102610 HD 9502 .Dlif1 ~ffi'.3() 20CV1 C::2 i ESMAP TECHNl.CAL PAPER Me~ms, Robert C. Ev<:11uation of ESMAP Tegional pc.Mei· txade portfolio I I 059 I I I I____ - - - - - - - _ _ _ _ _ _ ____J Evaluation ofESMAP Regional Power Trade Portfolio Energy Sector Management :------- - - - -- - - - - - - - - - - Assistance December 2004 HD SLC096082 9502 • Dl1l1 t:V116 2'10l1 ~~AAD -.I.IT 11 U C:2 Papers in the ESMAP Technical Series are discussion documents, not final project reports. They are subject to the same copyrights as other ESMAP publications. JOIN! UNDP I WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) is a special global technical assistance partnership sponsored by the UNDP, the World Bank and bi-lateral official donors. Established with the support of UNDP and bilateral official donors in 1983, ESMAP is managed by the World Bank. ESMAP's mission is to promote the. role of energy in poverty reduction and economic growth in an environmentally responsible manner. Its work applies to; low-income, emerging, and transition economies and contributes to the achievement of internationally agreed development goals. ESMAP interventions are knowledge products including free technical assistance1 specific studiesi advisory services, pilot projects, knowledge generation and dissemination, trainings; workshops and seminars, conferences and roundtables, artd publications. ESMAP work is focused on three priority areas: access to modem energy for the poorest, the development of sustainable energy markets, and the promotion of environmentally sustainable energy practices. GOVERNANCE AND OPERATIONS ESMAP is govemed by a Consultative Group (the ESMAP CG) composed of representatives of the UNDP and World Bank, other donors, and development experts froin regions which benefit from ESMAP's assistance. The ESMAP CG is chaired by a World Bank Vice President, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work plan, and its achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank, and from the energy and development community at large, to conduct its activities under the gµidance of the Manager ofESMAP. FUNDING ESMAP is a knowledge partnership supported by the World Bank, the UNDP and official donors from Belgium, Canada, Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. ESMAP has also enjoyed the support of private donors as well as in-kind support from a number of partners in the energy and development community. FURTHER INFORMATION For further information, ~ copy of the ESMAP Annual Report, or copies of project reports, etc., please visit the ESMAP website: www.esmap.org. ESMAP can be reached by email at esmap@worldbank.org or by mail at: ESMAP c/o Energy and Water Department The World Bank Group 1818 H Street, NW Washington1 D.C. 20433, U.S.A. Tel.: 202.458.2321 Fax: 202.522.3018 Evaluation of ES~AP Regional Power Trade· Portfolio March 2004 / TAG Report prepared by, .Robert C. Means Under the Supervision of · Jan Moen and Alfredo Mirkin, TAG Membe.rs Joint UNDP/World Bank Energy.Sector Management Assistance Program (ESMAP)_ Copyright © 2004 The International Banlc for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 2_0433, U.S.A. All rights reserved Manufactured in the United States of America· Second printing December 2004 First printing March 2004 -ESMAP Reports are published to communicate the results of ESMAP's work to the developmen~ community with the least possible delay. The typescript ofthe paper therefore has not been prepared in - accordance with the procedures appropriate to formal documents. Some sources cited in this paper may be informal documents that are not readily available. - · The findiJlg~, interpretations, and conclusions expressed in this _ - paper are entirely those of the author(s) and should not be attributed in any manner to the_ World Banlc, or its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Banlc does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The Boundaries, colors, denominations, other information shown mi any map in this volume do not imply on the part of the World Banlc Group ai:J.y judgement o:p. the legal status of any territory or the endorsement or acceptance of such boundaries. Papers in the ESMAP Technical Series are discussion documents, not final project reports. They are subject to the same copyrights as other ESMAP publications. - The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the ESMAP Manager at the address shown in the copyright notice above. ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. . ··..', Table of Contents ·. '; ., ~ Preface ................................................... ."; ........................................................................ v ESMAP Management Response ........................ ~ ...............................·........... :................ : ix Phase.J ............... ·.....·................. :......................... :............. ,..... .'.......................................... 1 Mekong River ............. , ................................................·......... · ................ ,................... 3. \ Seel.iring Regional Agreement ................. ~ .......................... :······························· 4 Workshops ...................... ~ ................. .'................................................................... 4 Negotiation of an Intergoverrimental Agreement ............. ;................................... 5 Nile Basin ...... :......... :........... :..... ~ ......... :: ................ :..... :................. ;........ :.... :.. :....... ;. 5 Introduction ................................... · ...................................... I ........................... :... · . 5 Development of the Nile Basin Project ................................. ,.............. ;.............. 7 · Development of Projects .. :............. :..•. :.......... :.................................... , ............... 8 ESMAP Support ............. .'.'.................. ,..................................................... ;........ 10 South.America· ............. :......... :............ :.. :........... :......................... :.................·...... : .. 11 Introduction ......... :........................................ :·....................................... ~ ........ ,.. 11 Development of the South American Project :.................. :....~ .. ,........................ 12 Southern Africa ................................. .'........ ,...............··········~································-'· 13 · Introduction ..... :............. ~ ................. :..........................·.................................. .'..... 13 Development of the Southern Africa Project ... :...... · .................................. :........ 14 West Africa ..... :...................................................................................................... 15 . . I . Introduction ....................... ." ........ ;... :........................................ :........................ :. 15 Development of the West African Project ....................................... ,................. 16 Some Tentative Conclusions-; ...... ,............................................ :..... ,.. :.... :'. ... :............... ~.18 Do Lessons ·Exist? ......... ;.................. :....................... .'.......................... :..................... 19 1.. DefiniJ;Ig the scope and purpose of the project .................................. ;........·... ;..... 20 2 .. Creating Regional Counterpart Institutions .....................................·................... 21 3 .. Providing financing for initial activities ... '. ........·.......................... , ...................... 22 · 4 .. Providing hands-on assistance ................................................... ,....................... 22 What Matters?. A Tentative.Checklist.. ........ :~ ......................................... ;., ................... 23 Phase II:. Executive Summary ..................... .'....................... .'.......... ;........ ;........... :......... ·25 Introduction ................................................................. :.................................................. 31 Some Notes on Terminology ......................................................... ;...................... :; ....... 31 .Part One. A History of the Power Trade Portfolio .... :.. :.................... ;............................ 33 - I. ESMAP's'Involvement with Regional Power Trade ............. ;.•. ~ ......... :............... 33 2. Southern Africa ..................................................................................... :............ 34 3.· Mekong River..................................................... ~ ........ :···········;···············'········· 37 Bank/ADB-Supported Activities ....... :.......................................................... 39 . Workshops·.............................. .'.. :.................................. :..... :................... 39 Regional Power Trade Documents ......................................................... 40 · Studies ................................................................. '..................... :............ 40 4. Nile Basin .......................................................... ·..........·....................................... 41 ,_ · ·Development of Projects ..... ,: ..... :.................... :............... :...................... '. ..... 42 ES MAP Support and ~e Creation of a Power Forum ................................... 44 5. South America ................ ~ ......... r...... :... ;.....·............... :., ................ :.............. ~ .. •••·• 45 6. West Africa ..... :........................................................,..................................... · ..... 47. I Part Two. Evaluation ....... ;.~ .............................................................. ,..... :...................... 51 A. Institutional·Memory ....................................................... '. ................... :.................... 51 1. The Problem ....... :..................................... :.......... ~ .............................................. 51 a. Lack of a Centralized Index ................................................................... 52 b. Reports .................... ~ ............. ~ ........................................_ ............. ·.......... 52 1. Lack of Consistent Periodic Reports .............. :.............................. ~ ... 52 ii. Lack of Regular Descriptions oflndividual Projects ......................... 54 c. Lack of Documentation of Workshops and/Training ................ :............. 54 2. Recommendations ...........................................•.......... ;...................................... 56 a. General Data Base.................. :............................................................ :.. 56 b. Reports ................................................ ·.-................................. .-............. :.. 56 1. Periodic Reports .. ,............................................................................ 56 ii. Reports on Individual Projects ..................... ,.................................... 56 c. Training ............... :.............. .-........................................... :...................... 57 B. The Role ofESMAP in Promoting Regional Power Trade.~ ...... :................. .'............ 58 1. . Regional Development and the ESMAP Agenda ......................................... ;..... 59 2. The Implications of Political Support and Institutional Development ............ ·..... 60 3. The Significance of Close Links to a Ministerial-Level Regional Body ............. 63 Conclusion.:................................................................................... ,............................... 65 · Table · Table 1. Periodfo ESMAP Reports ......................... :.... :..................................... :........... 53 Figure Figure 1. Political Support and Institutional Development.. ... ~ ...................................... 61 Bibliography · Appendices Appendix 1: Terms ofReference for Evaiuation ofESMAP's Trade Portfolio .............. 69 Appendix 2: Available Documents ..........'.................................. ,......... :........................ 71 Appendix 3: Persons Contacted ........................................ :........................................... 81 Appendix 4: Presentations from ESMAP's Regional Electricity Market Integration Brown Bag Lunch ................................................................... ,......................... 83 Appendix 4.1: Regional Electricity Market Integration in South America ..................... 83 Appendix 4.2: Evaluation ofESMAP Regional Power Trade Portfolio-Phase II Final Report - Part II-B ...................................................................................... ,....... 88 Appendix 4.3: Greater Mekong Subregion .................................................................... 94 Appendix 4.4: Nile Basin Regional Power Trade Project and Pow~r Reform .............. 102 . Appendix 4.5: West Africa Power Pool.. ..........................................................·.......... 113 7 ' ( 11 Robert C. Means ~iography Robert Means is a consultant on international and domestic energy issues and an adjunct member of the faculty of,Johns Hopkins University, where he teaches graduate cotirses in, energy policy and climate change. He previously served as director of the policy office for the United States Federal Energy Regulatory Commission. He' received an LL.B. and , S.J.D. from Harvard Law Scho~l and a B.S. in history and mathematics from Iowa State University. 111 Executive Summary Introduction According to economic textbooks, trade between countries contributes to economic growth and increased welfare. Trade enhances. the competitive advantage of a country or firm such that the output by high-cost producers will shrink and the market share of low- cost producers will increase. This 'efficiency gain' brings economic benefits to all stakeholders. , · These, effects are a consequence of the long-term effects of trade, and assume that short- term barriers are easily removed. Energy trade· can be analyzed in the context of this basic ·economic theory of trad~, but. · requires some special considerations. Specifically, these are that: • energy is a part of infrastructure and therefore plays an essential role in all countries; ' . power ·generation and final . sales can be operated• as a competitive business, but this business requires power lines to deliver its service and the operation of these lines must be recognized as a natural monop,oly; • regulations to handle the issues of competition· and monopoly must be organized in all of the .countries that engage in an e'nergy trade, and disputes between the participating .countries must ·be . handled in an efficient way; • ' these particular ,issues associated with power trade mean that political involvement is a ne~essity and must be recognized at an early stage of the process; and ..; · • energy. trade can be managed either through a simple bilateral contract or through 'an integrated market with some form of 'central dispatch. Any . evaluation of power trade projects must also take this into accoUr..t. The global trend is to remove the tolls and other barriers that inhibit trade, but progress in some sectors, notably agriculture and energy, has been slow. Farmers, for instance, will· protest if competition from abroad reduces their earnings o~ results in bankruptcy. Similarly energy companies are likely to also protest when their monopoly status is threatened when foreign companies are granted access to their domestic market. These transitional barriers are fully described in the theory of trade. Cross-border trade gives low-cost energy exporters the opportunity to charge higher prices andJhus increase. their profit, but their domestic customers may suffer from ,higher energy bills. The opposite takes place in the importing country: high-cost producers will 'lose sales and v domestic consumers will benefit from lower prices. In the short term there are winners and losers, and probably no coherent incentives. In the longer term some stakeholders will support the energy trade, but at the same time opposition to this trade may strengthen in other quarters. Bridging this conflict of interests is a major challenge but can be resolved by focusing all parties on the long-term benefits. The challenge will probably be easier where power shortages exist and expansion of supply is needed. . In all cases the objective should ·be to focus attention on the potential savings that ene.rgy trade represents. These include: • ·Reduced investment costs as a result of the availability of a wider range of least cost investment options across the whole trade region~ • lower operating costs due to more efficient use of resources • · better handling of peak requirements • increased system·reliability . • environmental gains through the expansion of supply options ESMAP has supported a number of energy trade programs, but so far feedback from these projects and evaluations of the knowledge gained has been limited. It was therefore decided to undertake a review ESMAP's portfolio of projects related to the international trade of energy. This review was to include not only those projects that have been· completed, but also those that currently are under. way, and those that are in the immediate pipeline. The review was guided by the Technical Advisory Group to the Energy Trust Funded Programs located at the World Bank. The Terms of Reference . . . The terms of reference can be summarized as follows: · (1) The aim of the evaluation was to in~estigate whether ESMAP had gained sufficient insights into: • . The' skills and knowledge required • The experience gained • The development of the mechanisms necessary to facilitate energy trade · • %ether the focus of support was on the right issues, institutions, political processes and the technical content . (2) Some critical questions to be addressed by the study were: • Whether this an activity for which ESMAP has a comparative advantage? · • If yes, can generic elements be developed in such a way that the results · can be transferred to cover special issues such as access, urban development ~nd poverty alleviation? vi • Whether ESMAP · ,participa~ipn. n:~sulted m additional funding and further engagement? ' .. '. (3) TAG was to work closely with the consultant and be responsible for a short version of the findings to the Consultative Group and to the ESMAP management. The evaluation was intended to start in early October and be.· finalized December 2001. These tasks ·proved ·more demanding than TAG anticipated both in terms of their · complexity of the tasks and in terms of the time required to complete them. The process of selecting the ·necessary documents to support the analysis in particular was time .. consuming but essential. Mr. Robert Means was appointed as the consultant to carry out· the work and his contriqution has been invaluable and is greatly appreciated. · The Main Findings The report draws three broad conclusions concerning: • . E~MAP's role in regional development; • .The implications of that role for evaluating ESMAP's performance; and • ESMAP's ability to draw on in its experience in formulating future plans of action. Implications of regional development Regiqnal power trade requires the development of political support and the development · of institutions capable of dealing with that trade's technical issues. Where neither development is. well-advanced, ESMAP can usefully play a. broad role in promoting regional power trade. To the extent that such development is more advanced, ESMAP's useful role is likely to be narrow~r. Implications for evaluating ESMAP's performance The role that ESMAP can usefully play is inversely related to the existing level of regional development supporting regional power trade. This means that the importance of ESMAP's contribution should be distinguished from the success (or failure) of. regional power trade itself. Its contribution is likely to be most important where the lack of existing development casts doubt on the ultimate success of the regional trade, and .J least importance where the high level ·of existing development almost assure that a re,gional power trade will, develop... ' . Drawing on ESMAP's experience ESMAP is not able at present to dra~ systematicaily on the extensive experience that its representatives have gained .in regional power trade. At the time of the review it was concluded that ESMAP lacked (1) any requirement for systematic reports on its projects,· \. vii (2) procedures for retaining the written materials _developed in those projects, and (3) and, a system for identifying and locating the reports and materials that it does possess. Practical Considerations for Follow-on work by ESMAP on international· power trade· " Technical Advisory Group believes that ESMAP does have a role in highlighting the The relationships between the countries involved in power trade. It is able to contribute to ·· building a high level of consensus among the various parties. However it is clear that the r operation of an energy trading system itself strengthens and improves the quality of the relationship between the countries involved and this has political benefits in the.region. There. is an important role for ESMAP to systematically gather together all the experiences gained so far from the projects it has supported, and, if possible, from other agencies as well. The objective of such work would be to build a guide that can be applied to other projects facing similar problems.·· In order to organize this synthesis of past experience it will be important to use a methodology that draws attention to the following key issues relating to international energy trading: . · a) The institutional structure that is initially in charge of fostering and managing the project and in obtaining the participation of the countries in the region. b) The evaluation of the costs a~d benefits that result from energy integration at the level of both individual countries and the region. c) An analysis o.f the definition and scope of the integration process d) The institutional and organizational arrangements chosen for the market integration system. e) An analysis of how the infrastructure needed for market operations was developed and the responsibilities for funding it. f) An analysis of the technical and economic rules governing the regional energy market. g) · The mechanisms for starting up trading activities the processes of integrating market operations. TAG believes that given the extent of energy trade developments and ESMAP's long experience in this areas that such a synthesis should be undertaken as soon as possible. Jan Moen and Alfredo Mirkin TAG Members viii , ESMAP Management Response . ESMAP's management ·is grateful to the TAG for having undertaken the review at its request. In particular, it wishes to thank Mr. Robert Means, the consultant hired. for the TAG to under this most valuable work. Background > ESMAP's management was interested in having this segment of ESMAP portfolio reviewed given a) the importance of the resources allocated to this sub- portfolio; and b) the relevance of power trade as an opportunity to identity least ·cost . investments and sources of ·power, in order to enhance access to affordable and sustainable energy servfoes for poverty reduction and econoffiic' growth. ESMAP was also concerned to get an independent assessment that through the varioqs Bank Task Managers and consultants, the technical assistance provided was of the best quality, and the combination of several projects was providing a solid· body of knowledge on the experience in developing regional power trade. Continued work on regional· power trade is one· of the btisiness lines in ESMAP 2002-2004 Business Plan. ( · Although a number of 'Viewpoints' and reports were published on the subject since ESMAP got involved. with regional power trade activities, in order to. disseminate the outcome of this work, ESMAP organized a Brown-Bag Lunch workshop on January 21, 2004, which it tiined with the .TAG meeting of January 2004, in Washington. The task managers associated with the E~MAP program in each of the regions made presentations of the ES MAP tasks and their· impact~ even when they were not ass0ciated to _the work throughout.