use of tables, maps, and graphics to present summaries of data and analyses are strongly encouraged. Detailed or un-interpreted data are not appropriate in the main text and should be presented in annexes or a separate volume. Unpublished documents that are not readily available should also be assembled inan annex or a separate volume. 68. The Draft ESIA Report shall be delivered to the MOE and disclosed to the public as follows: the 71 Executive Summary of the ESIA shall be made available in Arabic and English; the Main Report of the ESIA in English; the Social Assessment with the Resettlement and Land Acquisition Framework and Resettlement and Land Acquisition Action Plan(s), if required, in Arabic and English. Provisions shall also be made for the disclosure of information to local communities before the construction phase of the Project. 69. The MOE shall organize review meetings and maintain written minutes of meetings to record the major comments. Main sections of the ESIA Report that require extensive rewriting and editing shall be re-submitted for verification to MOE. Once the MOE has issued a letter approving the revisions to the Draft ESIA Report that incorporate its comments, the Consultant shall submit the Final ESIA Report. 70. Final ESZA Report with Executive Summary (25 copies). The Final ESIA Report shall be submitted within the time schedule set out below. The Final ESIA Report shall provide complete details of all work performed, analyses made, and justification of options and recommendations proposed. This report shall build upon the reports completed previously, and integrate comments received from the WB, MOE or other relevant governmental ministries or agencies including issues raised and discussed at review meetings, as well as written comments. 71. The Final ESIAReport shall be delivered to MOE and would be disclosed to the public as follows: the Executive Summary of the ESIA shall be made available in Arabic and English; the Main Report of the ESIA in English; the Social Assessment with the Resettlement and Land Acquisition Framework and Resettlement and Land Acquisition Action Plan(s), if required, in Arabic and English. Provisions shall also be made for the disclosure of information to local communities before the construction phase of the Project. The Consultant shall prepare a suggested distribution list for the copies, with the objective of a wide dissemination of the reports to stakeholders, universities and the public. 72. In addition, a master hard copy and master soft electronic copy suitable for reproduction purposes shall be provided to MOE to meet any future needs for reprinting. E. ESIA SUPERVISIONAND TIME SCHEDULE 73. The work of the Consultant shall be supervised by the MOE. The MOE will be the focal point for coordination with all other ministries, agencies, and any other international institution. The MOE shall assure free access to all existing data and to all relevant operations and facilities. It shall also provide liaison and contacts with local authorities, NGOs, academic institutions, and will work cooperatively with the Consultant for all public participation and public consultation activities. 