Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) First Programmatic Energy and Water Sector Reforms DPL (P154299) MIDDLE EAST AND NORTH AFRICA | Jordan | Energy & Extractives Global Practice | IBRD/IDA | Development Policy Lending | FY 2016 | Seq No: 1 | ARCHIVED on 24-Feb-2016 | ISR21135 | Implementing Agencies: Key Dates Key Project Dates Bank Approval Date:18-Sep-2015 Effectiveness Date:04-Nov-2015 Planned Mid Term Review Date:27-May-2016 Actual Mid-Term Review Date:-- Original Closing Date:30-Sep-2016 Revised Closing Date:30-Sep-2016 Program Development Objectives Program Development Objective (from Program Document) The program development objective of the proposed DPL is to support the improvement of financial viability and increase efficiency gains in the energy and water sectors in Jordan PHRPDODEL Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  --  Satisfactory Overall Implementation Progress (IP)  --  Satisfactory Overall Risk Rating  --  Substantial Implementation Status and Key Decisions The Jordan First Programmatic Energy and Water Sectors Reform Development Policy Loan (DPL) in the amount of US$250 million was approved by the Bank on September 18, 2015, its Legal Agreements were signed on October 8, 2015 during the World Bank Group Annual Meetings in Lima, Peru, became effective on November 4, 2015. Substantial reforms supported by the DPL have already taken place and will result in a significant impact on the financial and operational performance of the electricity and water sectors. In the electricity sector, cost of electricity supply of the National Electric Power Company (NEPCO) is approaching cost recovery thanks to the successful operation of the Liquefied Natural Gas (LNG) terminal in Aqaba, the commissioning of renewable energy plants, and the decline of oil prices. In the water sector, the Ministry of Water and Irrigation continues to implement measures to increase sector revenues to enhance cost recovery in accordance with the “Structural Benchmark Government Action Plan to Reduce Water Losses". In October 2015, the government implemented another tariff increase for water and wastewater users in the Kingdom. Improvements in this sector will have to be achieved while external factors have a major impact on the cost of water services including the impact of the Syrian refugee crisis and the need to provide basic services to these refugees and increases in electricity prices affecting the water sector’s operating costs. 2/24/2016 Page 1 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) 2/24/2016 Page 2 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  Substantial  --  Substantial Macroeconomic  Moderate  --  Moderate Sector Strategies and Policies  Substantial  --  Substantial Technical Design of Project or Program  Moderate  --  Moderate Institutional Capacity for Implementation and Sustainability  Moderate  --  Moderate Fiduciary  Moderate  --  Moderate Environment and Social  Moderate  --  Moderate Stakeholders  Substantial  --  Substantial Other  --  --  -- Overall  Substantial  --  Substantial Results Results Indicators 2/24/2016 Page 3 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) PHINDIRITBL  A1: Cost recovery of the end user electricity tariffs (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 56.00 -- 100.00 100.00 Date 31-Dec-2014 -- 31-Dec-2015 31-Dec-2017 Comments NEPCO’s cost of electricity supply and end user tariff are approaching cost recovery thanks to the successful operation of the Liquefied Natural Gas (LNG) terminal in Aqaba, the commissioning of renewable energy plants, and the decline of oil prices on the one hand; and to NEPCO benefiting from LNG transportation fees to Egypt and tax exemption on LNG imports on the other hand. However, the Bank team is advising the Government that electricity tariff increases for 2016 and 2017 still need to be considered by the Government to maintain full cost recovery for NEPCO. This is particularly important should oil prices rebound resulting in increasing cost of LNG and fuel supply to NEPCO), and in case NEPCO would no longer earn transportation fees of the LNG from Aqaba to Egypt and would be required to pay taxes on LNG imports PHINDIRITBL  A2: NEPCO’s Debt management target achieved (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target NEPCO’s Debt NEPCO’s debt servicing is Management managed through the Plan under budget, and there is no Value -- Not developed yet implementation specific NEPCO Debt and 2017 debt Management Plan in reduction target place. is achieved. Date 31-Dec-2014 -- 31-Dec-2015 31-Dec-2017 Comments NEPCO Debt Management Plan has not yet been developed. The Bank mission informed the Government that the Bank will be available to support the Government and NEPCO through providing financial analysis and international best practices for preparation of a NEPCO Debt Management and Reduction Plan, which is one of the critical trigger that needs to be achieved as a prior action for this programmatic DPL second operation. PHINDIRITBL  A3: Operation and Maintenance Cost recovery level in the water sector (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 86.00 -- 86.00 100.00 Date 31-Dec-2013 -- 31-Dec-2015 31-Dec-2017 Comments The Ministry of Water and Irrigation implemented in 2015 measures to increase sector revenues to enhance cost recovery in accordance