· They highlighted the impact o{ESMAP's work on both the country and regional activities, as well on specific Bank-lending or other technical assistance_ activities. The workshop was attended by 65 Bank staff from headquarters, · and was video-taped and made available through B-Span to field staff and others who had indicated their interest in the. subject but cou1d not be physically present. All the presentations. for the BBL were posted' the same day on ESMAP's webpage. · These presentations are considered an integral part of this management response and are attached in Appendix 4. · This response first provides some general observations, then offers some comments on the specific recolilmendations and how to take the work further. ' . ' ·General Observations The report is extremely valuable in the sense that this is the first report, which reviews all the activities on regional power trade that ESMAP has been involved with · since the early-mid 1990's. It offers a fascinating description of the different types of involvement of ESMAP and the Bank in regional power trade issues. In that sense, the review plays a very useful role in illustrating the different types of 'entry points' and opportunitie,s to promote regional power trade; how the knowledge from one region· can be .transferred to another while the specificity of the regional conditions require adaptation and region-specific; and how ESMAP can respond with a range of instruments I • . IX instruments, from relatively limited support to one-time workshops (South Africa), to studies (Nile River Basin, CIER, Mekong), patient and sustained support for capacity building (Mekong Basin and West Africa Power Pool), and support to developing political cooperation and commitment (Mekong and Nile River Basin)._ It provides a structured picture of how ESMAP contributed in the each case, and a plausible explanation of why it played the role it did in each case. -The report also makes some useful observations and recommendations in particular, on the importance of more just-in-time restitution. of experience and knowledge, on maintaining the institutional memory, and on focussing the design of the · tasks more rigourously both on the regions' specificity and on the expected outcomes. -The Phase I report, in particular: • provides some very useful guidelines· to better understand what worked in what type of project, and what are the key defining parameters to develop, a strategy for regional power trade projects. For example, the analysis of the influence .of the· existing or non existing regional political organization on ESMAP/Bank group (and others) approac.h is very interesting; • recognizes that ESMAP's strength is to inter\rene upstream in the process, and this is what it did in most (all) cases. More detailed on ESMAP involvement could have been helpful for those who were not ·closely involved in the projects at the time. I The Phase II report has made a valuable attempt at establishing evaluation criteria for assessing ESMAP's contribution, namely: • the reasonably chance of success of power trade development, and • whether ESMAP made a significant contrfbution. These criteria seem too restrictive and are operational only in hindsight: Task managers tend to be optimists (fortunately), and ESMAP should give them opportunities to develop · innovative approaches, rather than become a risk averse goal keeper, as it may be the case if ESMAP would seek to use the two criteria. Predictably, the application of these two qualitative and judgmental criteria leads to· evaluations which are highly debatable and subjective, and therefore not really helpful and operational for the future. It might .have been preferable to develop a more comprehensive set of criteria, such as those included in the log~frames used to submit ESMAP proposals since October 1998, which then enable to objectively do evaluations at completion or ex-post. The Phase II Report is not quite consistent with the Phase I Report. It highlights some. information gaps and includes substantial factual inaccuracies both about the projects and the written records {including in the classification of documents in the ·. .Bibliography); these were not evident from the Phase I Report. ESMAP's management does recognize that at least for cone project, Mekong, there has been an issue in x maintaining the documentation, but it is not clear why the consultant reports not having . · received the relevant documents 'for the other projects: The ESMAP team was also most surprised to-read that the consultant had not received the semi-Annual Reports or Animal Reports since 1998, since they have been dutifully issued and serit to the donors. They all ate either in the ESMAP data base accessible to TAG (semi-annual progress reports), or. in the public domain, including on ESMAP's website (the Annual Reports since 1998). Furthermore, the consultant was repeatedly requested by various team members if he needed more information or documents, and he repeatedly indicated that he did not! At hot point did he or the TAG members raise the issue of availability of periodic reports. So, the whole presentation of that section of the report and recommendations is based on the wrong facts. For the Nile River Basin project,. the consultant was explained that a . number of documents were confidential and not released by the governments. Finally, from ESMAP's management perspective, it is to be noted that the review · falls short of fully meeting the terms of reference. The report did respond fairly well to · · · the first four questions of the TQRs in demonstrating that ESMAP did help the Bank staff a.nd clients acquire skills and knowledge ·in regional power. trade issues, in· gaining experience in such projects, in developing necessary mechanisms to promote power trade, and in focusing on the 'right' or necessary issues (institutions, political process, technical content). It actually makes a very useful contribution in staying away from taking a normative approach regarding what is 'necessary' vers~s what is 'right'. as there may notbe a 'correct' answer to these questions given the vastly different conditions from on~ region to the other. The review could have explained better that one of _ESMAP's recognized contribution is· to provide a 'safe space' for confidential discussions .on very difficult political issues amongst country gove~ents. · · However, the review fell short of responding to some of the questions in the TORs. It offers no analysis of the -quality of the content of the various reports, nor whether the work done enabled to strengthen the linkages between power trade arid the development of least cost services for economic growth and poverty reduction. As t,he report is silent on this question, it opens the question of whether ESMAP should have supported another set of studies examining the relationship between Energy Trading and Access/Poverty Reduction~ As the linkage between energy trade and access is rather indirect (except through prices and distribution from high tension·lines), and ev~n.more indirect between energy and poverty reduction, we believe that ESMAP did the right thing in focusing on actions which contributed to advance the tegimial power trade · agenda directly. The report should have discussed this point. Finally, the review does not provide insights on the . value of the various .knowledge dissemination efforts including .how the lessons· learned and experience gained in one project (e~g .. South Africa) were integrated into the activities in the Mekong or the Nile River Basin, nor if artd how ESMAP's involvement contributed to mobilizing other fund,ing or engagement. This is an important point as ESMAP's catalytic role is often viewed as critical to change both in government sector inanagement and investment policies and in Bank lending. · · j xi Recommendations and taking the agenda forward The review has an extended section on the Issue of Institutional Memory, which is most valuable per se, in particular as staff change assignments or leave the Bank. The lack of file maintenance system in the anchor departments · as compared to regional systems was an often raised management concern, which is finally being resolved in this '-current fiscal year with the introduction 'of the extension of IRIS electronic filing system to these units. This system provides for exactly what is recommended in the report - unicity of project files, and thematic search capacity. RegardingESMAP publications, a thematic search capacity has also been introdubed on its website, which also links to the Bank-wide 'Image Bank' for all publications. Itremains, however, that it is the ultimate responsibility of the task manager and of their managers to ensure that the files are kept up-to-date. When ESMAP allocates project funds, the record.,keeping obligations are recorded. Periodic audits are the on:ly tools available to ESMAP management to check on file maintenance'. The last comprehensive audit, which dates to fiscal year '01 1 had in fact complimented ESMAP for its record keeping throughout the Bank; only one or two 1 pieces could not be identified out of several hundred requested. The review proyides other, recommendations, in particular for the periodic monitoring and report of the projects. Although these recommendations fall outside the TORS, they are useful. This said, contrary to what is asserted in the report, the Task Managers do report twice a year on the status of implementation of each.project. ·The information is collated into a published semi-annual report, which is posted on the donor- .reserved segment ofthe website as well as printed and sent to each donor. Likewise, Annual Reports ·are produced every year and are in the public domain, both on the website and in printed form. However, ESMAP's management is of the view that because of the limited staff resources in the ESMAP team, the follow-up of each individual activity during implementation has been insufficient. This is being remedied . as two new senior staff are joining the ESMAP team. One will have specific responsibility for the regional power trade portfolio. The most relevant recommendation is on dissemination of experience and know.fedge. While the bibliography actually highlights that there have been a number of timely short notes 'and write-ups on the ESMAP work on regional power trade, ESMAP's management recognizes the need. to do both a short-note summarizing the experience for ·wide distribution, and possibly a more comprehensive analysis of the portfolio than was possible under this review. As it proceeds to design this work, the list of 'activities', which has been proposed in the Review will be a useful guide. Taking the regional power trade agenda forward, ESMAP management will definitely draw on the general suggestions of what could be the conditions of success of energy trading project suggested in the review, and on the recommendations relative to \ ' the rules of engagement of ESMAP in this type of project. Although the criteria on ESMAP rules of engagement were not applied to the five projects under review, they are a useful contribution for the development of a methodology. Dominique Lallem~nt, Manager, ESMAP Xll '·; _., Phase I,, This report discusses five regional energy trade projects: Mekong River, Nile Basin, South An:J.erica, Southern Africa, and West Africa. The report does not attempt to evaluate the projects; that evaluation is to be made in Phase IL- Rather, the present report seeks to do two things.- One is to provide a summary fac_jual description of each project that may be helpful in determining how an evaluation should be conducted. -The other is to put forward some hypotheses regarding the factors that have shaped each-project. The hypotheses are not conclusions. They are intended to -provide a starting point for formulating questions_ that might fruitfully be pursued in Phase II. · The five projects are discussed in alphabetical order ·in the following sections ~f the report. Each discussion begins with an introduction· that identifies factors that appear to have played a significant.role in shaping the project. The introduction is followed_ by a chronological ' .,_ account of the project. The description for the Nile Basin project is based on discussions with Barbara Miller and Alexandra Planas and on documents they provided; for the other four projects I have relied pnncipally on discussions with Jean~Pierre Charpentier and on documents that he assembled. Those solirces were supplemented in some cases by additional research. The information available · from the sources · and the research varied considerably between the projects. ,It was most abundant by far for the Mekong River project and least abiindant for Southern ·Africa. To soine extent the variation in documentatfon may reflect differences in document retention, but it appears also to ' reflect differences in the intensity of the Bank's involvement. ·· · In this rep~rt I will sometimes refer to th~ documents that were provided to me as "the available documents." By this phrase I do not mean that no other documents exist somewhere in the Bank's files; However, serious efforts were made to find documents that might be helpful. In one sense, it does not matter whether other documents do not exist or simply are very difficult -to find. In either case, inform~tion beyond · that contained in the d_ocumehts I was able to examine apparently has not been available for anyone who might wish to benefit from the experience of the Bank in general and -of ESMAP in particular in the regional power trade projects. · The report's concluding section discusses the general nature of Bank involvement in regiop.al power integration projects._ This section is more tentative or provisional than the earlier sections. Its purpose is to put forward hypotheses -for discu~sion and for exploration in Phase II. . The concluding section is directed partly at one of the questions to be. addressed in Phase II: Has the Bank transferred the lessons learned in the projects undertaken to date? Two kinds of transfer are potentially relevant, one external and the other internal. The ext~rnal transfer is a transfer of knowledge to the regional power trade institutfons. An .evaluation of this transfer is potentially part of' Phase IL In any event, it cannot. be undertaken from the review of documents that is the principal basis for Phase I. 1 The internal transfer is a transfer of knowledge within the Bank - making the le.ssons learned in these projects available for future regional power projects or for ESMAP activities in other fields. The question of whether there has been an effective internal transfer of the lessons learned in these projects can be .broken down into two more specific questions: · (1) Is there a discernible pattern in the Bank's involvement irt the r~gional power projects? In other words, do lessons.exist? . (2) Does knowledge of that pattern exist in a form that makes it readily available for new projects? As discussed in the concluding section, based on the work for Phase I, the answer to the first question appears to be a qualified yes. Based on that same work, the answer to the second question appears to be an unqualified no. In brief- and subject to revision in Phase II - it appears that (i) ESMAP has played a useful role; (ii) that role has varied widely between projects, but it is possible to gener~lize about the factors responsible for ·. the variation; and (iii) for the reason discussed above, a knowledge of that role and those factors appears to reside almost entirely in the, minds of the persons who have been involved in the projects. · · .2 MEKONG RIVER Introduction Although each of ESMAP's regional power market projects has followed its own course, they have shared two elements. Each project grew out of an informal contact by a. official or organization in the region, and one of the essential steps in each case was to identify or create ategional body with which it could cooperate in the project. In the case of the Mekong project, the initial contact was by the energy manager of the Mekong River Commission (MRC), a non:.governmental organization supported by funding from Japan and other countries. The energy manager was w~rking on a regional electricity planning model. In 1995 he·approached ADB and World Bank with the purpose of promotirig his activity. · •' '-..... 'The ADB was the first to respond. In 1992 it had established an overall regional . co'operation ·program. Within that program, in 1996 it created the Electric Power Forum (EPF) as a sub-program. The EPF setved as the regional body that was the World Bank's . formal point of contact in the Mekong River project. . · However, the EPF could not serve as the regional .partner in discussions of the integration project. It evidently has no secretariat or other permanent structure.. · It appears to exist principally through its periodic meetings: 1 . · Those meetings provided the·forrim for most of the Bank's formal contacts with the region. However, to provide a partner in discussion for those meetings, a separate body was jointly' created by the ADB and the Bank. ' · This body was the Regional Experts Group (REG). It consisted of two representatives from each country.. One was from the country's electricity authority and generally was technically oriented, and the other was fro:m the country's energy policy entity and brought a political perspective. Although other parties were to be involved, the process' after the initial meeting appears to have consisted in large part· of a dialogue between the ADB and the Bank·on one side and the REG on the-other. In this dialogue; th'.e REG appears generally not to have been the driving force. Rather, it. appears that it s,erved two functions. One was to serve as a knowledgeable . legitimating body. Even if the ADB or the Bank took the initiative in identifying steps that should be taken, those steps acquired legitimacy through their ratification by REG. The second was to serve as intermediary between· the project and the national · governments·ofthe region and to help_to define.the boundaries of political feasibility: The websites for· its -meetings are maintained by the Asia Development Bank as part of that institution's website. The websites contain no reference to a secretariat or 0th.er permanent organization. 3 Development of the Mekong River Project Work on the Mekong River project can be divided into three, partially overlapping phases: ( 1) securing regional agreement for· the project,, (2) organizing a series of workshops, and (3) negotiating an Intergovernmental Agreement (IGA) 1. Securing regional agreement After several discussions, a World Bank team was ·invited to a December 1996 meeting in Kumming China. At the meeting, the Bank team proposed that a regional market study be undertaken. At tJiis point, there was a consensus in the region that the Mekong river basin represented a common resource, and projects were being constructed and planned to support bilateral trade within the region:. the export of hydro power from China's Yunnan province and from Lao PDR and the export _of surplus power from Thailand. However, although the Mekong River Commission had begun a Mekong Integrated Transmission Study, and the ADB had recently created the EPF, there was no joint approach to ·exploiting. the resource, and there apparently existed no process for creating such ah approach. The Bank proposal was favorably received, and a November 1997 EPF meeting confirmed cooperation among the ADB, the Bank and EPF activities. That confirmation closed the first phase of the project · , The confirmation and the creation of the Regional Experts Group gave the project a legitimate base in the region. However, it did not represent a formal commitment by · . the regional governments. Obtaining that commitment is the ultimate purpose of the other two phases. 2. Workshops The Bank played a role, and perhaps the principal role, in organ1zmg four workshops between June 1998 and December 2001. An initial general workshop on Power Trade Strategy for Greater Mekong Sub-Region was held in Bangkok in June 1998. It was followed by three workshops on specific topics: Coordination of Technical Issues (Bangkok, February 2000), Regulatory and Con;.imercial _Issues (Vientiane, December 2000), _and Financing and Private Participation (Hanoi, December 2001 ). Participants in the workshop included representatives of .international institutions, international and regional experts, and members of the Regional Experts Group. Each of the workshops lasted several days. Although the explicit agenda varied from workshop to workshop, the items on it generally fell into three categories: (1) presentation of international experience with power pools or international energy trade; (2) presentation of an expert's. report dealing specifically with the region; and (3) ·discussion .of the current draft of the Intergovernmental Agreement. It probably is not fair to judge the.workshops as training programs. The range of topics covered was too wide and the participants probably too heterogeneous for that 4 purpose. Rather, they· probably. are best viewed ~s . adjlincts to the essentially political 1 process of creating a basis for regional power trading: For this· latter purpose, it was important to familiarize the parti~ipants with the benefits of energy trade and with the issues that such trade raises. . Technical training, to the eXtent it is lrequired, probably is best handled separately. · j In additio,n, like most conferences and workshops, these probably gave the participants an opportunity to establish relationships that would be useful in advancing . the regional trade project · · 3. · Negotiation of an lntergovernm~ntal Agreement The first draft of the IGA was presented to the REG at the February 2000 As a back-to-office report notes; the document was presented at an early stage in its drafting• . because of the "need to capture the attention of the local people as early as possible to avoid any political bottleneck at a later stage." A second draft was presented at the December 2000 workshop in Vientiane, and final approval was obtained from the REG at the.December 2001 Hanoi workshop. The 'agreement was endorsed by the Thai government on September 12, 2002. EPF · representatives bf the other countries have reviewed the IGA and have no objection, but their endorsement will come only after the Regional Ministers' meeting.scheduled or December 2003. · Following that endorsement, it still will be necessary to secure ratification of the agreement by the countries' parliaments. The time from the informal initiation of the process in 1995 to final ratification thus is likely to be nine years or more. NILE BASIN Introduction · The Nile Basin regional power project is part of the broader Nile Basin Initiative (NBI). ·The power component of the NBI can usefully be compared with the Southern Africa project. In both cases a single dominant fact explains much about both the project and the role of ESMAP. For the Southern Africa project, that fact has been the leading role played by ESKOM, the large South African national utility. For the Nile Basin regional power project, it has been its relationship to the broader Nile Basin Initiative. The links to the broader Nile Basin Initiative has had s~veral implications for the . power project: (1) The · broader . program provided the initial · forum within which . representatives of the region's power ministries ~d national utilities could meet and discuss power integration issues. · ' 5 (2) · The importance of water issues to the riparian countries has given the program a much higher political visibility than any of the other regional pow~r programs. For the other projects, the impression from reviewing · and discussing documents is that one_" of the tasks for the· international bodies ~as to pla~e and keep the projects on the politicar agenda. ·That task appears to ~ave been enti!ely unneeded for the Nile Basin. (3} The first two implications generally have benefited the regional power program, but the linkage to the broader program also has introduced a level of political and organizational complexity that does not exist for the other regional projects. This complexity does not appear to threaten the regional power program, but limits on the pace of development for· tlie program may now be found as much in the links to the broader program as in issues relating to the power program itself. The links to the broader program also has affected the role played by ESMAP and by the Bank in general. · · · (I) It has narrowed ESMAP's role. ESMAP has provided funding for a scope study and for the initial development of a power forum. This contribution is considered to have been important, -perhaps essential, to getting the program under way. However, the early workshops and meetings that in other projects were funded by ESMAP appear for the most part to have been funded by other international donors in the Nile Basin project.2 Also in contrast to the other regional projects, ESMAP does not appear to have had a significant hands-on role in the Nile Basin project. 3 That role was . subsumed in the- Bank's participation in the broader project and therefore was undertaken by other parts of the Bank. (2) It also has narrowed the role of the Bank in general. Even for the parts of the Bank that were directly involved in the Nile Basin project, the hands- on role appears to have been more limited than in some of the other . projects. Because of the importance that the riparian countries have · attached to the project, there appears to have been little need for the Bank to coordinate meetings or to provide the impetus to move the project forward. 4 - · 2 The early support came from CIDA, UNDP, and the Bank. Based on ESMAP's Phase I and Phase II proposals, it appears that ESMAP funded two meetings.· One was a workshop to disseminate the results of the Phase I scoping study; the other was the, Nile-COM meeting that approved Nile Basin Initiative documents that were presentedto the international donors in June 2001. · The distinction between these two roles is discussed in the concluding section of this report. . . .- - 4 The number and frequency of the regional bodies' meetings supports this conclusion. ·For the period 1999-2001, the NBI web site lists more than 30. meetings held by one or another of the regional bodies involved in the project. It is doubtful.that this pace could have been sustained if the initiative for the meetings did not come primarily from the regional groups themselves. . - 6 Development of the Nile Basin. project Like the other regional projects, the Nile Basin project has a pre-history. A 1989 UNDP study5 discussed the need to develop regional hydropower and power transmission, but the actual amount_ of cross-border power trade has continued to be small. u ganda had been exporting a modes.t amount of power to neighboring countries since the 1950s, but there appears to have been no cross-border power trade involving Egypt, Ethiopia, or Sudan. , · There also were earlier regional programs involving some of the riparian states. Hydromet was formed ·in 1967 with UNDP support to. foster · the collection of hydrological and meteorological data. Hydromet ceased operation in 1992, but in 1993 ·.' some of the riparian countries formed the Technical Cooperation Committee for the .Promotion of the Development · and Environmental Protection of the Nile Basin . (TECCONILE) with a broader and more action-oriented agenda. - Also in 1993, the Canadian International Development Agency (CIDA) began supporting a series of annual meetings of the Council of Ministers of Water Affairs of the Nile Basin States (Nile-COM). Nile-COM became the regional legitimating body for the Nile Basin project. - These two developments came together in the Nile River Basin Action Plan (NRBAP). The plan was prepared by TECCCONILE and approved by· Nile-COM in . February of 1995. The following month Nile-COM asked the World .Bank to take a lead . role in coordinating inp~ts of external agencies to finance and implement the plan. The request received· no response - or at ieast no favorable response. From the · Bank's perspective, the plan submitted by Nile-COM suffered from two defects. One wci.s that it did not include all of the riparian states; the other was that it consisted of a series of disconnected projects with no organizing regional framework. Nile.:coM renewed its request in March of 1997. This time the Bank quickly accepted the request. Its acceptance marks. the formal beginning of the Bapk's role in what was to becoine the Nile Basin Initiative. 6 · · · .. _Nile Basin Integrated Development, Fad-Finding Mission Report. 6 · That formal beginning presumably was preceded by some period of informal involvement directed· at reshaping Nile-COM's original proposal. ~!though there is no record of this informal involvement in the. available documents,, a plausible sequence of events might be as follows. In March 1995 Nile- COM submitted its initial proposal. As discussed in the main text, the Bank viewed this proposal as being defective. During the following months, this view presumably was communicated to Nile-COM, .•which reformulated its proposal to take account of the Bank's objections. In the light of subsequent .• developments, it appears likely that the first objection was met directly by opening participation to all :of the riparian countries, but that the second objection was met to the Bank's satisfaction priniarily by agreeing to a process that would lead to a coherent plan, rather than by submitting such a plan. · The . revised proposal submitted in 199~ thus was essentially pre-approved, -a~d quickly received formal approval. · 7 - . The formal involvement of ESMAP in the Nile Basin program appears to have begun with a Work Program Agreement covering ESMAP's support for an initial scoping study. 7 That agreement was not executed until February 1999, twenty months after the Bank's acceptance ofNile-COM's request. During the intervening period, some of the basic institutions of the broader Nile Basin program were created.. An International Advisory Group prepared a report on the revised action plan, which was reviewed by the riparian countries. in January 1998 at a meeting convened for that purpose. Two months later, Nile-COM created the Nile Basin Initiative Technica.l Advisory Conimittee (Nile~TAC). Nile-TAC has a member and an alternate from each of the riparian countries. Its members appear to have been drawn from the countries' water ministries. 8 Through Nile-COM, the Ministers of Water Affairs continued to provide political direction and legitimacy for the Nile Basin Initiative. For the next year, however, Nile-TAC became the wqrking body for the broader Nile Basin project, and it was the starting point for the more specific working bodies created after that period. Between July and September 1998, Nile-TAC drafted the policy guidelines that defined the Shared Vision Program - the document that provides the general framework for the Nile Basinlnitiative. For purposes of this report, events since 1998 can be divided into two interrelated lines of development. One.has been the. identification of projects for which support from international would be requested and the preparation· of documents supporting -those requests. An ESMAP-funded scoping study helped to provide a framework for this work, but ESMAP appears to have had no direct involvement in the work. The second line of development consisted of the two phases of ESMAP's support for the Nile Basin project. Phase I financed the scoping study just mentioned. Phase II was directed atthe creation of a Power Forum. · Development of Projects . . On February 22, 1999, Nile-COM approved the establishment of the Nile Basin Initiative and directed Nile-TAC to prepare a priority list of projects for presentation to donors. In· early May a strategic planning and training workshop created a preliminary list of priority projects-based on consultation by Nile-TAC and additional sector experts from each country. Later in the month, Nile-COM approved the list, and Nile-TAC formed working groups to develop project concept documents for the projects in preparation for meetings with donors. Each working group consisted of the Nile-TAC I 7 Although ESMAP presumably could not provide any financial support until the Work Program Agreement was executed, its execution must ha~e been preceded by a period during which negotiations were conducted and a formal proposal was submitted. However, there is no record of this process in the available documents. 