74. The following is the time schedule for the production of the reports described above, assuming that all comments are received within one week of receiving any deliverables. This i s a relatively short period to conduct the ESIA and receive comments due to the emergency nature of the proposed project. The Consultant shall begin work upon contract signature. The Consultant shall propose a clear schedule with critical milestones, and make all possible efforts to meet the proposed time schedule. 72 Milestone/ Deliverable Weeks to completion I 2. 1. Contract signature 0 Submit Consultationand Communication Program I 2 I -3. Submit Annotated Outline of ESIA Report 6 4. Submit Preliminary Draft ESIA Report 12 5. Submit Draft ESIAReport 18 6. Submit FinalESIA Report 20 F. STAFFINGAND EXPERIENCEOFTHE CONSULTANT 75. It i s anticipated that the Consultant would establish a strong core team of specialists. It i s envisaged that a highly experienced engineer-specialists would serve as the ESIA Project Team Leader. The Consultant should complement the skills of the core team with other social, environmental, technical, health and/or institutional specialists with experience in Iraq and internationally. The team i s expected to provide pragmatic and insightful planning to complete the above scope of work. 76. The Consultant shall propose andjustify the range of disciplines to be included inthe core Project team and the complementary skills of other short-term specialists. The inputs of all specialists shall be clearly indicated as it i s anticipated that the majority of the work program would be carried out by individuals highly experienced in their professional fields and aligned with the tasks assigned. 77. Primary skills and specialties of the team are suggested below. The Project Team Leader shall have at minimum 15 years professional experience working on and managing large developmental projects, ability to work with government officials, energy and environmental specialists, familiarity with environmental and social assessments for equivalent size projects, and a proven track record in managing and coordinating a diverse group of professionals. The team shall include specialists who are highly familiar with specifying detailed mitigation measures, focused training programs, and structured monitoring programs. The entire proposed Project Team may include, but not be limited to, several of the specialists listed below: List of Sumested Specialists: - Teamleader(describedabove); - Power,energy,fuelspecialist; - Emissiondispersionspecialist - Waterquality specialist - Terrestrial and river ecologist/ natural habitat specialist; - Environmental health and safety specialist - SocialScientist; 78. The Consultant shall name individuals to participate in specified roles within the Project Team and provide full cumcula vitae and any other information considered relevant by the Consultant. The Consultant shall name the Team Leader, and the other core team members and key short-term specialists, and provide an assurance that all members of the proposed team will be made available as specified inthe proposal, if the Consultant i s named. 