with the “Structural Benchmark Government Action Plan to Reduce Water Losses”. Effective October 1, 2015, the Government increased 2/24/2016 Page 4 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) the water fixed charges according to the Action Plan. Actual cost recovery level at the water sector by end of 2015 has not yet been reported by the Ministry of Water and therefore the team assigned the Baseline value for this trigger to the anticipated water cost recovery level end of 2015 and will revise in the next ISR. PHINDIRITBL  B1: Share of gas supply for power generation (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 7.00 -- -- 70.00 Date 31-Dec-2014 -- 31-Dec-2015 31-Dec-2017 Comments After commissioning the LNG terminal at Aqaba in July 2015, NEPCO has made substantial progress in scaling up the LNG supply to the power generation through contracts for LNG imports (for the period 2015-2016) with an LNG supplier and in a shorter term through the LNG sport market. As a result, more than 80 percent of the power generation capacity in Jordan is now fueled by LNG replacing the more expensive and imported diesel and heavy fuel oil. PHINDIRITBL  B2: Share of MW renewable power in the generation mix (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 3.50 10.00 Date 31-Dec-2014 -- 31-Dec-2015 31-Dec-2017 Comments Jordan continues to make substantial progress in developing its renewable energy resources and is on track to increase the share of its renewable power in the generation mix to 10 percent by 2017 as expected in the DPL result framework. In 2015 three new renewable power plants (wind and solar) totaling 132 MW capacity were commissioned 2/24/2016 Page 5 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) PHINDIRITBL  B3: Reduction in electricity distribution network losses (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Network Loss Reduction Updated Loss Reduction The distribution sector has Program is Program has not yet losses of 13.8 percent and under Value -- been finalized by EMRC lacks a multi-year loss implementation in agreement with the reduction targets. and 2017 loss DISCOs reduction target is achieved. Date 31-Dec-2014 -- 31-Dec-2015 31-Dec-2017 Comments The distribution loss reduction study that EMRC is undertaking in collaboration with the distribution companies has not yet been completed and will be concluded in the first half of 2016 after which the loss reduction programs with the distribution companies will be revised with multi-year loss reduction targets taking into consideration the study findings. The Bank team reported to the Government that this DPL trigger will require further attention to ensure it will be achieved in 2016 as a required prior actions for the programmatic DPL second policy operation PHINDIRITBL  B4: Increase in energy efficiency savings in the water sector as per the implementation of the Action Plan accompanying the Energy Efficiency and Renewable Energy Policy. (Gigawatt-hour (GWh), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 50.00 Date 31-Dec-2013 -- 31-Dec-2015 31-Dec-2017 Comments The draft 2016 Budget includes a dedicated budget line provision sufficient to implement its planned energy efficiency activities as laid out in its planned energy efficiency and renewable energy policy. The implementation of these activities in 2016 and 2017 is expected to achieve the targeted results under this indicator. PHINDIRITBL  B5: Water is more optimally allocated. (Cubic Meter(m3), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 123000000.00 -- 123000000.00 128000000.00 Date 31-Dec-2013 -- 31-Dec-2015 31-Dec-2017 Comments the draft 2016 Budget includes a dedicated budget line provision sufficient to implement its planned actions to optimize its water resources as laid out in the surface water utilization and water substitution policies for the water sector. The implementation of these activities in 2016 and 2017 is expected to achieve the targeted results under this indicator. 2/24/2016 Page 6 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) The Minister of Water and Irrigation also approved a Water Substitution policy at the end of 2015, which is posted on the Ministry’s website. PHINDIRITBL  B6: Volume of treated wastewater used for non-domestic uses (Cubic Meter(m3), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 110000000.00 -- 110000000.00 135000000.00 Date 31-Dec-2013 -- 31-Dec-2015 31-Dec-2017 Comments The draft 2016 Budget includes a dedicated budget line provision sufficient to implement its planned actions to optimize its water resources as laid out in the surface water utilization and water substitution policies for the water sector. The implementation of these activities in 2016 and 2017 is expected to achieve the targeted results under this indicator. Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P154299 IBRD-85300 Effective USD 250.00 250.00 0.00 250.00 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P154299 IBRD-85300 Effective 18-Sep-2015 08-Oct-2015 04-Nov-2015 30-Sep-2016 30-Sep-2016 Tranches Restructuring History 2/24/2016 Page 7 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report First Programmatic Energy and Water Sector Reforms DPL (P154299) There has been no restructuring to date. Related Operations There are no related projects. 2/24/2016 Page 8 of 8 Public Disclosure Copy