8 According to Nile-TAC' s web site, all of its chairmen after the first one have been drawn from those · ministries, and this presumably also generally has been true of the other members. 8 member and one or more experts from each. country,. A lead ~onsultant assisted each 9 . ' ' ' ,, ' ' ' ' group. , . · · . · . One of the working groups fonrted by Nile-TAC was the Power Trade Working 10 Group . This appears to have been the frrst Nile .Basin Initiative institution speeifically concerned with cross-border power trade. · · The· working groups met in September and again in December, the latter meeting being held at the newly established NBI Secretariat in Entebbe. At the September . meeting, Nile-TAC identified the promotion of regional power trade in the Nile Basin as one of seven priority projects wi~n the Nile Basin Initiative. Following' the December meeting, more than a year was spent in preparing and approving project documentS: Draft final documents were reviewed by Nile-TAC in October· 2000. Final documents were endorsed by Nile-COM in March 2001 and presented to the frrst meeting of the international donors (ICCON) at a meeting in Geneva in June. · The Geneva meeting can be considered to have closed the first phase of NBI activity. The focus now shifted to implementation. A series of meetings dealing with overall implementation of the Shared Vision Program V\:'ere held during the following months. Following an April 2002 m~eting of the Power Experts Workfo.g Group, it was . . ., decided to proceed with the preparation of a Project Implementation Plan for the regional power.trade component of the SVP. That plan now is in preparation. The plan will be implemented by a Project .Management Unit, which will also act as secretariat for the Power Forum. · A Steering Committee to provide overall guidance and a Technical Committee composed of power experts from each of the riparian countries will be established before the project starts. This is expected to occur in June or · July of 2003'. · Within the overall framework of the Nile Basin Initiative, two Subsidiary Action Programs have been created: one for the Eastern Nile (EN-SAP), comprising Egypt, Ethiopia and Sudan; and.one for the Nile Equatorial Lakes (NEL-SAP), comprising the 0 six countries in the southern Nile Basin (Burundi, Democratic Republic of the Congo, Kenya~ Rwanda, Tanzania, and Uganda) plus Egypt and Sudan. This division may reflect - and at least 'is consistent with - the finding of the scoping study 'that the best opportunities exist at the level o(these sub-basins. , Unlike the geographical division in the South America and West Africa projects dis.cussed later in this report, the divi.sion of the Nile Basin Initiative assumes that both regions will be active in the near term. However, all of the proje".tS presented to the international donors at the June 2001 meeting apparently were developed-through the 9 The NBI web site states that each project was assistecl by a lead consultant, but it appears more likely . that the consultants assisted at the working group lev~l. 10 • This group sometimes is referred to as the Power Working Group. 9 Basin-wide progi"am. 11 As ofmid-2001, both of the sub-programs had identified project$ to be examined, but the process of documenting projects beyond those that had -been developed through the Basin-wide program apparently had not begun: ESMAP Support Three days after Nile-COM approved the Nile Basin Initiative, the Work Program Agreement for Phase I of ESMAP's support of the NBI was certifieq. The support was for a scoping level assessment to serve as a background study for a report to the internatiOnal donors. The budget was $546,000. ·$516,000 was to come. from ESMAP; the balance was to come from the Bank Group BudgeL The Phase I study was completed in draft form in November 1999 and discussed J by the Power Trade Working Group at an ESMAP-funded meeting the following month. Work was to continue on finalizing the study. However, there is no reference in the. available documents to the study'ever having been formally completed. Technically, the '· study apparently continued to exist as a consultants' repor:t rather than as an NBI- approved study, 12 but in that form it has helped to provide a framework for the development of projects for international funding. The Phase.I Work Program Agreement certified in February 1999 assumed that ·Phase II would consist of a series of in-depth studies that .would build on the scoping study. By December, however, the concept note for Phase II defined the principal focus as establishing a regional power forum, and the p9wer forum also was one of the. two . activities contemplated by the formal Phase II proposal of May 2000. The other component was to be a ministerial-level meeting to establish a consensus in support of regional power trade. It appears that this shift in focus may have .been the ·result of .consultations during 1999 with the Power Trade Working Group. The proposed budget for Phase II was $631,060, of which ESMAP was to provide $504,030. The ministerial-level meeting presumably was the Nile-COM meeting held in Khartoum in March 2001. That meeting endorsed the Shared Vision Program and the project documents that were to be presented at the international donors meeting atthe end of June." The Phase II proposal and the overall project document for the Nile Basin Initiative 13 laid out a phased process for creating the Power Forum. Nile-TAC would 11 In the "Sequence of Major Events" on the NBI web site, the first reference to a meeting of national · experts for the Nile Equatorial Lakes region is for August 2000, and the first reference for the Eastern Nile is for late January 2001. Since the draft final project documents were circulated in October 2000 and had been in-preparation since December 1999, it does not appear that the regional meetings can have played a role in the preparation of documents for the June 2002 international donors meeting. 12 The "Final Scoping Study'' carries a cover date of September 2000. Its cover identities it as having been prepared by Norconsult for the Bank and ESMAP. 13 · Shared Vision Program. Nile Basin Regional Power Trade Project Document (Nile-COM, March 2001). 10 authorize the Power Trade Working Group to create an Interim Technical· Committee,. which would be responsible for making the PowdForum operational. Most of the initial responsibilities of the Power Fon1m would be essentially informational. The forum would, for example, gather information, support technical meetings, . and commission studies. However, it also would develop the strategic framework and agreemepts for advancing regional power trade. Additional functions wo4ld develop as regional power trade matured. This plan subsequently was revised. As noted above, the Project Management Unit for the implementation plan wjll serve as the secretariat for the Power Forum. There will .be no Interim Technical Committee .. SOUTH AMERICA ·.' Introduction · . . A comparison of the South ' American and Mekong River projects illustrates the importance of context in shaping the regional power project and ESMAP' s role. The· six countries of the Greater Mekong Sub-Region appears to have had no framework for · cooperation prior to 1992, when they entered into a program of sub-regional cooperation, .apparently under ADB sponsorship; and there appears to have been no framework specific to electric power prior to the· creation of the Electric Power Forum in 1996., As already noted, even today, the EPF appears to exist primarily through its periodic meetings and to have little or no permanent structure. . In co11trast, the countries of South Aiherica have a long (although often . Ulisuccessful) history of initiatives for general economic integration, of which the most ~portant today is Mercosur linking the countries of the South America's southern cone. For electricity in particular, the Comision de Integracion Energetica Regional (CIER) was formed at a 1964 meeting of Latin Anierican countries 'and as a result of a .Latin American initiative. CIER has a permanent secr_etariat and website, and since 199 I it has published a quarterly technical revi~w. · Although there. is no integrated regional market for electricity in South America, · bilateral trade arrangements exist among the countries of southern cone. In addition, at the time, of ESMAP' s imtial involveinent, there already existed several proposals for aqditional cross-border transmission links between countries in the region. These differences appear to have affected the Mekong and. South· American· programs in at· least two ways.' One concerns the. respective roles of ESMAP and the regional body. It appears that ESMAP and the ADB were the driving force in the M~kong project, at least in its early years, while ESMAP's role in the South American project appears to have been more one of facilitator and funding source. The second and probably related effect concerns the progress of the projects. In . the Mek~mg project, there was an interval of a year .and a half between the first Bank 11 mission to the region and the first strategy workshop, and there was further slippage -in the schedule after that workshop. The corresponding initial interval in South America was shorter and appears to have been due to the differing goals of CIER and ESMAP ·rather than to any problems of coordination. Once it was under way, the project appears to have remained on schedule at least up to spring 2001. A reasonable inference would be that the slower. progress of the Mekong project is due at least in part to the lack of a local centralized driying force like CIER and the consequent need to secure coordinated - actions from six national governments. · Development of the South American Project Some time prior to 1998, ·CIER and a South American university jointly developed a planning model that included long term planning for the entire South ·American continent. In 1998 they presented the model to the United States, Department of Energy with the purpose of attracting interest and financial support. The World Bank was invited to the presentation, and following ·it,. the Bank proposed to go beyond modeling to look at the development of a regional market. CIER was interested, but its primary goal initially continued to be :f;inancial support for a modeling effort. As a result, there was a delay of about a year· before a· realistic work . program could be developed. During the first half of 1999, CIER completed an economic study of the potential for interconnecting South American national power systems. The study was discussed . with the World Bank, the U.S. Department of Energy, and several private companies. Following the discussions, N. de Franco and Jean-Pierre Charpentier submitted a proposal for ESMAP to support a two-phase follow-up study. The proj~ct was to take 16 months, and had a budget of$705,000, of which ESMAP would provide $430,000. The project was designed by CIER, US DOE, and the Bank. It was endorsed by the Peruvian Minister of Energy and Mining, and support from other governments was said to b~ in preparation. Phase 1 of the project was to identify technical and institutional issues affecting regional interconnections. Phase 2 was to develop options for· dealing with those issues and developing regional power markets. The project proceeded with unusual speed. Consulting groups were short-listed in October, and the Winning group was selected in November. Work began in December, and the Phase I report was presented in May 2000. The report was well received, and work on Phase II began almost immediately. The first draft of the consultant's ·.recorrimendations was presented in December, and the final Phase II report was submitted at a March 29-April 2, 2001 meeting. One of the Phase II recommendations, which apparently was accepted, was to develop two separate regional markets for South America: one for the Mercosur . countries of southern South America and one for the Andean countries of the northern . part of the continent. Two factors dictated the division. One was the higher degree of general economic integration of the southern countries. Mercosur has ambitions of 12 following the general path of the European Common Market. It is far from clear whether tjlose ambitions will be realized; ht.it even today; Mercpsur has a m:uch better developed framework for economic integration than exists for the Andean countries . . The second factor was specific to electricity. There already exist important cross- border transmission links involving Argentina, Brazil and Chile within Mercosur and a significant bilateral electricity trade based on those links. Comparable cross-border transmission links and trade are lacking among th~ northern countries. ·For· the southern coilntries,. the consultants therefore recommended moving directly to the preparation of a memorandum of'understanding among the countries to create a. regional market. For the northern countries, the initial focus would be on developing interconnection agreements. · At the December 2001 meeting, initial steps were taken towards a Phase III study. ' '·. To date, however, no further work has been done towards that study. . . . . . I. SOUTHERN AFRICA Introduction The most important fact about the Sou,thern African Power Pool (SAPP) is the large disparity between South Africa's national utility, ESKOM, and the other national utilities of the region. 14 ESKOM accounts for more than three-quarters.ofthe pool's total generating capacity; its. capacity is roughly four times the combined capacity of the next four largest members of the pool. The difference in size appears_; to be matched by a similar difference in technical resources. · This fact appears to have had four implications: (1) While regional integration offers economic benefits for the region as a whole, an important driver for Integration - probably the most important - has been.ESKOM's desire to play a larger regional role. (2) At a purely technical level, ESKOM probably is capable of dealing with the issues of integration with little or no outside help. · (3) Tue role of ESMAP therefore has been to serve as neutral facilitator, to ensure that all of the countries of the region benefit {and believe they will benefit) from the integration. · 14 Brazil and Nig~ria are both by far the largest countries in their respective regions, but the difference in size is not matched by a comparable difference in development and technical sophistication between those countries and the other .countries of their respective regions. China is a participant. in the Mekong River project, but apparently only through its Yunan province. · 13 (4) This role appears to have required a smaller commitment of ES MAP time and, presumably, resources than was needed for the other three regional projects. · Development of the Southern Africa Project Although bilateral energy trade had existed among some of the countries of the region since at least the 1950s, the movement towards h1tegration of the region~l electricity markets appears to have begun in 1992 with the creation of the Southern African Development Community (SADC) and under it, an electricity sub-committee. SADC was created as the successor to the· Southern African Development Coordination Conference (SADCC), which had been established in 1980. The change in name and organizational form appears to· have reflected an increased emphasis on economic integration. South Afri~a initially was not a member of SADC, and indeed, it appears that SADCC and SADC' initially were intended at least in part to provide a counterweight to South Africa. However, South Africa joined in 1994, and it was followed by other states. SADC now has fourteen members. 15 It extends as far north as the Democratic Republic of Congo on the west and Tanzania on the east; Uganda has applied for membership, but at least as of early 2001, its application still was pending. It probably is not coincidental that in September of 1995, the year following South Africa's accession to membership in SADC, the Southern African Power Pool _(SAPP) was created by an agreement signed by seven of the eleven countries that then belonged to SADC. That agreement was followed in December by a memorandum of understanding among the national utilities of the member countries. .Formal Bank involvement in the process appears to have begun. with a July 1995 trip to Botswana, South Africa, Zambia, and Zimbabwe. No report appears tp be available from the mission, but it presumably was on this mission that the Bank team provided assistance in drafting the memoranda of understanding that were signed by the governments and the utilities. The · 1995 Bank mission was followed the next year by a mission to ·present recommendations for implementation of SAPP. The recommendations dealt primarily with institutional issues, for exampie, the need to emphasize swift and effeCtive dispute resolution and to unbundle internal transmissi~n pricing. ..This was followed in 1998 by distribution of a World Bank paper on Southern Africa sub-regional strategy. · The Bank continues to be involved with SAPP. In June 2001, the Africa Regional Office issued a favorable Project Appraisal Document for support fbr SAPP Coordination ~ . Angola, Botswana, Democratic Republic of Congo (formerly Zaire), Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe. As · ofmid-2001, Angola, Malawi and Tanzania lacked cross-border lii:iks to other members and therefore were classified as non-operating· members. This presumably also is true of Mauritius and the Seychelles. 14 \ . - Center and for three cross-border transmission projects. There is, however, no indication in the documents of a formal ESMAP· involvement after .1998. In any event, the involvement during ,the 1995-1998 period appears to be fairly representative of the ESMAP's role in the Southern African region, which has been more that of advisor and facilitator than of prime coordinator and driving force .. ' WEST AFRICA Introduction In certain respects, the West African development· parallels -that of South .America. In both cases, the original initiative was taken by an individual whose concerns were related to, but not identical with, those of ES MAP. Also in both cases, it was possible to use an existing regional organization that had at least some pemianent organizational structure. . In the West African case, the initiative was tak~n by the Cote d'Ivoire Minister of Energy, and she continued to take an active role in pushing the project after her initial contact with the Bank. Her immediate concern was the development of a market for the · Cote d'Ivoire's then-existing power surplus .. As jn the South American case, the initial contact was followed ,by discussions directed at broadening the focus to regional integration. " The existing regional body was the Economic Community of West African States (ECOWAS) 16, which had been created in 1993; Unlike CIER, ECOWAS does not have a specific focus on electricity or even on energy, arid it appears that its pernl.anent structure· may have been less developed than CIER's. However, it did have a secretariat, which· could take responsibility for o~ganizing meetings, and US AID already was using it as the regional political framework for the Nigeria-Ghana natural gas pipeline. \. One obvious difference between the West African and South American cases is South America's higher level of development - both in general and in electric power . . systems in particular. .This difference affects the kind of projects that can and should be undertaken and the kind of near-term integration that can realistically be considered. Within its own scope, however, the West African project appears to have progressed about as rapidly as the South American.project over the 1999-2001 period. · . A second difference ·is that the forces driving the South American development appears tO have been generated by developments within the existing regional fostitution while ·the West African development ·also has been ·affected by external events in the electricity industry and outside it. · 16 .As of2000, ECOWAS members are Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea-Bissau, Guinea; Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. (Cape Verde sometimes is not included in the list ofECOWAS countries.) 15 ·The 1998 drought led to reduced hydroelectric power and, as a result~ to major power curtailments. Those curtailments appear to have focused attention on the desirability of cross-border transmission ties. A possibly more important external event was the large involvement of US AID. Its involvement may have been part of the more general United States effort to put more emphasis on African development, but it also was more specifically related to the proposed regional gas pipeline that was to take away surphis Nigeriari natural gas that now is being flared. , . In the Mekong River project, the World Bank shared major responsibility with the Asia Development Bank, and so far as can be judged from the available documents, the Bank-ADB collaboration has operated without friction.. There is, on the other hand, some suggestion of significant differences of approach between the Bank and US AID in the West African project documents. Development of the West African Project . ESMAP's involvement began some time before 1999. There had been general di.scussions of West African region~! power pool, but those discussions acquired a specific focus only with the visit to Washington of the Cote d'Ivoire Miruster of Energy. At the time of her visit, the Cote d'Ivoire had a power surplus. The minister's aim . was to develop a market for the surplus. Cote d'Ivoire po~er already was being wheeled through Ghana for sale to Togo and Benin. The minister presumably sought to establish direct or indirect interconnections with other West African countries and/or to expand the capacity of the.existing cross-border transmission line. Through discussions between the minister and the Bank, the purpose was ·'broadened to regional electricity trade, and around early 1999, S. Mikhail and Jean'-Pierre Charpentier submitted a proposal for support of a West Africa program. The initial concept was to .build on the existing interconnections that linked the COte d'Ivoire, Ghana, Togo and Benjn. 'These cou,ntries would be treated as the core of a power pool, which would be expanded to neighboring countries as additional transmission links were · constructed. Nigeria in particular was considered as a possible future candidate for participation, but only after cooperation among the first ·four countries was firmly established. During the following months, a West Africa power pool was discussed at several meetings with various. organizations. These included US AID, which was heavily involved with developing a regional natural gas pipeline. These meetings led to a decision to launch a .program for regional electricity trading~ US AID already was using . ECOWAS as the regional political framework for the 'pipeline project, and it was decided to use it for the power trading program as well. In December 1999 an ECOWAS-sponsored meeting of West African Heads of State established an initial regional political basis for the program by proposing a 16 . preliminary agreement aimed at fostering regional. c:i;oss-border energy exchanges. The first regional discussion meeting to define the program was held in Abidjan the following June. ECOWAS and UEMOA (the regional organization of francophone countries) were invited to the )une meeting, as were several donors, including US AID and the Agence Francaise de Developpement. ~ - Three determinations were made at the Abidjan meeting: (1) ECOWAS would serve as the regional couriterpart. (2) The focus initially would be on a limited group of countries within ECOWAS that were interconnected or soon to be interconnected, with the ECOWAS Secretariat to determine the membership of that group. (3) The ECOWAS Secretariat and the Bank team would coordinate exchanges of information between donors. Two working groups were to be established, one for technical matters and the ·other for institutional issues, and t\vo agreements were to be prepared, one for the -regional governments and the other for the regional national utilities. The second of these determinations, regarding the initial focus of the project, maintained the original concept of a core group, although perhaps with more. countries than originally had been envisioned. The fact that the project was to operate within ECOWAS probably carried with it at least. an implicit undertaking that the project ultimately would be expanded to the other ECOWAS countries. In the near term, however, the countries outside the core group would in effect be observers of the process. A draft Memorandum of Understanding for development of a regional power pool was prepared at a July meeting. In September, it was signed by the energy ministers of fourteen of the ECOWAS countries ~t a meeting organized by the ECOWAS Secretariat and sponsored by US AID. In December 2000, the West African heads of stfte agreed to·· create a West African Power Pool. Some time earlier_ - perhaps at the September meeting - agreement had been reached on the difficult issue of which ECOWAS countries would be part of the core group on which attention initially would be focused .. It was decided that those countries - known as Zone A - would be Benin, Burkina, Cote d'Ivoire, Ghana, Niger, Nigeria and Togo. Zone A thus. consisted of the four countries of the core group in the original ESMAP proposal plus Niget and Nigeria. The inclusion of Nigeria presumably was dictated· by· its importance and by-- the fact that it would be the point of origin .for the proposed gas pipeline. . .A kick-off meeting or seminar for the project was held in Bamakq, Mali _in March 2001, and a further meeting was held in Dakar later that month. At the latter meeting, the national power utilities. signed a Memorandum of Understanding for the Inter-Utility Pn;>ject Implementation Committee. With the latter meeting, the basic tasks that had be.en set out at the June 2000 meeting had been completed. Two working groups had been established; the core and non-counties had been identified; and agreements had been signed by the regional , I 17 governments and the national utilities. ESMAP appears to have taken the leading role in coordinating these developments. After the March meetings, there appear to have been two largely separate lines of development. One was a US AID-sponsored study. of institutional issues, which was presented in draft form at a July 200 l. One element of the study was an Energy Charter· . Treaty, model~d on the European treaty.