79. The team members should have experience in environmental assessment of large scale 73 infrastructure projects, preferably in the Middle East and North Africa (MENA) Region, and must have familiarity with the World Bank requirements and guidelines. Familiarity with the GO1 environmental guidelines i s an asset. The Consultant should have experience in social and environmental studies and be fully familiar with World Bank Safeguard policies, as well as other related guidelines and procedures. 74 Annex 9: Responsibility Matrix No. Activities Agencieaodies Involved Prepare Quarterly Progress Reports includingFinancial Monitoring Reports l3 Consultantshiredto (i)provideTA services;(ii) carry out roadassetmanagementstudies;(iii)providedesignandconstructionsupervisionservices 75 No. Activities AgencieslBodies Involved Mo MoPD MOE r:F Hartha (,TF) FMA AU WB F C 3.14 Coordinate procurementtraining to MOE& PMT staff E S N 3.15 Conduct trainingon procurementto Iraqi staff E S Key: R=Reviewklear E=Execute S= Support A= Approve N=Notified Legend: MOE Ministryof Electricity WBPMT: World Bank ProjectManagementTeam CONS: Projectconsultants WB: World Bank AUD: Auditor 76 EMERGENCY ELECTRICITY RECONSTRUCTIONPROJECT ECONOMICANALYSIS Frame9F CCGT 390M W Year Capital Fuel O&M (V) O&M(F) Total GWh 0 105 0 0 0 105 0 1 122.5 35.86 4.97 1.95 165.28 1242.54 2 122.50 71.72 9.94 1.95 206.11 2485.08 3 0 71.72 9.94 1.95 83.61 2485.08 4 0 71.72 9.94 1.95 83.61 2485.08 5 0 71.72 9.94 1.95 83.61 2485.08 6 0 71.72 9.94 1.95 83.61 2485.08 7 0 71.72 9.94 1.95 83.61 2485.08 8 0 71.72 9.94 1.95 83.61 2485.08 9 0 71.72 9.94 1.95 83.61 2485.08 10 0 71.72 9.94 1.95 83.61 2485.08 11 0 71.72 9.94 1.95 83.61 2485.08 12 0 71.72 9.94 1.95 83.61 2485.08 13 0 71.72 9.94 1.95 83.61 2485.08 14 0 71.72 9.94 1.95 83.61 2485.08 15 0 71.72 9.94 1.95 83.61 2485.08 16 0 71.72 9.94 1.95 83.61 2485.08 17 0 71.72 9.94 1.95 83.61 2485.08 18 0 71.72 9.94 1.95 83.61 2485.08 19 0 71.72 9.94 1.95 83.61 2485.08 20 0 71.72 9.94 1.95 83.61 2485.08 21 0 71.72 9.94 1.95 83.61 2485.08 22 0 71.72 9.94 1.95 83.61 2485.08 23 0 71.72 9.94 1.95 83.61 2485.08 24 0 71.72 9.94 1.95 83.61 2485.08 25 0 71.72 9.94 1.95 83.61 2485.08 NPV $831.55 $16,411.98 USc/ kWh 0.0507 78 EMERGENCY ELECTRICITY RECONSTRUCTIONPROJECT ECONOMICANALYSIS Hartha2 and3 400MW O&M Year Capital Fuel(1) (V) O&M(F) Total GWh 0 39.00 0 0 0 39.00 0 1 78.00 52.53 5.46 2.00 137.99 1365.12 2 13.00 105.06 10.92 2.00 130.98 2730.24 3 0 105.06 10.92 2.00 117.98 2730.24 4 0 105.06 10.92 2.00 117.98 2730.24 5 0 105.06 10.92 2.00 117.98 2730.24 6 0 105.06 10.92 2.00 117.98 2730.24 7 0 105.06 10.92 2.00 117.98 2730.24 8 0 105.06 10.92 2.00 117.98 2730.24 9 0 105.06 10.92 2.00 117.98 2730.24 10 0 105.06 10.92 2.00 117.98 2730.24 11 0 105.10 10.92 2.00 118.02 2730.24 12 0 105.10 10.92 2.00 118.02 2730.24 13 0 105.10 10.92 2.00 118.02 2730.24 14 0 105.10 10.92 2.00 118.02 2730.24 15 0 105.10 10.92 2.00 118.02 2730.24 16 0 105.10 10.92 2.00 118.02 2730.24 17 0 105.10 10.92 2.00 118.02 2730.24 18 0 105.10 10.92 2.00 118.02 2730.24 19 0 105.10 10.92 2.00 118.02 2730.24 20 0 105.10 10.92 2.00 118.02 2730.24 21 0 105.10 10.92 2.00 118.02 2730.24 22 0 105.10 10.92 2.00 118.02 2730.24 23 0 105.10 10.92 2.00 118.02 2730.24 24 0 105.10 10.92 2.00 118.02 2730.24 25 0 105.10 10.92 2.00 118.02 2730.24 NPV $886.30 $18.03 1.07 USc/ kWh 0.0492 79 Annex 11: Project Files IISP PowerResponse to QuestionsRaisedby the World Bank on February9,2006 HarthaPowerPlantFuellingAppraisalNote RapidAssessment of Atmospheric Dispersionof Stack Emissionsfrom Al-Hartha Power Plant, Iraq-February2006 UNDP/Governmentof Iraq Conference in Support of Electricity Master Plan, November 2006 80 Annex 12: Project Team Function - .