· The consultant placed considerable emphasis on the importance of such a treaty, but this was received with some skepticism by the Bank mission and by at least some of the countries. This issue was to be taken up again at a September meeting, and some of the institutional issues still are under discussion with the regional institutional working group. · The second line of development was directed at preparing a Project, Concept Document (PCD). At about the time of the Jµly 2001 meeting or shortly thereafter, the· World Bank Africa Region decided to launch an investment program to complement the technical assistance program. · Since that time, ESMAP and the Regional Bank have been working together to prepare a PCD, with the aim of going to the Bank board for financing in 2003. The most. recent version of the PCD was prepared in July 2002 and is .being circulated among the concerned countries for approval. The document proposes two major activities. One is investment in strengthening existing regional transmission lines and constructing new ones. This activity would be financed by donors, presumably meaning sources other than th~ Bank. , The second . activity · is the creation of an information center · to exchange information between the countries and to stimulate cooperation. The goal would be for this center to develop later into a coordination center like the one serving the Southern · . Africa Power Pool. Some Tentative Conclusions One of the questions to be addressed in the evaluation of ESMAP's role in the regional power trade projects is whether the Bank has -transferred the lessons learned in the projects undertaken to·· date. As noted in the general. introduction . to this report, two kinds of transf~r are relevant: an external transfer to the regional power institutions, and an internal trans.fer \tjthin the Bank. Based on this report, it can be suggested that the importance and nature of the external transfer will vary substantially between regions. It appears to have been most important fo~ the M~kon~ River and West African pr~jectS anq least important for t~e South Amencan project. 7 · Beyond that, an evaluation of the external transfer will 17 It may; however, b~come more important in South Am'erica when the focus shifts from the countries of the Southern Cone to the Andean countries. For Southern Africa, the question of the external transfer of knowledge is complicated by the great disparity berween South Africa and ESKOM on one hand 18 require a methodology that goes beyond the review of Bank documents and dis.cussions with Bank personnel that are the.principal bases for.this report. The evaluation therefore must be deferred to Phase II. The present report can, on the other hand, cast some light on the question of an . effective internal transfer of lessons learned from the regional power projects undertaken . to date. As noted in the general introduction, this question can be brokeri down into two more specific questions: ( (1) Is there a discernible pattern in the Bank's involvement in the regional power projects?· In other words, do lessons exist? (2) Does knowledge of that pattern exist in a form that makes it readily I available for new projects? . As ·already noted? the answer to the second question appears clearly to be. no. There appears to be nowhere in the Bank where one might go to obtain an overall analysis, or even a factual overview, of the regional projects undertaken to date. · The following discussion therefore will focus on the question of whether there are general_ lessons that can be drawn from the Bank's experience with the five ptojects. . I . . . Do Lessons Exist? Useful lessons can exist only where there is, a discernible pattern. If each regional power project were entirely unique, no possible examination of earlier projects would provide any guidance for future ones. · · . ' It sometimes has been suggested that each of the five regional power projects undertaken to date is in fact unique, and up to a point that is tru~. However, the differences that exist between them -- and more specifically, the diff~rences in the role played by ESMAP and th~ Bank .,.- can· be explained in substantial part by general features of the context out of which the project developed. A corollary is that it should be possible to make reasonable, if not infallible, predictions about the role of ESMAP in a new project by examining the initial conditions for the project. · Potential Roles For this purpose, it is useful to distinguish between four roles that ES.MAP might play in the projects: ' and the other regional countries and their national utilities on the other. Probably little transfer of ' knowledge was relevant for ESKOM. The potential usefulness of an external transfer in the Southern . African context therefore probably lay in aliowing the other countries and their national utilities to negotiate.and coordinate more effectively with South Africa and ESKOM. In this sense, the external transfer of knowledge might be viewed as part of the more general function of assuring the other countries that they as well as South Afrkan would benefit from regional power integration. 19 )· (1) -Working with individuals or institutions from the region to define the scope and purpose of the project. (2) Creating tegidnal counterpart institutions. (3) Providing financing for initial activities such as meetings, workshops and scoping studies. (4) Providing hands-on assistance in coordinating and promoting the progress of the regional project. · · 1. Defining the scope and purpose of the project All five projects apparently began with a proposal to the Bank or other international lenders, and in each case the proposal came from the region -- from a company like ESKOM or an individual like the Cote d'Ivoire Minister of Power, or from an existing regional body like Nile-COM. In at least four of the projects, the Bank considered this initial proposal to be too narrow. The first task therefore was to secure regipnal agreement to a broader and more rationally defined program. The possible exception is the Southern African Power Pool. The initial proposal presumably <;ame from ESKOM. The. available documents do not describe ESKOM's proposal. Possibly it already was broad enough to satisfy the Bank's standards. Even if it was, however, there was a perception that an ESKOM-dominated project might serve principally .to advance the interests of ESKOM and South Africa. It therefore was necessary tb assure other regional participants that they also would benefit from the project. · In principle, the role of defining the scope and purpose of the project might be played by any international organization whose own scope includes the entire region. In practice, it probably is most naturally and efficiently played by the same organization that would provide hands-on assistance in coordinating and promoting the project after it is begun. There may be continuity 'between the personal contacts invo.lved in the two tasks. In addition, while an initial definition of the scope and purpose of the project is a necessary basis for international support, the practical meaning of that scope and purpose is likely to be defined over the course of the project's execution. The question of whether ESMAP should be responsible for working with the region in initially defining the scope and purpose of the project therefore is linked to the question of whether ESMAP is the appropriate body for providing a continuing h~nd-on assistance in coordinating and promoting the project, discussed below. , 2. Creating Regional Counterpart Institutions Two kinds of regional counterpart institutions have been involved in some or all of the projects. One is ah mstitution that can provide the project with regional political 20 ,:. •' legitimacy. The other is an institution to carry out or at least participate in the technical work of developing regional power trade. 18 · - · .- . . . . ' . · Legitimating institutions. A regional institution can simplify the task of legitimating the project, since the alternative is to deal, ditectly or indirectly, with alf of the regional governments. However, a regional power project by itself probably does not carry enough weight to support the creation of a legitimating' institution. · In the Southern African and WesLAfrican cases, the project could use existing political institutions for this purpose: SADC and ECO WAS. No .such institution existed for the Mekong River or South America cases, and nothing comparable to SADC or ECOWAS· was created. The Mekong River Regional Experts Group served as an intermediary between the project and the regional governments, and it also could ·legitimate the study of regional power trade. However, it lacked the political weight to· legitimate the.actual devdopmentofthat trade or, apparently, even to convene the kind of high-level meeting of regional governments that could do so. For that legitimation, the project therefore has had to deal Individually with the regional governments. CIER perhaps also served as at least .a de facto intermediary between the project ·and the regional governments of South America.. As in the Mekong River project, however, approval for the project apparently had to be obtained. individually ·from the · ·· regional .govermhents. In practice, this necessity apparently has caused less delay in South America than in the Mekong ·River region. This difference perhaps has more to do with the stronger tradition of regional cooperation in South America than with any differences specific to the power projects. :The one case in which a legitimating institution was in s_ome sense specially created for the project was the Nile Basin. ff that project is defined.broadly to-indude the preparatory work· preceding the Bank's formal involvement, then Nile-COM was a ·creation of the project. The explanation for the Nile Basin exception, as for other features of that project, lies in the importance of the overall Nile Basin Initiative to the riparian· countries. It is doubtful that the NBI' s ·regional power component ·would by itself have led to the creation of a ministerial-level body like Nile-COM. Working institutions.· An institution with sufficient political weight to give political legitimacy to a regionai power project is lJ!llikely to be a useful working organization. For at least three of the projects, it therefore was necessary to create one or · more organizations to carry on the work of the project: the Regional Experts Group for . the ·Mekong River region, the Power Trade Working Group for the Nile Basin, and the ECO WAS Secretariat and two working ·groups for West Africa. In the case of South America, a. working organization already existed in the form . of CIER. The record is unclear for Southern Africa. The Southern African Power Pool (SAPP) now has a Coordination Center. One would ex;pect that kind ~f institution to be 18 A related but separate issue is the need for a regional institution to serve as the recipient for World Bank funding °(including ESMAP) funding that cannot or should not be given to individual cou_ntries. 21 the product of a previous temporary working organization. The available documents note the existence of an electricity sub-committee under SADC, but there is no indication as to whether it served as a working organization~ 3. Providing financing for initial activities . . ' This is ESMAP's core role. The Nile Basin Initiative illustrates its importance. ESMAP does not appear to have played a role in defining the scope and purpose of the regional power component of that project, and it also does not appear to have provided continuing hands-on role in coordinating and promoting the project. Because of the project's links to the broader program, those roles apparently were taken by other parts of ~Bank. . However, ESMAP appears to have made the largest financial contribution to the activities necessary to get the project under way - a total of more than a million dollars for the initial scoping study, a meeting to disseminate the study's results, and activities directed at the eventual creation of a regional power forum. These activities were essential to the project, and there appears to have been no practical- alternative to ES MAP for funding them. It appears that other units of the Bank are available to provide funding in the tens of thousands of dollars for similar activities, . . . and millions of dollars for hard investments. But only ESMAP appears to be able tQ · provide funds measured in hundreds of thousands of dollars for the initial activities that are required in order to get the project under way. 4. Providing hands-on assistance There are two issues regarding hands.:on assistance. One concerns the extent to which such assistance is necessary or at least useful. The other concerns who is to provide it. The need for hands-on assistance. Consider two extreme ver.sions of the Bank's hands-on involvement. In Version A, Bank personnel make frequent trips to the. region and play an active role in ensliring that meetings are scheduled and organized and in defining the meeting agendas. In Version B, the Bank provides funds to cover the expenses of meetings, but its hands-on role is limited to ensuring that.the· funds are used for their intended purpose. The Mekong River region appears·to have come close·to Version A. None of the four projects for which there is detailed information - that is, excluding Southern Africa - fully corresponds to Version B. However, South America and the Nile Basin appear to . have been closer to that version than to Version A. The· difference between the Mekong River on one hand and South America and the Nile Basin on the other evidently· stems from a difference in the strength of the regional institutions. For the Mekong River, there were no pre-existing institutions, and 22 ,. ~e ones that have been create4. over the course of the project do not appear to be · particularly strong. For South· America, CIER provided a well-established institutional· base. No similar base existed for the Nile Basin, but the high-level political commitmenf of the major regional countries·has created a different kind of base. Who is to provide it? ESMAP would appear to be the logical organization for providing hands-on assistance where the project is limited to regional power trade. On the other hand, where regional power. trade is part of a broader project, as in the Nile Basin, it would seem that ESMAP's role would have to be subordinated to~ unit of the Bank that would have responsibility for the broader project. The isime of the specific contribution of ESMAP within that role then would appear to tum on the practical question of the availability of personnel with the required background. What Matters? A Tentative Checklist , The preceding discussion suggests that ESMAP' s role is to a considerable extent defined by factors that generally should be identifiable at the beginning of the project: I. What'is the motivation of the initial ;regional proponent of the project? In two of the cases - Southern Africa and West Africa - the proponent was in fact seeking cross-border trade, and it should 1have been relatively easy to link that motive to a broad regional power trade initiative. The linkage · may be more difficult where the proponent initially had a different aim, as . was the case for the Mekong River and South America. 2. Does the region already have a political organization that would be willing to take ·a regional power project under its wing? As illustrated by the Mekong River and South American projects, it is possible to proceed without such an organization. As the Mekong River projeet probably also illustrates, however, dealing individually with the regional governments may make it difficult to achieve the necessary political approvals within a short period of time. 3. What is the level of commitment of the regional governments? The Nile · Basin presented some obvious problems, including recent armed hostilities involving some of the. region's countries. Those problems appear to have been more offset by the high level of commitment to the project. 4. Is there an existing organization that can participate effectively in the technical work? Such ari organization existed most clearly for South America, but it appears that the ECOWAS Secretariat also has played a useful role for the West African project. In Southern Africa, ESKOM certainly was capable ·of playing a technical_ role, but it is not known whether it was politically feasible for it to do so. 23 It will be noted that all of these points ai:e concerned with institutional factors. ·Different kinds of factors will affect the substantive nature of the work - whether it should be directed at creating a power pool, or whether bilateral cross-border trade is a in.ore realistic first step. However, it is not obvious that these factors by themselves affect the role that is played by ESMAP or the Bank. ( 24 PHASE II EXECUTIVE SUMMARY \ ' . HISTORY OF THE POWER TRADE PORTFOLIO Since 1994, ESMAP has considered support for cross-border trade in at least eight developing country regions, and it has formally initiated projects in five regions. A project supporting development of a Southern African Power ,Pool was initiated in 1996. Projects subsequently were initiated for the Mekong River Sub-Region (1996), the Nile 1 River Basin (1997), South America (1999), and West Africa (1999) .. Southern Africa. ESMAP failed to find an important role in Southern Africa. ·Development of a power pool was already well under way by the time it became involved, and the project consisted principally of supporting a single workshop~ The project was closed by around the end of 1998.' . • r Mekong Region. ESMAP' s role in the other four regions was more significant, and the projects for all of those regions still are active. The longest-running project is for the Mekong region. The development of powertrade in that region has been jointly supported by the World Bank and the Asia Development Bank (ADB). ADB had' s,upported the creation of an Electric Power Forum (EPF) prior to the Bank's formal involvement in the region. Following the first Bank mission to the region, a Regional Ef(perts Group (REG) was ·created,. which has served as the local working group for Bank-ADB activities relating to regional power trade. Even today, however, neither the EPF nor the REG has developed a formal institutional existence apart from their periodic meetings. Working with REG, the Bank and ADB organized four regional power trade workshops between 1998 and 2001. One of the topics discm~sed at the workshops was· a draft Intergovemmentai' Agreement (IGA) on power trade. The draft was approved by EPF and REG at ~eetings held at the fast of the four workshops, and it was approved by the regional heads ~f state in Nov~mber 2002. The member countries still must ratify the IGA, but approval by the heads of state has been considered an adequate basis for further action. The Bank also supported three studies between 1999 and 2002. · The most recent o'f these, .an options paper, defines the next steps in developing regional power. trade. These are to begin with an October 2003 meeting. A formal proposal for ESMAP . support of the meeting has been submitted. Nile Basin. The regional power trade project for the Nile Basin is part of a much broader program of regional economic integration known as the.. Nile Basin Initiative (NBI). Bank involvement in the broader program b~gan in 1997, and ESMAP's formal involvement began in February 1999. A Power Trade Working Group was established a· few months later as the first NBI institution specifically concerned with cross:-border power trade. · 25 ESMAP has provided support for two lines of development. One is the identification of projects for which support from international,, agencies would be requested and the preparation of documents supporting those requests. The list of projects was presented to an international donors meeting in June 2001. The second line of development has been directed at the creation of a: Power Forum. The Power Foruni initially is to service principally as an informational body, but it also was to develop the strategic framework and agreements for regional power trade. South America. ESMAP's South America project was initiated in 1999 and has operated within the framework of an existing regional body, the Comisiori de Integracion Ene:rnetica Regional .(CIER). In principle, the project includes all of South America. Subsequent to the beginning of ESMAP involvement, however, , it was decided to develop two separate regional markets, one for: the countries of southern South America and the other for the Andean countries. · ESMAP has supported two studies conducted under CIER auspices. A Phase I study identified technical and institutional issues affeeting regional interconnections; a Phase II study then developed options for developing regional power markets. The Phase H report was submitted at a meeting held March 29-April 2, 2001. A Phase III report was planned, but there appears to have been no further ESMAP-related activity since 20Ql. , West Africa. Development of regional power trade in West Africa has been jointly· supported by ESMAP and US AID. AID's interest is linked to its support for a pipeline to carry stranded Nigerian gas to regional markets. Within the region, ESMAP and A.ID have worked through the Economic Corrimunity of West African States (ECOWAS). ESMAP's involvement ih the West Africa region began some time in 1999. By. March 2001, memoranda of understailding had been signed by the regional countries and . by the national· utilities, and the heads of state had agreed to the creation of a West African Power Pool. There have been two largely separate lines of development since that period. One is an AID-sponsored study of institutional issues. One of the study's proposals was an Energy Charter Treaty modeled on the European treaty. This proposal has been contr?versial, and the issue appears not to have been resolved. The second line of development was the preparation of a. Project Concept Document by ESMAP and the Regional Bank. It was planned to use this document as the basis for requesting financing from the Bank some time in 2003. EVALUATION Institutional Memory ESMAP lacks an institutional memory. Knowledge of each project resides principally in the minds of the persons involyed in the project. The knowledge is not 26 convemently accessible to other. persons, and it i.s . lost when those who possess it leave ~Bank. .·. SP,ecific Problems. This general deficiency arises from· several more speCific deficiencies. First, there is ho index or database ;that can be useq to identify all of the documents relevant to a project or area. of activity. The set of documents relied on for this report w~re assembled with the assistance of a 'number of persons, and even with their assistance, the set affi?.ost certainly is not complete. Second, the reports issued by ESMAP have limited value for someone attempting to follow itspfojects. (1) ESMAP's project monitoring includes the publication of semi-annual reports and Annual Reports, but the information is inconsistently recorded. (2) Information on projects can sometimes be obtained from external sources, but the availability of detailed project-specific information froni within the Bank depends largely on the timing of Bank missions '(which produce back-to-office reports), the existence of proposals for follow-on phases (which summarize the project to that point), and the existence of formal reports supported by a project. Third; workshops and training programs are not adequately documented, and often are not documented at a:lL Recommendations. It is the consultant's unde.rstanding that ESMAP's activities ~ill beintegrated into a gei;ieral World Bank database. This should remedy the lack of a general dat~base; at least for future documents. The report's recommendations therefore focus on the kinds of documents that should be created: (1) ESMAP periodic reports summarizing the status of all of its projects during· the report period. The status reports that it issued during 1997 and· 1998 can serve as models. (2) Reports describing· work on specific projects during the report period should be filed at reasonable intervals. · (3) For workshops and training: a. Basic information on all workshops and training should be filed. b. Materials used .in the~ workshops and training. should be compiled, preferably in electronic format. · c. A system of evaluation should be created at least for programs that are intended to serve a self-contained training function. 27 The Role of ESMAP in Promoting Regional Power Trade ,Three broad lessons emerge from the present study. These concern: (1) The role of regional institutional and techni<;al development m · . determining ESMAP's agenda; (2) The importance of political support and institutional development; and (3) The significance of close links between the ESMAP project and a ministerial-level regional body.· The' ESMAP Agenda. ESMAP potentially could support a number of different. · kinds of activity relating to regional trade, ranging from ah irutial study of trade opportunities to the preparation of an intergovernmental agreement on trade. However, ESMAP support for some activities may not be nee4ed. In South America, both a well- established regional technical body and agreements for economic integration already existed, and ESMAP's role has been largely limited to support of studies of institutions and trade opportunities. ESMAP never achieved a defined role in Southern Africa. If it · had, the role ·probably would have been limited to supporting the new Coordination . Center. In regions with wide disparities in. the development of national power systelils, ESMAP appears also to have played another role.. That is to assure the countries with . less developed systems that the benefits of power trade ~ould be equitably shared. Political Support and Institutional Development. It is important to distinguish the success and importance of ESMAP's role in supporting the development of regional power trade from the success of that development. Within the universe of developing country power trade, the Southern African Power Pool (SAPP) must be counted as· an outstanding success, but ESMAP support has made at most only a marginal contribution to that success. In the Mekong region, on the other hand, progress has been slow and the long-run prospects for power trade are uncertain. However the progress that has been made has depended heavily on the impetus provided by ESMAP-ADB support. Without that support, it is likely that there would have been no progress at all. West Africa may resemble the Mekong region, both in the importance of outside support - from ESMAP and ·US AID in the case of West Africa - and in the still uncertain prospects for 'success. ln South America and the Nile Basin, on the other hand, ESMAP's contribution has been useful but probably less critical than in the Mekong region, and the prospects for success appear significantly greater than in the Mekong. Lying behind these differences in the relationship between ESMAP support and the success of regional power trade is an important distinction. in the nature of the role played by ES MAP. For present purposes, the specific roles played by ES MAP noted in the preceding section can be divided into two categories. In one category, the inputs provided by ESMAP can largely determine the outcome of the activity it supports; in the other, they cannot. 28 An example of the firs! .category is support for a survey of existing regional opportunities for cross-border trade. If the funding is adequate and the firm selected to conduct the survey is .competent, a useful survey should be almos~. certain. A short course for the participating national utilities' technical staff generally would also fall into this category. . . The prime example of the second category is the promotion of an effective \ political consensus in favor of regional power trade. In some regions this may not be necessary. In others, it may be the most important activity undertaken by ESMAP. Yet no possible input by ESMAP can guarantee that the consensus will be created or · sustained. . . ' . . . This distinction is closely related to the definition of ESMAP's agenda; discussed above. The existence of effective political support for regional power trade means that the tasks requiring support from ESMAP are likely to fall under the first of the above categories.. It also means that efforts to develop regional power trade are likely to be successful. Where effective political support does not already exist, or its continued existence is uncyrtain, the creation and maintenance of that support may become the most important element in ESMAP's role, but even with ESMAP support, long-run success is . likely to be uncertain. Links to Ministerial-Level Regional Bodies. Projects in the Southern Africa, Nik Basin and West Africa regions have been formally linked to niinisterial~level regional bodies, and CIER's existing structure probably provides a similar link for.South America. A similar link does not appear to exist for the Mekong region. While that region demonstrates that progress is possible without such ·a link, ·the region also demonstrates that progress is likely to lie slow in the absence of a high-level organization · . with both the interest arid the power to keep regional P.ower trade on the political agenda. CONCLUSION \-I The report has implications both for the section of regional power trade projects to'be supported by ESMAP and for the evaluation of ESMAP's performance in that support. Project Selection. Two criteria appear to be appropriate for the 'selection of projects: that there be reasonable prospects for the successful development of power trade in the region, and that ESMAP be able to make a significant contribution to that development. Southern Africa probably fails the second criterion. it is Understandable that ESMAP agreed to support regional power trade in Southern Africa. At the time, no other regional power trade project was m· prospect. For ESMAP, rejecting Southern Africa could have appeared tantamount to turning its back on a potentially important area of developing country activity. For the future, however, it is questionable whether the prospect of such a very marginal contribution would justify an ESMAP commitment. In contrast to Southern Africa, there is little doubt that ESMAP~s Mekong project has had a significant impact. If there is a .question about the selection -of the Mekong · project, it concerns the first criterion:· that there be a. reasonable prospect of success. The 29 basic problem in that region - a lack of strong regional _political support - was obvious at the time. If ESMAP· had used the existence of strong political support as a screening factor in assessing proposed regional power trade projects, the Mekong project would have been rejected. · , That probably would have been a mistake. The lack of strong political support has meant that progress has been slow, and it may mean that ESMAP support must continue for a number of years. It may even mean that in the end regional power trade will not develop .. However, to require certainty of success appears inconsistent with ESMAP's mission of supporting reform in developing countries' energy sector. What should be required is that the support be a gamble at decent odds: that the cost of the support be commensurate with the potential benefits and the likelihood of achieving them. The Mekong project appears to satisfy that standard. ·Project Evaluation. The distinction between the two. categories of activity supported by· ESMAP discussed above is relevant to an evaluation of .ESMAP's · performance. If the success of an activity is largely determined by the input supplied by ESMAP, it is reasonable to judge ESMAP' s performance by the success or failure of the activity. Such a judgment requires that one know whether the activity has succeeded or. failed, that is not possible at this point. because of the lack of documentation. However, · the means for remedying that problem are straightforward and were noted earlier. ' Even with better documentation, the kind of relatively mechanical evaluation 1 procedure that can be used for training programs is not suitable for evaluating ESMAP's role in promoting effective political support for regional power trade. The alternatives for that evaluation are to evaluate one or more projects based on extensive interviews with persons involved, both at the Bank and in. the region or to base the evaluation on documents supplemented by interviews with a limited number of people. The first alternative would be relatively costly but could produce results that are firmly grounded. and nuanced. The second alternative is the one used for this report. The conclusions that can be drawn on that basis are: (1) ESMAP's involvement in Southern Africa probably was a mistake, but one that was understandable under the circumstances. (2) ESMAP's flexibility in providing funds for meetings, rep~rts and training has made a useful contribution in South America and the Nile Basin. (3) The combined contribution ofESMAP and the ADB has been essential to progress in the_ Mekong region. (4) ESMAP's role in West Africa may ultimately resemble its role in the Mekong, but it is too early to assess ESMAP's contribution in the West Africa region. 30 Introduction This report is the product of Phase II of an evaluation of the ESMAP regional power trade. portfolio. It is divided into two parts. Part One describes the history of the · portfblio. Part Two presents the evaluation. Part Two is followed by a list of the documents that have been available for this report. Some Notes on Terminology . Regionai power trade, power pools, and bilateral trade, "Regional Pe>.wer frade" is used here as the generic term covering both power pools and bilateral cross- border trade provided 'that the trade takes place within some form of regional institutional . structure. The proviso is needed in order to di,stinguish the developments supported by ESMAP from the. limited bilateral trade that already existed in some of the regions · J discussed in this report. lri the restricted sense of the term used here, only Southern · Africa had a regional power trade prior to ESMAP's involvement. 19 Regional power trade and ESMAP support. It is important to distinguish the development of power trade. from ESMAP's support of that development. The develop~ent of regional power trade may begin prior to ESMAP's involvement and may continue .after its involvement has ended. More importantly, the success or failure of power· trade is .not a reliable measure of the value of ES MAP support. In one region, power trade ,might develop rapidly and successfully with ESMAP support but might have developed with equal rapidity aild success without that support. In another region,· power . trade might develop slowly and with uncertain prospects, not because of any failings in the support it received from ESMAP but because that support was given in a difficult ~ontext. · · The reasons for the less-than-perfect correlation between the value of ESMAP' s contribution and the progress of regional power trade are discussed in Part Two20 . They . arise from the varying nature of the activities supported by ESMAP. For some of those activities,. there is a clear relationship between input and outcome. This is true of a survey of existing regional opportlinities for cross-border trade. If fundillg is adequate· · and the firm undertaking the survey is competent, a reasonably satisfactory outcome - . that is, a useful survey - should be almost c.ertain. It also may be true of a short course for the participating national utilities' technical staff. It generally is not true . of activity ' . directed at fostering an effective political consensus favoring regional power trade. In some regions this may be the most important activity undertaken by ESMAP. · Yet no possible input can guarantee its success.· The appropriate criterion forjudging ESMAP's performance in such an .activity . therefore cannot be that thf': political consensu~ was quickly created, or even that it was 19 SoutJ::iem Africa has had some form ofregional power: institutional structure since 1980 .. See page 4 below. · 20 See in particular the discussion below at pages 30-33. 31 created at all, but that ESMAP undertook the activity in a well-conceived way that substantially increased the odds for success. To make clear the distinction between the development of regional power trade and the value of ESMAP's support for the development, its support in each region will be referred to as a "project" - for example, ESMAP's Southern African power trade project - and the project terminology will not be used to refer to the regional power trade development that ESMAP supports. Formal and informal ESMAP projects. A further distinction is needed within the category of power trade projects. Up to a point, ESMAP is able to support the development of cross-border trade in a region without establishing a formally defined project with its own budget. In the Mekong region in particular, there was no formal ESMAP project Until more than a year after the first Bank mission to the area. In general, a formally budgeted project appears to become necessary only when support in a region moves from the occasional mission and consultation to studies and workshops. In this report, the entire course of ESMAP support of power trade in a region will be referred to as the project, and the transition to a formally budgeted project (when it can be identified) will be noted. Nile Basin regional power trade and the Nile Basin Initiative. An additional distinction is necessary in the case of the Nile Basin. In all of the regions, power trade has been only one of several areas in which economic cooperation has been pursued, or at least considered. · Outside of the Nile Basin, however, the development of regional power trade has been clearly distinct from other elements of regional economic . cooperation. This .has not been trhe for the Nile Basin. Regional power trade is· an integral part of a broader program of regional economic cooperation known as the Nile Basin Initiative (NBI), and ESMAP's support for regional power trade is given within the framework of Bank support for the broader program. To avoid confusion, NBI will be used only to refer to the broader program, and the development of power trade in the Nile Basin will be explicitly identified as such. Available documents. Finally, this report will refer frequentiy to the "available documents." This terin is not intended to cover all documents that may have been produced by the Bank, or even to all documents that may now reside somewhere in the Bank. It refers only to the documents that have been available to the consultant in preparing this· report. 32 . Part One. · . . A History of the Power Tr~de· Portfolio Part One presents a factual history of ESMAP's involvement with regional power trade. The history is divided into six sections. The first section describes ESMAP' s involvement in general terms. Each of the following five sections then sets out the history of one of the -regional power trade projects so far undertaken by ESMAP. · These sections are arranged in the order of ESMAP's initial involvement in the· region: ·Southern Africa (1996), Mekong :River (1996), N~le River Basin (1997), South America · (1999), and West Africa (1999). · ."' 1. ESMAP's Involvement with Regional Power Trade· ESMAP's involvement with regional power. trade is comparatively recent. ES.MAP was established in 1983, Support for a Southern African regional transmission project appears to have begun around 199021 • However, the availabl~ ESMAP reports , make no reference to power trade for that or any other region before 1994.22 · ESMAP's annual report for 1994 refers in general terms to enhancing international power trading in different regions, and it specifically mentions the southern Mediterranean, southern and western Africa, · Southeast Asia and South America. However, the first formally budgeted ESMAP regional power · trade project · - for Southern Africa;- was :pot initiated until 1996. The only budgeted projects concerned with power trade undertaken during 1994 appear to have been the preparation of two .reports on interconnections and power trading - one consisting of a general overview of experiences withiri different regions and the other focusing on pricing of bulk supply and transmission. 23 ' , . · . · Possibly these reports were the activities enhancing international power trading · that ate referred to in the annual report. Alternatively, ESMAP may have begun encouraging regional power· trade without formally initiating a budgeted project.24 Whatever the precise nature of ESMAP's regional power trade activities iri 1994, the beginning of its interest probably was· linked to the creation i11 January of that year of an IntercoJ1.Ilection Operating and Planning Committee (IOPC) linking the national utilities . of South Africa and other members of the Southern African Pevelopment Community 21 The list of projects in progress as o(September 30, 1992 in ESMAP,Annual Report 1992, Annex 3, p. 42 includes SADCC Power Interconnection II, initiated 1 October 1991. Presumably Phl}se I began some time before that date. · · 22 Annual reportS are not available for all years prior to 1994. For the. general ESMAP documents · available for the pre-1994 period, see the bibliography in the appendix to this report. 23 Unlike soine ESMAP annual reports, the report for 1994 does not include a formal list of aCtivities initiated, completed or continuing. ·~ · 2,4 . Activities in the Mekong region support the latter explanation. There were Bank missions to that region in late 1996 and again in early 1997, and these ~issions worked with the Asia Development Bank on the initial steps towards regional power integration. Yet reports for that period do not include the Mekong region in their lists.ofESMAP projects. · · · 33 (SADC). 25 The object of the IOPC was to create a loose power pool, and by the middle of the fo~lowing year, the basic documents for the pool existed in draft form. ESMAP did not formally initiate a Southern African project until 1996. , Well before then, however, the movement towards creating that pool probably influenced ESMAP's view of the appropriate scope for its activities. By 1994 there were power pools linking national.and state systems in Europe and North America, but none existed in the developing countries that are ESMAP's area of concern. Southern Africa provided a :concrete example of the possibility ofa developing country pool. The formal initiation of ESMAP's support for SAPP in May 1996 was followed by the Mekong River project in December of that year, the Nile Basin in 1997, and South America and West Africa in 199926 . ES MAP also has considered support for regional power projects in the North African Maghreb and in Central America. The North African project apparently never went beyond initial consideration. The Central Anierican project became a formal (but unfunded) activity proposal but apparently went no further . as an ESMAP project27 . . . . · · No new projects have been undertaken since 1999. ESMAP's Southern African project has been concluded.. Formally, all of the other four. projects appear still to be under implementation. At the time of this writing - August 2003 - there is current activity in at least the Nile Basin and Mekong projects. . · 2. Southern Africa Southern Africa is unique among the five regions in having begun the movement towards a regional power pool prior to ESMAP' s involvement. The Southern African · Development Coordination Conference (SADCC) had established a. Technical and Administrative Assistance Unit in 1980 to act as coordinating agency for the regional power sector, and in 1992, the national utilities of three SADCG members - Botswana, Zambia and Zimbabwe - had created an Interconnection Operating I. and Planning Committee (IOPC). In 1994~ South Africa joined SADCC's successor, the Southern African Development Community (SADC). 28 S'outh Africa's accessfon. to the SADC 25 c As discussed in the section on Southern Africa, an IOPC linking only the national utilities of · Botswana, Zambia arid Zimbabwe had been created in 1992. · 26 These are the dates (or· approximate dates) for the first known formal Bank activity in each region. The dates of formal initiat,ion of the projects are not known for all of the projects. 27 In 1996 the Central American countries signed the Tratado Marco del Mercado Electrico de America Central. A 2002 .report describes the results achieved since the treaty signing as "lento pero estable e irreversible." Proceso de integracion y creacion de mercados regionales en centroamerica y region andina (Documento SECIER CIG&T-06-2002, Medellin, July 19, 2002). As of the time of that report, loans had been finalized (apparently from the Inter-Ainerican Development Bank), and construction of transmission links was to begin in 2003. 28 SADCC had· been formed partly· as a counterweight to South Africa._ South Africa's accession to membership followed the end of the apartheid regime. · 34 I dramatically changed the potential scope.of a regional power pool. It also added a strong and technically sophisticated proponent of regional power trade in the form of ESKOM, . South Africa's national utility. It presumably was these developments that led ~o the a creation of new IOPC in 1994, this time including South Africa and other SADC ~ . members. · The purpose of the new IOPC was to' create a loose power pool among the members pf SADC. 30 Work on the founding documents must have started almost immediately. By May 1995, an Agreement among Operating .Members had been · drafted; 31 by the following month, an Energy Protocol was in second draft. 32 On September 28, 1995 an.Intergovernmental :Memoran~um of Understanding creating the Southern African Power Poor' (SAPP) was signed.- · , These activities were paralleled by the initial stages of Bank involvement in the power pool's development. A Bank,mission visited the region in July 1995, and a report on its visit and recoIIllJlendations was published in July 1996.33 · The recommendations dealt with a wide range of topics. The first might have been included in the recommendations for almost any developing country power sector reform. It concerned the need to develop financially vial;>le, credit-worthy power utilities; . The other recomnwndations were more specifically concerned with the proposed power pool. Most were concerned with the power pool itself or with its relation to the national power systems. l.Jnder the first head, the recommendations noted the need to operationalize the pool'. s Coordination Center and to broaden its membership criteria to ,- include institutions that control . or influence significant amounts of generation or transmission, and the need for swift and effective dispute resolution proced~es. Under the latter head, recommendations concerned the need to unbundle internal transmission · and the Pool's compatibility with ESKOM's internal pool and with_ national regulation. · The report was issued by the Bank's Africa Region, which presumably also had supported the 1995 mission. By the time the report was published, ESMAP also was in involved in· supporting the· proposed power pool. By March 1996, a proJect with a relatively modest $130,000 budget had been proposed but-was still unfunded. 4 Funding ,.· 29 It is not known how many SADC. members ~ere signatories to the 1994 agreement creating the new IOPC. By mid-2001, however, all eleven members ofSADC were signatories of the later documents that created the powe~ pool: Angola, Democratic Republic of Congo, Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland, Tanzania, Zambia, and Zimbabwe. Angola, Malawi and Tanzania lacked cross-border links to other members and therefore were classified· as non-operating ·members. · 30 · Development of Regional Electric Power Networks (UNDP/ESMAP, October 1994), p 13 and Annex I, p. 2. . 31 A draft Inter-Utility Memorandum of Understanding dated May 16, 1995~1.s referenced in World Bank, Proposals to Support the Implementation of the Southern African Power Pool, July 1996. 32 Id. 33 Id.- 34 ESMAP Status of Ongoing Activities as of March 31. 1996 (April 1996) includes support for a Southern African Power Pool in its list of prospective activities, with an unfunded budget of$130,000. 35 was received and the project launched in May. 35 A second Bank mission visited the region in November of that year. 36 · The report of the July 1995 mission had recommended support for SAPP on a number of fronts. 37 It appears that most of the recommended support was provided by the Africa Region. ESMAP's budget was directed principally at support for a three-day workshop to draw the attention of key regional decision makers to the issues. 38 This plan was modified at the request of the SAPP Executive Committee. Rather than a general workshop for decision makers, a small workshop would be held in conjunction with the Committee's annual meeting. The subject of the workshop would be project financing, and other issues facing SAPP would also be discussed. Key issues identified ·in those discussions would be investigated by ES MAP over a period of two or three months, and a report would be prepared and discussed with a selected number of representatives of the Executive Committee'during a one-week visit to Washington. 39 · The workshop was held in May 1997. According to an October 1997 ESMAP report, several issues were identified, including the compatibility of the ,national regulatory systems, the governance of the pool's regional coordinating center, a review of the SAPP agreements, and analysis of the potential legal status of the coordinating center. 40 Upon aqditional funding availability and a request from ,the SAPP's Operating Committee, a joint ESMAP/Bank-SAPP team would investigate these issues in the forthcoming year. The investigation apparently was never carried out. A lack of funding may have been fue reason: a November 1997 ESMAP report noted that the Operating Committee needed additional support to study the identified issues and to combine the analysis with the simulation works carried out with the University of Purdue under U.S.-DOE funding: The remaining funding from the original $130,000 budget would be used to support part of this effort, and a mission to the region was tentatively scheduled for March 1998. However, the full scope of the proposed work would require a search for additional funding. 41 · · There is no indication that the planned March 1998 mission took place. ·A June 1998 ·report suggests a possible reason. The report anticipated a mission for the last quarter of 1998 with t4e main objective of identifying the Executive Committee's future 35 Table 2.2 of ESMAP 1996 Annual Report. (n.d., presumably 1997) sets out activities launched during 1996. They include the South African project with May 1996 launch date and $130,000 in funds received. 36 Back-to-office Report, December 18, 1996. 37 See report cited above, note 13. 38 ESMAP, Activity Proposals (March 1997). 39 ESMAP, Status of Ongoing Activities as of March 31. 1997 (April 1997). 40 ESMAP, Status of Ongoing ESMAP Activities as of September 30, 1997 (October 1997). 41 ESMAP, Status of Ongoing ESMAP Activities as of September 30, 1997 (November 1997) .. The title .of this report is the same as that of the report cited in the preceding footnote but the date ofissuance is a month later. 36 ;·:· support requirements. Elsewhe_re in the same report, the objective was stated in broader and more pessimistic terms. It was io clarify the kind of support needed by the Executive \, Committee arid to secure a commitnlent of their interest in continuing the work. If that · commitment could not be obtained, the project would be closed. It_ was expected that the projected would be closed by the end of 1998.42 . . Apparently the necessary commitment of interest was not obtained and the project was in fact closed at the end of 1998 or shortly thereafter. 43 The Southern African Power Pool itself continued to develop. .SAPP's Coordination Center became operational in 1999, and in April 2001 a.market in monthly, weekly, daily and hourly energy contracts began operation. 44 In December 2001 that market was supplemented by an hour-ahead market for bids noj: matched in the short-term energy inarket.,.5 .. • The amount of power traded still is small. 46 However, SAPP continues to be the only functioning power pool outside of Europe and North Amer~ca. SAPP has continued to receive international. support. USAID may now be its . principal external s,ource of support, 47 but it also continued to receive. support from the Bank after 1998. In June 2001, the Africa R~gional Office issued a favorable.Project Appraisal Document for support of the SAPP Coordination Center and f9r three cross- · · border transmission projects. 48 The Bank also has supported the attendance of SAPP personnel at training workshops during 2000-2001. 49 There is, however, no indication of any formal ESMAP involvement after ·1998. The list of ESMAP projects completed, launched or ongoing during 2000-2001 does not include support for the Southern Africa . · Power Pool. 50 .. . · · . . 3. Mekong River The Bank's initial contact with the Mekong region was initiated by the energy manager of the Mekong River Commission (MRC), a non-governmental organization supported by funding from Jap~ and other countries~ The manager was. working on a regional planning model. In 1995 he approached ADB and the World Bank with the 42 ESMAP, Status of Ongoing ESMAP Activities as of May 31, 1998 (June 1998) (revised). 43 ESMAP, Annual Report 2000-2001, lists ESMAP projects that were active during those two years. The, list does not include Southern Africa. . 44 South Africa Power Pool Annual Report 2001/2, Management Committee Report. .45 . Id. 46 By July 2002, the monthly volume traded had reached 116 GWh. South Africa Power Pool Annual Report 200112, Operating Sub-Committee Report.. 47 This is inferred from the SAPP website's current listing of meetings and other events, which notes only US AID support.' According to USAID, Initiative for Southern Africa FY 2002, Activity Data Sheet, USAID assistance for SAPP coordmation center will continue to develop, test and put in operation a real-time electricity market in the region~ This will allow regional electricity trading to shift from the current ad-hoc arrangements to niarket-driven agreements. 48 Projec;tAppraisal Document, June 18, 2001. 49 South Africa Power Pool Annual Report 2001/2, Operating Sub-Committee Report. · 50 ESMAP, Annual Report 2000-2001, Annex 4. 37 purpose of promotin§ his activity. The ADB responded in 1996 by creating the Electric Power Forum (EPF) 1 uiider the program of regional cooperation-it had established in 1992. ' In December of 1996, a World Bank, team fro~ ESMAP and the Bank's East Asia Region attended an EPF meeting in Kumming; China.?2 At the meeting, the Bank team proposed that. a regional market study be undertaken. 53 At that point, there was a consensus in the region that the Mekong river basin represented a common resource, and projects were being constructed and planned to support bilateral trade within the region: · the export of hydro power from China's Yunnan province and from Lao PDR and. the export of surplus power from Thailand. However, although the Mekqng River Commission had begun a Mekong Integrated Transmission Study, and the ADB had recently created the EPF, there was no joint approach to exploiting the resource, and there apparently existed no process for creating such an approach. The Bank proposal was favorably receiveds 4 , and a November 1997 EPF meeting confirmed cooperation among the ADB, the Bank and EPF. By that time, a second regional body had been created, the Regional Experts Group (REG), consisting of two representatives from each country -: one from the country's electricity authority and .usually technically oriented, and the other from the country's energy policy body.ss The EPF and REG have served as the framework for the Bank's involvement in the Mekong region. EPF meetings have served as the forum for most of the Bank's subsequent formal contacts with the region, but it could not serve as the working .group for the project, apparently because of the other commitments of its members. That role therefore has been played by the REG, which has served as the Bank's principal partner in discussing regional power trade. · Neither the EPF nor the REG appears to have devefoped a permanent institutfonal existence. Both groups appear. to exist principally through their meetings, and those meetings appear to be held once or twice a year. ~ 6 There apparently is no secretariat or similar body. · That contemporary badge of institutional existence, a website, also is lacking.s 7 51 Some documents refer to the Electric Policy Forum. 