___ - .--__ Tjaarda P. Storm van Leeuwen Task Team Leader, Lead FinancialAnalyst, MNSSD A. Amir Al-Khafaji Consultant, Procurement Specialist, MNSSD Reynold Duncan Lead Power Engineer. MNSSD " Nourredine Bouzaher Senior Energy Economist, M N S S D Fadi Haddadin Economist, MNSSD HyacinthBrown Senior Finance Officer L O A G 2 Mona El-Chami Financial Manaeement SDecialist. MNAFM Vikram Raehavan v Senior Counsel. LEGMS Hiroko Imamura Senior Counsel, LEGMS Simon Stolp Energy Advisor, WB/DFID Nazaneen Ali Procurement Specialist, MNAPR Nafie M.Mofid Procurement Specialist, MNSSD Kari Nyman Peer Reviewer, ECSSD Vladislav Vucetic Peer Reviewer, SASE1 Hayat Taleb Al-Harazi ProgramAssistant, MNSSD KhalidBoukantar ProgramAssistant, MNSSD 81 Annex 13: Bank ProjectsinIraq Difference Between Expected and Oriqinal Amount in US$ Millions Actual Disbursements a/ Project IDE:' Project Name IDA ITF Undisb. Orig. Rev,d Frm PO88945 2004 EmergencyTextbook Provision 40.00 38.56 1.44 1.70 0.00 PO87907 2005 EmergencySchool Construction and Rehabilitation 60.00 7.24 52.76 36.00 10.70 PO91305 2005 Emergency Health Project 25.00 1.45 23.55 18.95 0.00 PO91344 2005 Emergency PrivateSector Development 55.00 4.15 50.85 35.85 7.35 PO87910 2005 EmergencyWater, Sanitation,and Urban 90.00 4.50 85.50 54.14 35.44 PO87912 2005 Emergency BaghdadWater Supply 65.00 1.12 63.88 47.99 47.39 PO87881 2005 EmergencyCommunity Infrastructure 20.00 9.72 10.28 5.10 2.10 PO96774 2006 Emergency DisabilitiesProject 19.50 0.09 19.41 1.93 0.00 PO99295 2006 EmergencySocial ProtectionProject 8.00 0.00 8.00 0.01 0.00 PO98979 2007 Emergency Household Survey and Policies 5.10 0.00 5.10 0.00 0.00 PO87735 2006 Emergency Road Rehabilitation 135.00 137.00 0.67 PO96234 2006 Third Emergency EducationProject 100.00 101.57 0.02 Dokanand DerbandikhanEmergency PO99059 2007 HydropowerProject 40.0 40.0 Total 275.00 387.60 66.83 559.34 202.35 102.98 82 STATEMENT OF IFC's Held and DisbursedPortfolio InMillionsof US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 2005 INB 8.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NBK Iraq 0.00 0.00 1.89 0.00 0.00 0.00 1.89 0.00 2006 ucc 90.0 8.30 0.00 0.00 0.00 0.00 0.00 0.00 Total portfolio: 98.00 8.30 1.89 0.00 0.00 0.00 1.89 0.00 Approvals PendingCommitment Fy Approval Company Loan Equity Quasi Partic. 2004 Iraq SBFF 0.05 0.00 0.00 0.00 Total pending commitment: 0.05 0.00 0.00 0.00 83 Annex 14: Iraq at a Glance Iraq at a glance 9/7/07342 PM Lower Key Development Indicators rrtddit incowe Age distributron,2085 WW We Fernape Popu~alm,midyear iniiilmrs~ 2%e 3D5 ? 475 Surfacearea I'nousond SQ knt! 4LR 3.244 39 W6 Paw atangro&ith17:) 30 1 3 'n Umnnpopulat~on {?&ofIota paopcla~on) 67 57 45 49 s 435 4.746 1,725 2.241 i.va 9.076 B 3'3 GDF grovrih"W 3 3 45 C 5 pff Capita gtCP&h !%) Q O 2 3 5 9 (mastreEei?teshmate. 