52 Market Structure Options for the GMS Market. A First Overview of Issues and Possible Options (October 30, 2002). 53 . Back-to-office report, December 18, 1996. 54 Id. 55 More recent documents generally refer to the Experts' Working Group on Power Interconnection (EGP). 56 According to the account of the December 2001 Hanoi meeting in ADB GMS Updates, the meeting was the sixth meeting of the REG and the eighth meeting of the EPF. The groups also have met informally from time to time. · 57 The October 2002 options paper, above note 34, recommends the creation of a website for the EPF and REG. 38 ) Bank/ADB-Supported Activities The Bank and· the APB have supported three kinds. of regional activity: workshops; the preparation ofregional power trade docllinents; and studies. · ~ Workshops. As late as May 1998, there was no budgeted ESMAP project for the Mekong region. 5 Bank support for missions to the region up· to that. point presumably came from the general resources of ESMAP and the East Asia Region. The need for a formally budgeted projected appears to have been created by plans to hold a series of . workshops. . Working with the REG, the Bank and ADB organized four workshops between Jline 1998 and December 2001. Workshops have also been a sign~ficant part of ESMAP's support of power trade in other regions, but materials on the workshops in other regions range from sketchy to non-existent. Of necessity, therefore, the Mekong workshops must stand as representative of this aspect of ESMAP support. . ·' The workshops probably should not be judged as training programs .:.:._ that is, programs designed to develop the participants' technic_al skills. The range of topics covered probably was too wide and' the participants too heterogeneous for that purpose. The workshops did provide a means. for co:Q.veying information relevant to regional power trage .. Beyond that, they probably are best seen as serving tWo related plirposes: creating a political base for regional power trade, · and giving the participants an opportunity to establish relationships that would be useful ip. advi:!-ncing that trade In the Mekong region, an initial general workshop on Power Trade Strategy for Greater Mekong Sub-Region was held in Bangkok in June 1998. It was followed by three workshops ,on· specific topics: Coordination of Technical Issues (Bangkok, February' 2000), Regulatory and Commercial Issues (Vientiane, December 2000), and Financing and Private Participation (Hanoi, December 2001). Participants in the · workshops included representatives of international institutions, international and regional experts,. and members of the Regional Experts Group. . Each of the work~hops lasted several days. Althou~h the agenda varied from workshop to workshop, taken together the four workshops dealt ·principally with three subjects: (1) international experience with power pools and cross-border energy trade; (2) experts' reports dealing specifically with the Mekong region; and (3) the draft Intergovernmental Agreement.(IGA). 58 ESMAP, I Status of Ongoing ESMAP Acti~ities as of May 31, . 1998 (June 1998) (revised). · 39 Regional Power Trade Documents. The IGA is the basic document of regional power trade. The first draft of an IGA for the Mekong region was presented to the REG . at its February 2000 meeting As a back-to-office report notes, the document was ·presented at an early.stage in its drafting because of the "need to capture the.attention of the local people as early as possible to avoid any political bottleneck at a later stage." A second draft was presented at the December 2000 workshop in Vientiane, and final approval was obtained from the 1REG and EPF at the December 2001 Hanoi workshop. Approval by REG and EPF cleared the way for political approval of the document. A January 2000 meeting of regional ministers already had approved a policy statement. supporting regional power trade. It had been planned to submit the IGA to a regional ministerial meeting in September 2002. Instead, it was submitted to a sUmmit meeting of regional heads of state in November. The heads of state approved the IGA at their November meeting. The member . countries still must ratify the document, but approval by the heads of state appears. to· be regarded as a sufficient basis for moving forward. 59 . · · - - At least three other regional power trade documents have been ·prepared or proposed. A May 2002 meeting of the REG reviewed a draft Indicative Master Pla:n on Power Interconnection in the GMS, .and an· October 2002 REG meeting adopted guidelines for the establishment of the Regional Power Trade Coordination Committee ·(RPTCC). · That entity eventUally is to coordinate preparation of a study on the Regional Power Trade Operating Agreement (PTOA), which would provide the operational guidance for the conduct of GMS power trade.· Drafting of the PTOA is .scheduled to begin in 2004-2005. 60 ·. . Studies. At least three studies ofgower trade have been supported by ESMAP: a 1999 study of power trade in the region, 1 a 2001 survey of the regulatory systems and pricing principles 1of the member countries, 62 anq an October 2002 study of options for . the next_steps towards creating the regionalmarket ("options paper"). 63 The options paper now defines the -framework for further actions. A work plan based on the options paper is to be formulated at an October 2003 meeting, and it appears . that formal activity on reiional power trade may largely have ceased pending the development of that plan. 6 At one point it was thought that the meeting might be delayed by SARS, but it apparently is to proceed on schedule. It has been proposed that 59 Market Options paper, above note 34. 60 Id. 61 Power Trade Strategy for the Greater Mekong Sub-region (World Bank R~port No. 19067-EAP, March 1999). 62 Deveiopment of a Regional Power Market in the Greater Mekong Sub-Regio; (GMS) (ESMAP Technical Paper 015). · 63 Options paper, .above note 34. 64 This is inferred from the GMS Updates pages of ADB's web site. As of the end of August 2003, the pages do not indicate any activity in the.regional trade area since late2007. 40 ESMAP provide $50,000 in support for 'the meeting. 65 Under the recommendations of the options paper, the work plan would include· a Bank-supported regulatory and institutional study. 4. Nile Basin . Like the other regional projects, the Nile Basin project has a pre-history. The amount of· cros-s-border power trade was small. Uganda had been exporting a mod~st . amount of power to neighboring countries since the 1950s, but there' appears to have been . no cross-border power trade involving Egypt, Ethiopia, or Sudan. There had, however, been earlier regional programs involving some of the riparian states. ' . . . ·. · Hydromet was formed in 1967 with. UNDP support to foster the collection of hydrological and meteorological data, and a 1989 UNDP study66 discussed the need to develop regional hydropower and, power transmission. Hydromet ceased operation in 1992, but in 199i3 some of the riparian 'countries formed the Technical Cooperation Committee for- the Promotion of the Development and Environmental Protection of the · Nile Basin (TECCONILE) with a broader and more actfon-oriented agenda.. Also irt 1993, the Canadian International Development Agency began supporting a series of annual me~tings ·of the Council of Ministers of Water Affairs of the Nile Basin States (Nile-COM). · · . , These last two developments came together in the Nile River Basin Action Plan. The plan wa's prepared by TECCCONILE and approved by Nile-COM in February of 1995. The following month Nile-COM asked the World Bank to take a lead role in coordinating inputs of external agencies to finance and implement the plan; · . . ) . The request apparently received no response, perhaps ·because the proposal had not yet been fully developed~ At this point it did not include all of the riparian states, and ·it also still lacked an organizing regional framework. Nile-COM renewed its request in March of 1997. This time the Bank quickly accepted the request. Its acceptance mark~ the beginning of the Bank's role in what was to become the Nile Basin Initiative, ESMAP's own formal involvement appears to have begun with a Work Program Agreement covering support for an initial scoping study.· That agreement was executed in February 1999, twenty months after the Bank's acceptance of Nile-COM's request. During the intervening period, some of the basic institutions of the broader Nile Basin Initiative were created. An International- Advisory Group prepared a report on the revised action plan, which was reviewed by the riparian countries in January 1998 at a meeting convened for that purpose. Two months later, Nile-COM created the Nile Basin Initiative Technical Advisory Committee (Nile-TAQ). 65 ESMAP Concept Note_ (2003). 66 Nile Basin Integrated Development, Fact-Finding Mission Report. 41 · · Nile-TAC consists of a member and an alternate. from each country. Members appear to have been drawn from the countries' water ministries. 67 Its responsibilities include the preparation for the annual meeting of the Nile Council of Ministers. For the first year following its creation, Nile-TAC was the working body for the Nile Basin Initiative~ and it was the. starting point for the working bodies .subsequently created for specific. areas of act!vity within the NBI, including regional power trade: Between July and September 1998, Nile-TAC drafted the policy guidelines that defined · the Shared Vision Program - the 'document that provides the general framework for the Nile Basin Initiative. For purposes of this.report, most of the events since 1998 can be divided into two interrelated lines of development. One has been the identification of projects for which . support from international ·agencies would be requested and the preparation of documents supporting those requests. The ·second was directed .at the· creation of a· Power Forum. Both lines ofdevelopment have been supported by ESMAP. 68 · · · Development of Projects · On February 22, 1999, Nile-COM approved the establishme.nt of the Nile Basin Initiative and directed Nile-TAC to prepare a priority list of projects for presentation to donors. In early May a strategic planning and training workshop created a preliminary list of priority projects based on consultation by Nile-Ti,\.C and additional sector experts from each country. Later in the month, Nile-COM approved the list~ and Nile-TAC formed working groups to develop project concept documents for the projects in preparation for meetings with donors. Each working group consisted of the Nile-TAC member and one or more experts from each country. A lead consultant assisted each group. 69 Orie of the working groups was the Power Trade Working Group 70 . This appears to have been the first NBI institution specifically concerned with cross-border power trade. The working groups met in September and again in December, the latter meeting being held at the newly established NBI Secretariat in Entebbe. At the September '\ 67 According to Nile-TAC' s web site, all of its chairmen after the first one have been drawn from those ministries, and this presumably also geiierally has been trrie of the other members. 68 An event that does not fall under either of those headings is the clarification of the legal status of the NBI Secretariat. The Secretariat was established in 1999 and began operating in Entebbe in the latter part of that year. However, its operation was considered to be handicapped by ambiguity in its formal juridical status. This problem was resolved fa November 2002 by an Agreement between NBI and the Government of Uganda recognizing the NBI as international legally constituted institution and granting it diplomatic status in Uganda. The agreement was described by the NBI web'site as a major breakthrough. Why it took three years to achieve the breakthrough is I.J.Ot known. 69 The NBI web site states that each project was assisted by a lead consultant, but it appears more likely that the consultants assisted at the working group level. 70 This group sometimes is referred to as the Power Working Group. ' ' 42 meeting, Nile-TAC identified the promotion of regional power trade in the Nile Basin as one of seven priority projects within the Nile Basin Iiiitiative. Following the December meeting, more than a year was spent in preparing and approving project documents. Draft final documents ~were reviewed by Nile.::TAC in October 2000. Final documents were endorsed by Nile-COM in March 200i and presented to-the first meeting of the international donors at a meeting in Geneva in June. . ' The Geneva meeting can be considered to have closed the first phase of NBI activity. The focus now shifted tb implementation. A series of meetings dealing with overall implementation ·of the Shared Vision Program -Were held during the following months. Following an April 2002 meeting of th~ Power Experts Working Group, it was decided to proceed with the preparation of a Project Implementation Plan forthe regional power trade component of the SVP. The plan was approved by a formal declaration of , the regional power ministers at ~heir first meeting, in Dar es Salaam on May io, 2003? 1 According to an earlier report, the plan was to be implemented· by a Project Management Unit, Which would also act as secretariat for the Power Forum. A Steering Committee was to provide overall guidance and a Technical Committee composed of power experts from each of the riparian countries would be established before the project started. This was expected to occur in June or July of 2003. The Dar es Salaam declaration makes no explicit reference to a steering committee but states that the power ministers will meet periodiCally to review progress of the power trade project. Within the overall framework of the Nile Basin Initiative, two Subsidiary ActiOn Programs have been created: one for the Eastern Nile (EN-SAP), comprising Egypt, L Ethiopia and Sudan; and one for the Nile Equatorial Lakes (NEL-SAP), comprising the six countries in the southern Nile Basin (Burundi, Democratic Republic of the Congo, Kenya, Rwanda,.Tanzania, and Uganda) plus Egypt and Sudan. This division may reflect - and at least is consistent .with - · the finding of the scoping study that the best opportunities existat the level of these sub-basins. , Unlike the geographical division in the South America and West Africa projects discussed later in this report, the. division of the Nile Basin Initiative assumes that both regions will be active in the near term. However, all of the projects presented to the international donors at the June 2001 meeting apparently were developed through the Basin-wide program. 72 As of mid-2001, both of the sub-programs had identified projects to be examined,· but the process of documenting projects beyond those that had been dt:fveloped through the Basin-wide program apparently had not begun. 71 . Dar es Salaam Declaration on Regional Power Trade, May 20, 2003; available on NBI'web site. 72 In the "Sequence of Major Events" on the NBI web site, the first reference to a meeting of national experts for the Nile Equatorial Lakes region is for August 2000, and the fin~t reference for the Eastern Nile is for late January 2001. Since the draft final project documents were circulated in October 2000 and had been in preparation since December 1999, it does not appear that the regional meetings can a . have played role in the preparation of documents for the June 2002 international donors meeting. . 43 ESMAP Support and the Creation of a Power Forum Three days after Nile.;.CQM.approved tpe Nile Basin Initiative, the Work Program Agreement for Phase I of ESMAP' s support of the NBI was certified. The support was for a scoping level assessment to serve as a background study for a report to the international donors. The budget was $546,000. $516,000 was to come from ESMAP; the balance was to come from the Bank Group Budget. The Phase I study was completed in draft form in November 1999 and discussed by the Power Trade Working Group at an ESMAP-funded meeting the following month. Work was to continue on finruizing the study. However, there is no reference in the available documents to the stiidy ever hav~ng been formally completed. Technically, the study apparently continued to exist as a consultants' report rather than as an NBI- approved study, 73 . but in that form it has helped to provide a framework for the development of projects for international funding discussed above. The Phase I Work Program Agreement certified in February· 1999 assumed that Phase II would consist of a series of in-depth studies that would build on the scoping study.. By December, however, the concept note for Phase II d,efined the principal focus as establishing a regional power forum, and the power forum also· was one of the two activities contemplated by the formal Phase II proposal of May 2000. · The other component was to be a ministerial-level meeting to establish a consensus in support of regional power trade. It appears that this shift in focus may have been the result of consultations during 1999 with the Power Trade Working Group. The proposed budget ·for Phase II was $631,060, of which ESMAP was to provide $5.04,030. The ministerial-level meeting presumably was the Nile-COM meeting held in Khartoum in March 2001. That meeting endorsed the Shared Vision,Program and the project documents that were to be presented at the international donors meeting at the end of June. The Phase II proposal and the overall project document for the Nile Basin Initiative74 laid out a phased process for creating the Power Forum. Nile-TAC would authorize the Power Trade Working Group to create an Interim Technical Committee, which would be responsible for making the Power Forum operational. Most of the initial responsibilities of the Power Forum would be informational. The forum would, for example, gather information, ·support technical meetings, and commission studies~ H~wever, it also would develop the strategic framework and agreements for advancing regional power trade. Additional functions would develop as regional power trade matured. 73 The "Final Scoping Study'' carries a cover date of September 2000. Its cover identifies it as having been prepared by Norconsult for the Bank and ESMAP. 74 Shared Vision Program. Nile Basin Regional Power Trade Project Document (Nile-COM, March 2001). ' . . 44 ~· :',: ,_·. This plan subsequently was· revised. As noted above, .the Project Management Unit fo~ the implementation plcin will serve as the secretariat for the Power Forum. There will.be no Interim Tech:llical Committee. · I . I 5. South America In its 1994 annual report, ESMAP. listed South America along with southern and western Africa, Southeast Asi~ and the southern Mediterranean as areas where it had launched acti_vities aimed at enhancing international power trading projects. 75 There are ·other references to these and other regions in annual reports for 1995, 1996 and 1997 and in other ESMAP ·documents. from this period. 76 . As late as March 1998, h9wever, ESMAP annual reports and periodic status reports make no mention of a South American project, and in contrast to the Mekong. region, South America appears also to have · · received no Bank miss.ion related to regional power trade . .The situation from 1994 to mid-1998 appears to have been as follows: • ESMAP had become interested in regional power trade. ' • Power trade was being discussed in a number of regions, including the Mercosur region. of Smith America, and ES:MAP probably participated in soine of these discussions . • Outside of southern Africa, however, there were no budgeted projects for · support of regional power trade, and outside of southern Africa .and the · Mekong region, there also were no Bank missions or formal projeCt proposals. . Th~ immediate impetus for the South America project came from a regional planning.exercise. The Comision de Integracion Electrica Regional (CIER) and a South American university had jointly develOped a planning model tha~ included long term planning.for the entire South American continent·· In 1998, the model was presented· to the United States Department of Energy with .the purpose of attracting interest and financial support. The World Bank was invited .to the presentation, and following it, the Bank proposed to go beyond niodeling to look at the development of a regional market. CIER was interested, but its primary goal· initially continued to be financial support for a modeling effort. This initial difference in. the proposed focus apparentl1' resulted in a delay of about a year before a realistic work program could be de.veloped. 7 · · Meanwhile, during the first half of 1999, CIER had completed a study of national l)alances of energy supply and demand .and' the costs and benefits of regional 75 ESMAP, Annual Report 1994. 7.~ ESMAP Status of Ongoing Activities as of March 31. 1996(April'1996); ESMAP, Activity Proposals (March 1997); 77 The prece4ing two paragraphs are based principally on Back-to-office report of May 3, 2000 and on discussions with Jean-Pierre Charpentier. 45 integration. 78 The study was discussed with the Bank, US-DOE, ~nd several private companies. Following the discussions, a proposal for support of a tWo-phase follow-up study was submitted to ESMAP. The project was to take 16 months and had a budget of about $500,000 - $700,000. 79 · _ · . The project was designed by CIER, US-DOE, and the Bank and endorsed by the Peruvian Minister of Energy and Mining; support from· other governments was said to be in preparation. Phase 1 of the project was to identify technical and institutional issues affecting regional interconnections. Phase 2 was to develop options for dealing with those issues and for developing regional power markets. The work was to be coordinated by Leading Group composed of representatives from the Bank, CIER and US-DOE and executed by a Working Group composed of representatives from the National Committees of CIER. 80 · The project proceeded with unusual speed, perhaps reflecting the fact that, in CIER and the Mercosur national governments, the South America project had access to better-developed bureaucratic resources than were available in the other regions. Consulting groups were short-listed in October 1999, and the-winning group was selected in November. Work began in December, and the Phase I report was presented in May 'r 2000. 81 The report reportedly was well received82 , and work on Phase II began almost immediately. The first draft of the COI1sultant's recommendations was presented in December, . and the final Phase II report was ~ . submitted. at. a March 29-April 2, 2001 meetmg. . . · . · One of the Phase II recommendations, which apparently was accepted, was to develop two separate regional markets for South America: one for the Mercosur countries of southern South America and one for the Andean countries of the· northern ?8 UNDP/ESMAP, South America Regional Interconnection of Electricity Markets. Project Description. (n.d.). The study is known as CIER-02. Earlier, in 1995, CIER had carried out a study quantifying-the hydrological correlation of the region's major hydro river basins, known as CIER-01. CIER may have undertaken the two studies with its own resources. In any event, they apparently did not receive support from the Bank. 79 The available documents include two ESMAP proposal forms for the project, one with a budget of $536,600 and the other with a budget of $705,350. Presumably one of the proposals sµperseded the other, but since neither proposal is dated, it is not possible to determine which one is the final proposal. 80 This description of the management of the project is from UNDP/ESMAP, South America. Regional Interconnection of Electricity Markets. Project Description (n.d.). The consultants' terms of reference describe the Working. Group as the coordinator. See Interconnection of Electricity Markets in South America: Terms of Reference for Consultant Services (n.d. but presumably 1999)~ 81 The report was published in December 2001 as ESMAP Technical Paper 016, Regional Electricity Markets Interconnections - Phase I. Identification of Issues for the Development of Regional Power Markets in South America. 82 · Back-to-office report, May 3,_2000. 83 Regionai Electricity Market Interconnections in South America (Project CIER 03). Phase II: Proposals to Facilitate Increased Energy Exchanges (ESMAP Technical Paper 016, April 2002). Although it has the same technical paper number, the April 2002 report is separate from the December 2001 reported cited in note 63. · 46 ,·•'" , part of the continent. Two factors dictated the division. 84 One was the higher degree of general economic integration of the southern countries: Mercosur has· ambitions of following the general path of the European Common Market. It is far from clear whether those· ambitions will be realized, but.even today, Mercosur has a much better developed framework for economic integration than exists for the Andean countries.. The second fa~tor was specific to electricity. There already exist important cross-border transmission links involving Argentina, .Brazil and Chile within Mercosur and a sigllificant bilateral electricity trade based on those links. Comparable cross-bord.er transmission links and 1trade are lacking among the northern countries. For the southern countries, the consultants therefore recomillended m~ving directly to the preparation of a memorandum of understanding among the countries to create a regional market. 85 . For the ,_northern countries, the initial focus would be on developing interconnection agreements. · Following the March 29-April 2, 2001 meeting, it was assumed that the Bai1k and the CIER Executive Committee would jointly decide on launching the Phase III study within a few months. To date, however, it does not appear that any further work has been done towards that study. In the available documents, there is no record of further ES MAP involvement after 2001. However, CIER has continued to be active. In June 2002, it . sponsored a conference on the integration of national power . systems in the Andean regiori. 86 The conference was held against the background of recent activity in that region. In September 2001 the energy ministers of the Andean countries had signed an agreement for regional transmission links and cross-border trade in electricity, referred to as the Cartagena accord. This was followed in April of 2002 by a second accord, which adopted regulatory principles for the cross'-border transmission links and trade. These · a:greements have been signed by Ecuador, Colombia and Peru, but Bolivia and Venezuela have indicated they will join the agreements. 87 . . . . 6. West Africa Like South America, West Africa is included in the regions for which ESMAP's . 1994 annual report appears to .indicate it has launched activities intended to enhance international power trade. Also like South America, there is no indication that West Africa was then the subject ofa formal ESMAP project or proposal. · 84 See Back-to-office report, May 10, 2001. 85 · . The precise role of a new intergovernmental agreement is not clear. Ramon Sanz of Mercados Energeticos notes that the Mercosur countries already have agreements allowing regional. market development, and the problem now "is· to advance in second generation rules and to increase the institutional commitment to allow more interconnections." E-mail communication from R. Sanz, May 13, 2003 . 