2000-20051 PovertyheadCDUnf 0'10at S t 8 da?iPPP -5' Poiertj hsadcoun' fa'% at 52 3 da Iunder-5 25 mortalityrate (per 1,080) I Lkfe expectancyat I)I% pars: E l 63 70 Intan; nicrta ry.per 1,DX !nebat*ls: 44 33 CbiW mo ntitntiw 1% of chilaren wder 5) .I) Adulliteracy n~aleI%ofepes 15andoseri 93 4diul literacy female 1% 0' ages t 5 ald &der) 85 Gross pnniaryenr&itrt male % of age g ~ ~ p i 1'5 %ow wnwyenr>llnientfemea I% o' q e group 133 82 57 Net Aid Flows 1990 2000 63 12I Growthof GDP and GDP per capita [%I 336 0 -20 5 54 1L 07 3 x Long-Term Econoiiiic Trends Conwnwcnces iannual % cha-gr. c o GDP inp icndepator ianniial ctnnqe? 47 1 -GCPpercay!:a Evchangera~bianwr? aierape local 3er g!sSI 0 3 1 w a Terniso'trods ime7 2l2Qo= $DO) $85 2: 1 4E 657 25,763 66 7 76 1 60.5 33 A 90 9 9 Staff est n-atei 2 GIJi s cslculax! 15 sun' OF GDP andne; *can?@ atinua ekchmgr -3 e a?d differstroni !he atlas nwthod 3 3DA and ufficw sid are roto on grartsform? gear 2DIX 4 33P de"om in U S dOlnartemis 6 Grass sainngs are gross national%wings6 e w d h n - IGYl mi nus3m55don=%: c conumiptior plaiane1 aonsfen le East arid NuCh kfr ca. %cis1 aid Ecoionsc D%feIopiilen?Grew> ihlpdEiED 84 Balarice of Paynients acid Trade 2000 2006 I (US$tmiPuosf Governanceindicators,2000 and2004 Total nierciwndiseerport (fob' 20,603 3,343 Tetnl niercbsnbiselnpms rcifr 13,384 :?.963 tiet *race inooms ` 5.380 Woakers renwances and ccwpcnaationof emp!oyees{receipts! Currenr account balance 5,569 m a 0,k >fGDP 129 Resews ocktdiny gdd 17 800 Central Government Finance (% of GDP! Revenue' 61 1 Tax rererue 0 8 Experre' 59 5 Technologyand Irrfrastructtire 2000 2005 Ccxsn surpluudefici:` 122 PiWGdroads to& Of ZOtRl) 84 .? Highestmarginaltax rate I%) P I Y line and mowsonone ~ bdb'idual I 5 subscribers (per 1OM? people\ ?7 57 Ccrprate 15 Hi& technoogy exports ibd manufachredeumel 5 Externat Debt and Resource Flows Eiivironrirerit 54,500 Apihculhln land I% of E& area' -- -3 23 T O Mdeot senice 1 300 Fwestarea I% of!and area, 2@C@and 2005 19 19 HLPC and MD91debt relief iexpecmd, flow: - - HLatiora'ly protected areas (% of land &?ea 0031 T i b l dent i%m`GCPl 1070 FreshvmZerrewuces per capsta ICU meter9 2 800 .- T9tol debt men ce PA 01e x m ) 4 4 Frashwter w+hdrmaI{%of interna resources 150 0 D CO2 en~s~iom capifa(nit! oef 3 0 L , 0 G3P per urri or energy use CODo PPP 5 pzr kp of 01 eciui~ialenti Coinpositionof total external debt, 2005 `. .. . .I IDA. 3 Energy usecer capite(kg ofoil equrvalent~ 00s 96.7 2Q06 0 0 0 0 0 c; Private Sector Development 2000 2006 0 Time requitedto 5far1a business,dap' - 77 C3s:?o stad a business(%of GI4 per ~api@j 10c Time requiredto regisre; pfopefbf ,days -- 5755 103 - Rarkedae o major constraint:e ~bsme5s p.5ofnmagerssuneye$#whoagreed - n a n a - c Note =Igdres in 131es are for yeam oMer than thooe specfled ,005 data ore xeliminar~~ esitmaes Midde E m and 'dad Africa. Socialand Econauc Dmelopmen: Grntrp IMIJSEO lraa'sIl,?tiona3Cor7muneatans& WeciaCmmissoo estiniateJriobi e-~iwnesubscicsrs at 4 nitllimend-:OOR 85 Millennium Development Goals It-tiq Goal 1:halve the ratesfor $1 a doy poverty and malnuhttror .I990 1995 2000 2006 PoverbjheadColJnlramat S1 a day (PPP,Sb of papLla-sonJ Pmerty headcoun: ratm at nationalp ~ e r t $ne1%of popuationl y Share of inconst or consumptwi to the poorest qunmle1%) Reva!ence of manutrition(%of chiWrenunderfi I 2 29 ' 6 15 7 Goal 2: ensureth31children are able to caniplese primary schooling PrmawSC~DOIenraOlmentinzi XI 94 a3 88 i'riniary cmoietmi rate L% of reiew+ntage group! 3' 59 53 74 Seconda~jschoc- enrollmen: {gross, %) 44 ?& 45 Youth literacyrate {X of peopleages 15-21 41 85 Goal 3: elrminate gender dtspanty ineducatim and empower woiner Rorioof girls to boys 30 primary and s e c d a r j edueatron \%I 76 Wmm eRlplWkedinthe nwmgncuituraisect@$ (% ofnonqncultural emplojwent: Proportionof ?.em heldi'y t~mien n 3 m ~padiment I%)? in I Goal 4: reduce under-5 mortality bytwo-thirds Under-: n.ortality rete (per 1C-30) 50 121 Infanrnrsr,aicy rete iser 1 O W IbvebtMs1 40 10.3 Measles ininiuiiiiatlon proport!an of ans-yearolds immunized h 30 ao w w Goal 5: reduce niaternal mortalw by three-fourths Maternaln,ortaiit.j ratiomodwed estimate, per 130,000lirebirths1 B~rtnsaReMed by sk ilr-3 healthstaR 1% of total) 54 ?T: Goal 6: halt and begin to feweraethe spread of HIWAIDSand other major diseases 44 135 132 11 20 1 9 bhttenully protected (ireas :% of totab land oaeai O D 2 6 3 " 3 0 30 Goat 8: develop a globalpartnership for devdopinent FixedI!?eand nmoildc h r e subsenber3icer I.C@@peoa'e't 38 30 2? 57 Inremet users (per 1,CDO wop el 0 0 5 P s m dcornpiiten per 1 003 peqlel 8 i wthtinempl.3yrien',@Aof tota labx brceages 1524) P3 Measles tniinunization of 1-yearoids) iCT indicators (per 1,000 people) im - 86 IBRD 35243 IRAQ EMERGENCY ELECTRICITY RECONSTRUCTION PROJECT PROJECT FACILITY POWER PLANTS: SELECTED CITIES AND TOWNS NATIONAL CONTROL CENTER DIESEL GOVERNORATE CAPITALS MAJOR TRANSFORMER STATIONS GAS TURBINE NATIONAL CAPITAL TRANSMISSION LINES: THERMAL RIVERS 400 kV HYDRO-ELECTRIC INTERNATIONAL BOUNDARIES 132 kV 40°E 42°E 44°E 46°E 48°E TURKEY Cizre Zakhu- - 0 50 100 150 Kilometers Tigris R.DAHUK - Dahuk - 'Aqrah 0 50 100 Miles Ayn Zalah Rayat - - Regulating Dam ARBIL -Shaqlawa - Mosul Sinjar Tall Khalakh Arbil - 36°N Afar Euphrates Al Bahamdan Dokan 36°N R. NINAWÁ - Dam Al Qayyarah Dibs As ISLAMIC Mullah Abdallah IPC 1 - - Ash Sharqat Sulaymaniyah SYRIAN - - Kirkuk- REPUBLIC AT IPC 2 AS SULAYMANIYAH Arbat Tazah ARAB TA'MIM - Salam Pirak OF IRAN Derbandikhan Ajaji Dam REP. Bayji- Tikrit - Uzaym Qusaybah Rawah Dam (u.c.) Abu Kamal SALAH AD- - Al Qa'im - Khanaqin Tharthar - Samarra'- Jalanda Lake Samarra DIN 34°N Barrage Al Hadithah - Mukarayin- 34°N Hamrin - Al Arbar Ba'qubah - 'Akashat - - (u.c.) Hit DIYALÁ - Ar Ramadi - - Ramadi Barrage Habbaniyah BAGHDAD Habbaniyah - - Dawrah Ar Rutbah Lake BAGHDAD Rasheed Control Center - South Salman Pak Baurah A L A N B A R As Suwayrah Trebil Razzaza Al Aziziyah WASIT - Lake Al Musayyib Hindiyah An Numaniyah BABIL - Karbala- Babil Al Kut - Ali al Gharbi Al Hillah JORDAN KARBALA' - Ad Diwaniyah - - - Al Hayy T 32°N igris Nukhayb An Najaf Al Fajr R. 32°N Al 'Amarah- AL QADISIYAH - - Euphrates Ar Rifa'i MAYSAN - Qalat Salih R. Al 'Uzayr AN NAJAFAs Samawah - DHI- QAR - An Nasiriyah - - Al Qurnah Hartha Power Station Al Basrah As Salman- AL Abadan Rumayla Az Zubayr 30°N AL MUTHANNÁ BASRAH Safwan 30°N Umm Qasr Al Faw IRAQ SAUDI ARABIA KUWAIT This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any 28°N endorsement or acceptance of such boundaries. 40°E 42°E 44°E 46°E 48°E JANUARY 2007