86 . II Taller Internacional delnterconexion electrica en la Region Andina; CIER 2002-06-14. A summary of the proceedings is posted on CIER' s web site. ' 87 Except where otherwise noted, this paragraph is based on Proceso de integracion y creacioil' de · mercados regionales en centroameric·a y region andina (Documento SECIER CIG&T-06-2002, Medellin, July 19, 2002). The report is available on the CIER web site. · 47 The first specific reference to a proposal for 8 t?e West African region isin a March 1997 list of ESMAP activity proposals. The list included a proposal· to support the development of a regional power pool in Central West Africa. The specific subject of the 1 proposal was a three-day workshop that would involve senior power sector officials and would identify the potential benefits of regional power trade. The workshop would be directed "toward capacity building in a participatory environment of senior decision makers." There is no record of the conference having been held; presumably it never was funded. · The immediate impetus for the West 'African project came from a visit to Washington around 1998 by the Minister of Energy of the Cote d'Ivoire. The aim of the minister's visit was to expand the niarket for her country's then-existing power surplus. Cote d'Ivoire power already was being wheeled through Ghana for sale to Togo and Benin. The minister. presumably sought to establish direct or indirect interconnections with other West African countries and/or to expand the capacity of the existing cross- border transmission line. As already noted, ESMAP already was considering undertaking a project in central Africa. Through discussions between the minister and the Bank, her purpose was broadened to r~gional electricity trade, and around early 1999, S. Mikhail and Jean-Pierre Charpentier submitted a proposal for support of a West Africa program. The program probably was formally initiated some time that year. 89 · . The initial concept was to build on the existing interconnections linking the Cote d'Ivoire, Ghana, Togo. and Benin. These countries would be treated as the core of a power pool that would be expanded to neighboring countries as additional transmission liriks were construct~d. · Nigeria in · particular wa:s considered as a ·possible future candidate for participation, but only after cooperation among the first four countries was firmly established. During the following months, a West Africa power pool was discuss~d at several . meetings with various organizations. These included US AID, which was heavily involved With developing a regional pipeline to take away Nigerian natural gas that was being flared. These meetings led to decisions to launch a program for regional electricity trading. US AID already was using the Economic Community of West African States (ECOWAS) 90 for the natural gas pipeline project. It was decided to use Tt as the partner for regional power trading as well. 88 ESMAP, Activity Proposals (March 1997). 89 ESMAP's report for 2000-2001 includes Development of Regional Power Market in West Africa with a budget of $257 ,558 in its list of projects "under implementation" during 2000-2001. 90 ECOWAS was formed in 1993. As of2000, its members were Benin, Burkina Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea-Bissau, Guinea, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. (Cape Verde sometimes is not included in the list ofECOWAS countries.) 48 The project appears to have proceeded with little delay over roughly the next two years, 91 In December 1999 an ECOWAS-sponsored meeting of West African Heads of State · established an initial regional . political basis for the program · by proposing a preliminary agreement aimed at fostering regional cross-border energy exchanges. The first regional meeting to define the program was held in Abidjan the following June: EG:OWAS and UEMOA (the regional organization' of francophone countries) were invited to the June meeting, as· were several· donors, including US AID and the Agence Francaise de Developpement. . At the Abidjan meeting it was decided that two. working groups would be . established, one for technical matters and the other for institutional issues, and that two agreements would be prepared, one. for the regional governments and the other for the regional national utilities. In addition, three determinations were made at the meeting: (1) ECO WAS would serve as the international donors' regional counterpart. (2) The focus initially would be on a limited group of countries that were interconnected or soon to be interconnected, with the ECOWAS Secretariat to determine the membership of that group. For the near term at least, the countries outside the core group would in effect be observers . of ~he process. (3) The ECOWAS Secretariat and the Bank team would coordinate exchanges ·of information between donors. ·· A draft Memorandum of Understanding for development of a regional power pool · was prepared at a July meeting. In September, it was signed by the energy ministers of - fourteen of the ECOWAS countries at a meeting organized by the ECOWAS_ Secretariat and sponsored by US AID. In December 2000, the West African heads of state agreed to create a West African Power Pool. - Some time earlier - perhaps at the September meeting - agreement had been reached on .the jssue of which ECO WAS countries would be part of the core group on which attention initially would be focused. It was decided that those countries ~ known as Zone A - would be Benin, Burkina, Cote d'Ivoire, Ghana, Niger, Nigeria and Togo. Zone A thus consisted of the four countries of the core group in the original ESMAP proposal plus Niger andN)geria. The inclusion of Nigeria presumably was dictated by its importance and by the fact that it would be the point of origin for the proposed gas pipeline, A kick-off meeting or seminar for the project was held in Bamako, Mali in March 2001, and a further meeting was. held in Dakar later that month. At the latter meeting, the national power· utilities signed a Memorand~ of Understanding for the Inter-Utility Project Implementation Committee. 91 It has been suggested that the 1998 drought with its resulting reduction in hydroelectric power and major power curtailments served .to focus regional attention on the desirability of cross-border transmission ties. J · 49 With the latter meeting, the basic tasks that had been set out at the June 2000 meeting had been completed. Two working groups had been established; the ·core and non-core countries had .been identified; and agreements had been signed by the regional governments and the natjonal utilities. After the March meetings, there appear to. have been two largely separate lines of development. One was a US AID-sponsored study of institutional Issues, which was presented in draft. form at a July 2001 meeting. One of the stlidy'-s proposals was an Energy Charter Treaty, modeled on the European treaty. The proposal was received with some skepticism, and the issue was tc;> be taken up again at ·a September 2001 meeting. A~ far as can be determined from the available documents, it still has not been resolved.. The second line of development was directed at preparing a Project Concept Document (PCD). At about the time of the July 2001 meeting or shortly thereafter, the World Bank Africa Region decided to launch an investm~nt program to complement.the technical assistance program. Since that time, ESMAP and the Regional ·Bank have been . working together to prepare a PCD, with the aim of going to the Bank board for financing in 2003. The most recent version of the PCD was prepared in July 2002 and is being circulated among the concerned countries for approval. The document proposes two major activities. One is investment in strengthening existing regional· transmission lines and constructing new. ones. Donors, presumably meaning sources other than the Bank, would finance this activity . .The second activity is the creation of a center to exchange information between the countries and to stimulate be cooperation. The goal would for this center to develop later into a coordination center like the one serving the Southern Africa Power Pool. 50 Part Two. Evaluation This part of the report evaluates two aspects of the ESMAP regional power,trade portfolio. Sub-Part A evaluates ESMAP's institutio11al mel)Jory for 'that portfolio - the knowledge of the regional power trade projects that is practically accessible within· ESMAP to persons who have had no involvement in the projects. Sub-Part B discusses the lessons that can be learned from the projects themselves. This organization may strike the reader as perverse since it places an evaluation of bureaucratic record keeping before evaluation of ESMAP's substantive work. In this case, however, the limitations of ESMAP' s institutional memory of its re$ional power trade portfolio are also limitations on an evaluation of that portfolio. To understand what an evaluation of the. portfolio can· and cannot do, therefore, it is necessary to understand something of those limitations. · . The difference in subject matter of the two sub-parts dictates a difference in organization. Sub-Part A identifies several specific Weaknesses in ESMAP's institutional· memory and makes several equally specific recommendations for dealirig with them. The lessons.that CJ.fe discussed in Sub..;Part B are more general. They do not lead to the kind of specific recommendations set out in the preceding sub-part but rather to more . general recommendations regarding the selection of projects and their evaluation. A. Institutional Memory 1. .. The Problem ESMAP's ability to draw lessons from its experience is seriously limited by the . lack of a satisfactory institutional memory. The knowledge 'of each project appears to reside principally in the minds of the persons involved in the project. As a. result, the knowledge is fragmented. Persons involved in.one project may know little of other projects and, indeed, may not even know of another project's existence. The knowledge also is subject to in~vitable decay as individuals retire or move to positions outside the Bank.· . . This general problem of institutional· memory is composed of a num]?er of more .specific problems. These include: . . 1) The lack of a ·centralized index of documents relevant to ESMAP' s projects. 2) The lack of two kinds of regular reports: a) A sustained and consistent. series of periodic reports describing .the nature and status ofESMAP's.projects. · . b) Periodic narrative description of the events and progress of individual ESMAP projects. : · 3) The lack of any. procedure for doc~)nting ESMAP workshops and training programs. 51 a. Lack of Centralized Index The consultant has had the assistance of a ·number of individuals within and outside of ESMAP in assembling documents relevant to its regional power trade projects. Without that ·assistance, this report would not have been possible. Everi with that assistance, however, additional documents have continued to surface throughout the work on the report92 , and it is likely that still more documents would surface if that work was extended. The problein is that there exists no index or database that can be used to identify the full set 'Of documents relevant to a project or to a general area of activity like regional power trade. As a result, the set of documents that are relevant and available can be identified only by canvassing individuals' recollections or a physical recorinaissance of likely repositories b. Reports_ (1) Lack of Consistent Periodic Reports The table on the following page lists the ESMAP annual reports and other reports that, by their title or format, appear i~tended to be part of a periodic series - referred to collectively here as periodic reports. The table also indicates whether each report includes a list of current or proposed projects. The most striking thing about the table is the lack of continuity in the reports. ESMAP now has been .in· existence for approximately twenty years. Annual reports are available for each year from 1992 to 1997. However, there are gaps in the annual reports . both before and after those years,. and within the 1992-1997 period, some annual reports list current projects and some do not. No .other category of report is available in continuous series for more than two.years. It is possible that periodic reports in addition to those listed in the table have been issued but are not ainortg the available documents. To the extent this is true, that is _of course itself a problem. However, the unavailability of existing documents ·is unlikely to be the principal explanation for the lack .of continuity. It is very unlikely, for example, that reports on the status of ongoing activities ·have been issued continuously but that ·reports in that category since June 1998 are not available. The discontinuities in the table might be less extensive if it had been possible to locate every report ever issued by ESMAP, ·but it is .unlikely that the picture shown by the table would be fundai:nentally different. 92 For example, the consultant only recently became. aware of the existence of two recent studies and copies of the studies were obtained while this draft was in its final stages. The studies in question are Bradley 0. Babson, Cross-Border Economic Cooperation in the Mekong Region (October 11, 2002); and Market Structure Options for the GMS Market. A First Overview of Issues and Possible Options (October 30, 2002). · 52 Table 1: Periodic ES MAP Reports Report Lists Projects? Arll).ual Report (April 1987) No Work Program 1992-1993. Part II. Co,untry Summaries (Oct. No 1991) i Annual Report 1992 Yes Annual Report 1993. Yes Annual Report 1994 · Partial~j · Annual Report 1995 Yes· Status of Ongoing Activities as of March 31, 1996 (April 1996) Yes 1996 Annual Report ·Yes Activity Proposals (Mar9h 19~7) Partiaf4 Agenda, Work Program and Budget for 1997 (April 17, 1997) No Status of Ongoing Activities as of March 31, 1997 (April 1997) Yes Status ofOngoirig Activities as of September 30, 1997 (10/ 1997) Yes. Status of' Ongoing ESMAP Activities .as of September 30, 1997 . Yes November1997) · Status of Ongoing ESMAP Activities as of September 30, 1997 Yes N oveniber 1997) . Status of Ongoing ESMAP Activities as ofDecember31, 1997 Yes (February 1998) 1997 Annual Report Yes Status of Ongoing ESMAP Activities as of May 31, 1998. (June Yes 1998) (revised) ' Energy and Development Report 2000 (first prmting April 2000) No Annual Report 2000-2001 No ESMAP Business Plan 2002,.2004 Partial~' .. .. The discontinuities shown in the table probably have two causes. One is the lack of a consistent policy regarding periodic reports. It is understandable 'that views on the importance and role of reports will change over time. However, in assessing the history and performance of ~a program or. institution, it is useful to have a consistent .base line. That base line is lacking for ESMAP. The second likely cause is a fo.cus on what might be called a thematic approach to periodic reports.. In this approach, a report focuses on the broad purposes of ES MAP and 93 The report lists completed activities but not ongoing ones. · 94 / . Report lists proposed activities but not ongoing ones. 95 Annex V lists formal and technical reports published from January 1, 1999 through December 31, ~2 ~ 53 on the efforts to achieve those purposes. There is nothing wrong with such an approach. A catalogue of projects with budgets and dates makes dreary reading and probably is neither interesting nor relevant for most readers. ·It therefore is quite appropriate to place such a catalogue in an ~ppendix to the report or. in a separate document. The problem is that for some years the catalogue appears simply not to exist. In the available documents; . the most r~cent report containing a systematic list of ESMAP projects is for May 1998. (2) Lack of Regular Descriptions of Individual Projects By .its nature, an annual report cannot be expected to provide much more than project titles,. budgets and current status. For a little more than a year during 1997 and · 1998, a series of reports on the status of ongoing projects gave not only the basic facts but also· a narrative account of the recent developments and cilrrent status of a project. However, those reports appear not to have been continued after June 1998. At present, a narrative description . of a project generally can be found in three . places: (1) · Back..:to-office reports. (4) Proposals for follow-on phases of the project. (3) · Introductory discussion in reports funded by the project.. The shortcoming of all of these sources is a failure reliably to provide ·project descriptions at reasonable intervals. It is possible to piece together a continuous account of a project from back-to-office reports during periods when Bank missions to the region are frequent but not when such visits are rare or nonexistent. Back-to-office report can sometimes be supplemented by follow-on proposals' and project-funded reports, but the latter two sources typically provide a description ofa project at only one or two points over its life. ~. · In addition to· the sources just cited, the available .documents for the Nile Basin project includes a document from the "ESMAP Portfolio Tracking System" thatincludes dated notes on that project, the most recent of which is for January 29, 2002. The name of the system appears to imply that it is capable of producing comprehensive information on all ESMAP projects. However, the available documents include only the single report on the Nile Basin project, and the notes in that report do not provide a continuous narrative. ESMAP's owri. record of its projects can· sometimes be supplemented from outside sources, especially the web sites maintained by the regional organizatipns. However, these web sites are concerned with their respective regions and not with ESMAP's projects.· More ·fundamentally, a record of those projects should not depend on the decisions of other organizations regarding the scope and content of their web sites. c. Lack of Documentation for Workshops and Training One of the commonly accepted goals of the ESMAP programs is to provide the regions with sound technical knowl activities into a general World Bank database. If this is done, it presumably will be possible to identify at least all future documents - including proposals and back-to- office reports - that are relevant to an ESMAP project, and this presumably will be true not only- for documents produced by ESMAP but also for documents produced by other Bank units with which ESMAP collaborates. The focus then will shift from the question of whether documents can be found, to the question of whether they have been created. The remainder of this section is concerned with this second question. . b. Reports (1) Periodic Reports ESMAP's most recent periodic reports are aimed at a broad public. They; have taken a thematic approach and are attractively produced, with color graphics and user- friendly layout. · A report of this kind could incorporate ari annex setting out the status of current. projects. However, it seems preferable instead to report their status in a separate document. This would free the status reports from the production. schedule of the more . elaborate reports and should result in documents that can readily be distributed in e~ectronic files of moderate size. The reports on the status of ongoing activities that were ( issued Cluring the 1997-1998 period could be taken as a model. (2) Reports on Individual Projects ESMAP's business plan for 2002-2004 states that it now publishes "Activity . Completion Reports - Lessons Learned."96 Such reports -are potentially very valuable. However, no activity completion report has· been available for the preparation of this report. The explanation for this probably has two parts: (1) the practice of issuing such reports probably had not begun at the time that ESMAP completed its work on the Southern African project, and (2) none of the other regional projects has beeri completed. ·The second part of the explanation points up the limitation of activity completion reports: by their nature, they are issued only at the completion of a project. This limitation may not be important if a project is completed in a few months. It is important if a project continues for several years - as seems likely to be typical of regional power trade projects. An activity completion report provides no basis for a mid-term asses·s1Ilent of a project. In additioi;t, if th,ere has been a change of personnel over the life of a project, it may be .difficult to prepare an activity completion report if there is no interim docum~ntary record. 96 ESMAP Business Plan 2002-2004, Annex XII. 56 ) ' It therefore is suggested .that accounts of a. project be prepared at reasonable intervals. The status reports issued during 1997 and 1998 include brief narratives. ·If the practice of issuing status reports is resumed, narratives of this kind may serve the purpose. Alternatively, a separate short report might be 'prepared. In either case; the puipose.should not be to issue an interim "lessons learned" report but, rather, to provide a continuing i;iarrative account of the project. The' narrative can be brief, but it should be understandable. by someone who is not already familiar with the project. . ( c. Tr~ining Two straightfol"Ward ·steps can be taken to. provide· better documentation of ESMAP's ·training activities. One is simply to document when and where training sessions are held, the subjects. covered, and the persons attendi11g. The second is to compile - preferably in electronic form - the' materials used for the training. . . . . I , By themselves, these steps are likely to be of limited use in evaluating a training session. The information they would provide would be similar to that provided by the syllabus for a college course, Presumably most readers of this report have experienced an interesting syllabus that turned out to be the only interesting or useful thing about the course it covered. To go beyond this information - actually to evaluate ·a workshop or· training . · sessions - it iS necessary to be clear about what the training is expected to do. Consider several possible goals: (1) ·. The relevant organizations in the region are amply supplied with persons who . are familiar with the technical requirements for' connecting different power systems, but the organizations' leadership is not convinced of the benefits of . cross-border trade. The goal is to convince ~e leaders of those benefits. '...._: (2) The benefits of regional trade are generally accepted, but the specific opportunities for trade have not been identified. The goal is to identify those opportunities and/or to develop a regional competence to identify them. (3) The benefits· of regional trade are generally accepted and known and · commercially viable trade,opportunities have been identified. However, there has been little effective concern for the implications of regional trade for·the environment and for broadened access to modem electric power. The workshops may have a dual goal: to convey information regarding those. concerns, and to convince participants of the importance of the concerns. (4) The relevant organizations in the region are amply supplied with competent engineers, b'Ut the engineers have . no experience with the technical requirements of connecting different systems. The goal is to provide a cadr~ . of engineers with training in those requirements. (5) Engineers anq other technical persons familiar with modem best practices for operating ·a transmissfon or distribution grid are in short supply in ·at least some of the countries In the region. The goal is to upgrade the engineers' basic technical skills. · 57 These .different goals should be pursued in different. ways, and their evaluation should be based on different criteria: • In the first case the appropriate action might be a: promotional workshop; It would be pointless to criticize the workshop for a failure to convey the complexities of regional trade because the workshop is intended to be an exercise in political salesmanship rather than education. However, it may be reasonable to criticize a project if it assumes that one or two workshops will be sufficientto achieve·the political purpose. • Iri the second through fourth cases, an educational workshop or short course is needed, and a failure to convey the complexities of regional trade or of the links between trade and the environment and access to electric power would be a very appropriate ground for criticism. The third case probably also requires ·some amount of political salesmanship, and as in the first case, one or two workshops may not· be sufficient for the purpose. • In the. fourth case, something more extensive than the typical workshop or short course may be needed, and the success of the assistance . can be · judged only over a longer period of time. It is suggested that.ESMAP begin by estab~ishing a system of evaluation at least for workshops and short courses that are intended to serve a self-contained training function - a function corresponding to the second and fourth cases in the above list. For sessions of this kind, the evaluation can be directed at a manageable question: How successful was the session in conveying the intended information to the participants? Formal student evaluations answering that question should µot be th~ sole basis for assessing the training, but they provide information that cannot be obtained in any other way .. B. . The Role of ESMAP in Promoting Regional Power Trade The. lessons that can be drawn in this report regarding ESMAP's ·role in promoting regional power trade of necessity are concerned with the broad structural features of ESMAP' s support. It is not possible, for example, to assess whether progress 'in a certain region would have been faster if workshops had been conducted differently or Bank missions had conferred With different persons. Possibly conclusions on some of these issues could have drawn i.f more documents had been available. Principally, however~ issues such as these would require a different kind of study, one based in part on extensive interviews with persons within and outside the Bank. 97 . 97 A recent example is Babson's study of cross-border economic cooperation in the Mekong region, cited above note 75. The present consultant has benefited. greatly from discussions with a number of persons, which have served to place documents in context and to fill in gaps where the !}ocuments are silent. :I-Jowever, it has not been possible to test the views expressed in these discussions against the views of a broader range of persons, including officials in the five regions. For this reason, the 58 At the broader level, three lessons emerge from the present study. These concern (1) The . role- of region~l institutional and techiiical development m determiningESMAP's agenda; (2) The importance of political support and ins.titutional development; and (3) ·The significance of close- links. between the· ESMAP project and a ministerial-level regional body. These lessons are discussed in the following three sections 1. Regional Development and the ESMAP Agenda A full agenda for ESMAP support of regional power trade would include at least the following activities: . (1) Studies of institutions and of opportunities for trade. I (2) Creation of technical and/or policy-oriented bodies specifically concerned with regional power trade. (3) Training for regional personnel. · (4) Creation and maintenance of effective political support for regional trade. ( 5) Preparation of an intergovernmental agreement. Regional institutional and technical development may· affect that agenda in two ways. First, ESMAP support for some activities may not be needed because the activities 'already have been completed or are · adequately supported by existing . institutions . . ESMAP's .actual agenda in South America and Southern Africa has bee~ much briefer than the full agenda listed .above'. In South America, CIER already provided &, well- .established regional technical body, andthe existmg agreements for economic integration ·among the. Mercosur countries apparently made an intergovernmental agreement unnecessary. Those agreements probably also evidenced political support at least for ·economic integration in general. ESMAP support in South America therefore appears to . have been largely limited to the first item on the agenda: studies of institutions and trade opportunities. ESMAP's involvement with Southern Africa was even more narrowly focused. This was partly because its involvement before a ·well-defined agenda ·could .be developed. Even .if its involvement had been longer, however, it is likely that the principal and perhaps the only item on its agenda would have been support for the new Cqordination Center. The second potential effect of local conditions arises where there are wide · disparities in the development ofthe region's national power systems. Such disparities exist in Southern Africa and the Mekong region, and in both regions, an additional item , conclusions of this report generally have been limited 'to ones that receive at least some support from the documentary record. · 59 on ESMAP' s agenda has been, to assure the countries with less developed power systems that the benefits of power trade would be equit~bly shared. 2. The Implications of Political Support and Institutional Development ' . . It is important to· disti~guish the success and importance of ESMAP' s role in - promoting the development of regional power ·trade from the success of that · develOpment. The· importance of this distinction may be seen by comparing the development of regional power frade m Southern Africa and in the Mekong River Subregion. ·' The Southern African Power Pool (SAPP) is the only_ functioning power pool outside of Europe and North America. In the other four regions supported by ESMAP, . trade has not moved beyond long-term bilateral sales, and in some regions even that trade is, very limited· in volume and scope. In Southern Africa, trading through the power pool began in 1999 and since then has been expanded to include short-term and hour-ahead sales. Within the unive.rse of devefoping country power trade, SAPP must be counted as the outstanding success. Yet ESMAP support has made at most only a marginal contribution to that success. Southern Africa contrasts sharply with the Mekong region. The Mekong is the oldest of the still-active regional projects. ESMAP has been involved with promoting power trade in the region since 1996. After nearly seven years, however, cross-border trade still has not moved beyond a limited amount of bilateral trade. And yet, the progress that has occurred has depended heavily on the impetus provided by ESMAP- ADB support. There was no movement towards regional power trade prior to their involvement and apparently nothing. that would have initiated that movement in their absence. ' ' ' Paradoxically, therefore, ESMAP's 1 Mekong project has been much more successful than its Southern African one • In the Mekong region, ESMAP's joint involvement with. ADB appears . clearly _to have made a difference. Without that involvement, the inovementtowards regional power trade probably would not exist; with it, there appears to be a reasonable prospect that the movement will - eventually - be. successful. In Southern Africa, on the othe~ hand, it is likely that SAPP would have begun operation around 1999 even without any support from ESMAP. · That support may . have been useful, but if so, its usefulness probably was only at the margin. West Africa perhaps resembles the Mekong: there is little to suggest that the development of regional power trade institutions would have begun without support from ESMAP and US AID, and the long-run prospects for that development still are uncertain. In both the Nile Basin and South America, on the other hand, ESMAP's contribution ha.s been very useful. However, the movement towards power trade in those regions has not been solely a creation of that contribution, and the success of that movement seems, if · ·. perhaps not absolutely certain, at leas~ highly likely. · 60 '': .... Lying Behind these differences in the relationship between ESMAP support and the success of regional power trade ·is an important distinction in the nature of the role played by ESMAP: For present purposes, the specific roles played by ESMAP noted' in the· preceding section can be divided info two categories. In one category, the inputs provided by ES MAP. can largely determine the outc01p.e of the activity it supports; in the other, they cannot. An example of the first category is support for a survey of existing regional ·opportunities for cross-border trade. If the funding is adequate and the firm selected to conduct the survey is competent, a useful survey should be almost certain. _A short ·cours_e for the participating national utilities' technical staff generally would also fall into this category. The prime example of the second category is the promotion of art effective political consensus in favor of regional power trade. In some regions this may not be necessary. In others, it may be the most important activity undertaken by ESMAP. Yet no possible input by ESMAP can guarantee that the consensus will be created or -sustained; )- This distinction is closely related to the definition of ESMAP'_s agenda, discussed above. The existence of effective political support :for regional power trade means that the tasks requiring support from ESMAP are likely to fall under the first of the two categories. _It also means that efforts to develop regional power trade are likely to be SUCCySSful. Where effective political support ·does not already exist, or its continued existence is uncertain, the creation and maintenance of that support may become the.most important element in ESMA.P's role, but even with ESMAP support, long-run success is , likely to be uncertain. . Figure 1: Political Support and Institutional DevelQpment Regional Institutional Development High ... tow Strong S. Africa Political Support .t Mekong Weak Figure 1 offers a fnimeworkfor thinking about the importance of political support and institutional development and their implications for ESMAP's role. In the figure, Southern Africa stands well up into the northwest quadrant. Regional political support was strorig, and SADC provided a well-developed regional institution that already had ·created subordinate institutions dealing specifically with regional power issues. Within the framework of SADC; the process of creating a regional power pool was well advanced by the time the Bank be~ame involved. · 61 ' The tasks that remained, such as providing technical support for the power pool's control center, fell under the first of the categories described above. In another setting, ESMAP might have performed an important role in supporting those tasks. · In the Southern African setting, the tasks evidently received adequate support from other institUtions. The workshop on project financing that ESMAP did support may have been useful, but it could not be regarded as central to the purpose of creating a functioning power pool. · · The Mekong region is located at the opposite comer of the figure. · there is no , evidence of high-level political support for regional power trade during the early years of the ESMAP project, and there still is no evidence of strong support today. The early attitude appears to have been more one of acquiescence than of support. Even today, notwithstanding the February 2000 statement of policy, power trade app~ars to rank below a number of other 'activities within the· area of regional economic cooperation and integration. 98 - · . Regional power trade institutions also are less well developed for the- Mekong ·than for the other regions. 99 The OMS Ministerial Conference meets annually but appears to have no institutional existence between meetings and to have created ·no standing institutions. For the implementation of its decisions, it.relies on another ad hoc -·body, the Senior Officials' Meeting. There is, moreover, no formal institutional link between the Ministerial Conference and Senior Officials'-Meeting on one hand and the 100 Electric Power Forum and Regional Experts Group on the other. The result has been very slow progress. The slow pace may initially have been due to the need to create institutions - the Electric Power Forum and Regional Experts Group - and to conduct studies.· Now it appears to be due to the lack of a strong drive towards regional power trade at the highest political levels. The problem now may not be so much one of overcoming political opposition as of keeping regional power trade on the· · active political agenda, and this task is made the more difficult by the lack of a body such as a Ministerial Conference electric power sub-committee that would haye both a vested organizational interest in power trade and the ability to take effective action in support of that interest. A major role for ESMAP and the ADB appears now to be, in effect, to serve as a substitUte for such a body. The commitment of resources required by that role is not large, but it is continuing. The role is likely to end only when it can be passed to a 98 On ADB's website, "GMS updates" gives accounts of periodic meetings of the GMS Ministerial Conference and Senior Officials' Meetings. Activities of regional economic cooperation and integration appear always to be on the agenda, but in most of the meetings,' regional power trade has - not been included in the activities discussed - or at least has not been included in the activities that the ADB considered important enough to include in its accounts of the meetings. · ASEAN institutions are better developed. How~ver, China is part of the Mekong region but not part of 99 ASEAN, and in t~e area of power· trade, the Bank and ADB have worke.d through the Mekong institutional structure. - 100 This point is discussed further in the following section. 62 regional body that has both the interest and the necessary influence to maintain progress towards regional power trade. · ' the other. three regions would fall somewhere between If placed in the figure, Southern Africa and the Mekong. In Mercosur and CIER, South America started with · regional institutions that were different from those of Southern Africa but at least equally well developed. Neither the Nile Basin nor West Africa began with such institutions .. The Nile Basin Initiative has crea.ted strong institutions, but successful institution building in that region has been at least partly due to NBI's unique character. Regional power trade is only one part of its broader program. That program carries a political . weight much· greater than could be expected for a regional power trade project alone. ·One of the consequences of that importance has been the creation of high-level regional _institutions to support the initiative. . · . Regional power trade institutions also have been created for West Africa. They appear still to be less well developed than those of Southern Africa or the Nile Basin. Unlike the GMS Ministerial Conference, however, ECO WAS has a permanent secretariat and has involved itself in the regional power trade project from an early point. It appears · · that continued development of those institutions and, more importantly, the maintenance · of political support for regional power trade may be more dependent on continued outside support in w_est Africa than in South America or the Nile Basin. ~Where the other regions outside the Mekong appear principally to differ from, Southern Africa is in the political commitm.ent to regional power trade. It is not that commitment is lacking. In Southern Africa, however, the strength and focus of the comffiitment had placed the region on the path to ·regional power trade even before the Bank become involved in the process; This did not occur in any other region. 3. The Significance of Close Links to Ministerial-Level Regional Body · A third lesson to be drawn from ES MAP' s experience concerns· the significance of formal links between the project and a ministerial-level regional body. An explicit coru1ection exists for the Southern African, Nile Basin and West African projects. For all three of these projects, it is possible to draw an organization chart with lines leading from the project to the regional political body, and the record of events indicates that these links. have more than a paper existence. 101 The· existing structure of CIER probably provides an effective link between the project and the regional' national governments in the case of South America. · No such links appear to exist for the Mekong project. At the project level, there is an Electricity Power Forum and a Regional Experts Group. At the regional level, there is the GMS Ministerial Conference and the Senior OffiCials' Meeting. So far as appears, there is no formal organizational link between the project-level organizations and the 101 Formal links appear also to be lackingl for the South America project. Because of the existing J Mercosur agreements, however, this appears not to be a significant problem for that project. See note 60 above. 63 I , regional-level ones. There are, for example, no references to a power trade sub- committee of the Ministerial Conference or Senior Officials' Meeting. As the Mekong project illustrates, progress towards regional power trade is possible without a close link to a high-level regional body. '.As the Mekong project also illustrates, however, that ·progress may be slow and may depend on continuing support from ESMAP or other outside institutions. The relevant question for this evaluation is, was this a shortcoming that might have been corrected? Back-to-office reports and other documents are silent on this point. Possibly the silence implies that no thought was given to the problem, or the matter may have been considered but the Bank and ADB staff involved with the project inay have concluded that efforts in that direction would be futile. It also is possible that the project's isolation from any high-level regional body was at least partly a by-product of the Bank's decision to give the ADB the lead in overall Mekong region activities 102 . Whatever the reason, the isolation appears to have carried a cost at least in terms of the rate of progress. 102 See. Babson, cited above note 74. 64 · Conclusion The preceding discussion has implications both for the selection of regional power trade projects to be supported by ESMAP and for the evaluation of ESMAP's performance in that support. 1. Project Selection , ' ' Two cri~eria appear to be appropriate for the .selectio.n of projects:· that there be reasonable prospects for the successful' development of power trade in the region, and thatESMAP be able to i;na~e a significant contribution to that development .· ' The Southern African project 'probably fails the ·second criterion. It is understandable that ES MAP. agreed to support regional power trade in Southern Africa. At the time, no other regional power trade project was in prospect. For ESMAP, rejecting Southern Africa could have appeared tantamount to turning its back on a potentially important area of developing country activity. That, however, is a one-time rationale. A prospect similar to Southern Africa is unlikely ever to present itself again. If it did, however, ESMAP probably should give it at best a low priority in allocating its resources. The Southern African Power Pool almost certainly would have begun operation without ESMAP. · ESMAP's support for a workshqp on project financing may have had some value, and the use of that workshop to identify issues probably added to its value. In a small program with a limited budget, however, it is questionable whether those sorts of marginal benefits are enough to justify a commitment. In contrast to Southern Africa, there is littie doubt that ESMAP's Mekong project has had a significant impact. It is likely that there would have been no movement towards regional power trade in the Mekong without the joint efforts of ADB and ESMAP. If there is a question about the se!ection of the Mekong project, it.concerns the first criterion: that there be a reasonable prospect of success. To date, the activity of ESMAP and· the AD$ in.the Mekong region has yielded no concrete result and there -is no assurance that it will ever do so; Moreover, the basic · problem - a lack of strong regional political support - was obvious at the time and was at least implicitly noted in a back-to-office report. 103 Quite possibly it was. not realized at ' ' ' the time just how much of an obstacle that lack of strong support would be: at the time, ESMAP's only experience with regiQnal power trade was with .Southern Africa. Nevertheless, if ESMAP had used the existence of strong political support as a screening factor in assessing proposed regional power trade projects, the Mekong project would have been rejected. · · That probably would have been a mistake. ESMAP cannot operate effectively in the face of strong political opposition, but it can operate in the face of something 103 Back-to-office report, March 21~ 1997, on February 22-March 17, 1997 visits to Thailand, Lao PDR, China, Vietn~ and' Cambodia. 65 approaching. benign political indifference. Jhe lack of strong. political support means that progress is slower, and it may mean that ESMAP support must coritinue for a number of ' years. It may even mean that in the end regional power trade will not develop. However, to require certainty of success appears inconsistent with ESMAP's mission of supporting reform in developing countries' energy sector. What should be· required is that the support be a gamble at decent odds: that the. cost of the support be compiensurate with the potential benefits and the likelihood of achieving them. The Mekong project appears to satisfy that standard. It appears likely that regional power trade ultimately will develop, .and the potential benefits if it does so will be substantial. On the other side, although the ESMAP project now has continued for nearly seven years, the cumulative ·commitment of ESMAP resources does not appear to be very large. 2. Project Evaluation The distinction between the two categories of activity supported by ESMAP . discussed above is relevantto an evaluation of ESMAP's performance. If the success of an activity is largely determined by the input supplied by ESMAP, it is reasonable to judge ESMAP's p~rformance by the success or failure of the activity. Of course, such a judgment requires th~t one know whether the activity has in fact succeeded or failed. For workshops and training, that is not possible at this point because ·the documents that would form the basis for such a judgment are lacking. However, the means for remedying that problem are straightforward and were noted earlier. Evaluating ESMAP's performance in promoting effective political support for regional power trade presents a different kind of problem. Even with better documentation, the ·kind of relatively mechanical evaluation procedure that can be used for training programs is not suitable for ESMAP's more political role. · For the latter evaluation, there appear to be two broad alternatives. One is to evaluate one or more projects based on extensive interviews with persons involved, both at the Bank and in the region. Such an evaluatio.n would be relatively costly but could produce reslilts that are firmly grounded.and nuanced. The other altemati~e is something like the present report: an evaluation based on documents supplemented by discussions with a limited number of people.· It is to be hoped that any future evaluation would be able to ·drawn on more complete documents. However, it appears unlikely that additional documents would change the general conclusions that, in the consultant's vfow, can be drawn from those that have been available for this report. Those conclusions are: (1) ESMAP' s involvement in Southern Africa probably was a mistake, but one that was understandable under the circumstances. (2) ESMAP's flexibility in providing funds for meetings, reports and training has made a useful contribution in South America and the Nile Basin. 66 (3) The combined contribution of ESMAP and the ADB has been essential to progress in the Mekong region. (4) ESMAP's role in West Africa may ultimately resemble its role in. the Mekong, but it is too early to assess ESMAP's contribution in the West Africa region. 67 Appendix 1: Terms of Reference for Evaluation of ESMAP's J Trade Portfolio · General Jn some countries international trade has been going on for a long time and in recent years developed further to cover power pools to facilitate such trade into a fully commercial ·business. Evaluations ofsuch trading arrangements are however seldom specially when ,it comes to access, urban development and poverty alleviation. .ESMAP has supported a number of such projects and TAG has recommended that an evaluation seems necessary. .The energy sector is being transformed into more competition and privatization and this new environment create new challenges for distribution of gains, profit and governance. ES MAP' s work program is based on seven thematic areas as: I. Energy Sector Policy and Restructuring 2. Linkages between Energy Use and the Enviromrient · 3. Promoting Access to Energy for Rural and peri-urban populations 4. Mainstreaming Renewable Energy Technologies 5. Encouraging More.Energy Efficient Practices 6. Facilitating International Energy Trade · International Energy trade has been an important element in energy policy · in several areas .and has shown to be of increasing importance as sector reforms and restructure are on the agenda . . ESMAP needs special skill, experience and new mechanisms to transform · international trade into a well function tool to fit into the priority areas as: 1. market-oriented sector refomi and restructuring, 2. access to efficient and 'affordable energy by .the un- or under-se!"Ved (totaling more than two billion people), especially those in rural and peri- urban areas, and · 3. environmentally sustainable energy practices Aim Mr. Means and the Technical Advisory Group (TAG), will undertake a review of . ESMAP' s Portfolio of projects related to the International Trade of Energy, that are ' completed, currently underway and in the immediate pipeline. The aim of the evaluation is to investigate the following issues a:pd try to determine if ESMAP has gain enough insights of: 69 • Skill, kriowledge • Experience • Development of necessary mechanisms • Focusing on the right issues, institutions, political processes and the technical content To advice, support and be an active part to promote international Energy Trade to reach one or more of the criteria above. Some critical issues are: • Is this an activity for which ESMAP should have a, comparative advantage? • , If yes, can generic elements be developed in such, a way that results can be transferred to cover special issues as access, urban de".'elopment and poverty alleviation? , • Has ESMAP participation had an impact on other funding and engagement? , Level of Evaluation This study will cover electricity and both bilateral trade on pool option are included. Method Stage 1. Collect a complete list of projects including reports and written documents Interview the T~sk Managers to update· information and make an overview of memos, notes etc. that gi~e insights on the development and progress of the projects Stage 2. Organize the documentations and prepare review for TAG Output' Mr. Means will work closely with the TAG and, assist in completing a summary (maximum 20 pages) of the findings to be presented to the Consultative Grmip and to the ESMAP management. Timing and Logistics The evaluation should be finalized by December 2003. ' 70 Appendix 2: Available Documents This appendix lists documents that have been available for this repoft. The docume.nts are broken down:by project; general documents not limited to a single region appear at ~~ .. I . Within each project, the documents are divided among several categories. The broadest division of categories is between internal Bank documents and externaJ documents. The internal documents consist of back-to-office reports and of what are referred to here as · decision-making documents: documents such as proposals and budgets that would have been part of the process of determining Bank support for· a project. The exte~al documents consist of articles by Bank staff; consultants' reports, workshop. materials and documents obtained from the Internet. · · In ,addition to the available documents, the app~ndix also includes a few potentially useful documents that are not included in the available doctiments but are referenced in other docuri:l~nts. These documents are listed in italics. GREATER MEKONG SUB-REGION 1. Internal Bank Documents · a. Decision-Making Documents ES MAP Activity Proposal. Development of a Regional Electricity Market in the Greater Mekong Sub-region (probably 1996) ESMAP Proposal Form. Regional Electricity Market (probably 1999) ESMAP Concept Document f2003) b. · Back-to-office reports December 18, 1996;· on December 2-11, 1996 visit to Cambodia and December 12-13, 1996 visit to China · March 21, 1997, on February 22~March 17, 1997 visits to Thailand, Lao PDR, China, \ . . Vietnam and Cambqdia · · · · .- July 1, 1998, on June 17"-25, 1998 Workshop on Power Trade Strategy in th:e Greater Mekong Sub-Region December 28, 1998, on December 1-7, 1998 visit to Thailand on ESMAP Energy Efficiency project and December 8-15 visit to Thailand on Power Interconnection in the Mekong Region · 71 . . February 18, 2000, on February 8-11, 2000 Workshop on ~'Coordination of Technical Issues" in Bangkok , February-23, 2000, on February 8-11, 2000 Workshop on "Coordination of Technical · Issues" in Bangkok (apparently identical to February 181h report except for reference to attached workshop program and list of participants) · J~nuary 17, 2002 104, on December 13'.'"19, 2001.meeting of the Greater -Mekong Power Forum and Workshop on "Financing Issues and Role of the Private Sector" (Attachments: Workshop program, list of participants, and .Work Program suggested by Regional Group of Experts for ADB and ESMAP/World Bank support) 2. External Documents a. Workshops Proceedings of workshop on power trade strategy in the Greater Mekong Sub-Region, _ Rose Garden Country Resort, Thailand, June 19-20, 1998 Proceedings of a workshop on development of a regional electricity market in the Greater Mekong Sub-Region. Workshop 1: Coordination or'technical issues., Bangkok, Thailand, February 8-11, 2000 · (2 vols.) (Volume 1 contains the main text; volume 2 contains reports'and presentations from the workshop) · Proceedings. Greater Mekong Sub-region ·development a regional electricity market. Workshop 3. FinanCing issues and role of the private sector. Hanoi, Vietnam, December 17-:19, 2001 b. Other Documents Enrique Crousillat, Developing international. power markets in East Asia, Viewpoint, Note no. 143, May 1998 Power Trade Strategy for the Greater Mekong Sub-Region (Report No. 17033-EA~P, September 1998) · Power Trade Strategy for the Greater Mekong Sub-Region (Report No_ 19067-EAP, March 1999) UNDP/ESMAP, Greater Mekong Sub-Region Development of a Regional Electricity Market. Technical situation of the GMS power systems (consultants report, ·March 2000) Development of a Regional Power Market in the Greater Mekong Sub-Region (GMS) (ESMAP Technical Paper 015, December.2001) 104 , Apparently niisdated as January 17, 2001. 72 Jean-Pierre Charpentier and Enrique Crousillat, Towards the Development o a Regional Power Market in the Greater Mekong Sub::.Region (PowerPoint presentation, apparently mid-2000) · · Compatibility of Regulatory Systems and Pricing Principles in the Grater Mekong Sub- . Region. Final report. to the expert's group on power interconnection and trade {January 2001) Inter-Governmental Agreement on Regional :Power Trade in the Greater Mekong Sub- Region (adopted by Electric Power Forum December 15, 2001} Bradley · 0. Babson, Cross-Border Economic Cooperation in the Mekong Region (October 11, 2002) Market Structure Options for the GMS Market. A First Overview of Issues and Possible Options (October 30, 2002) c. Internet Sources The regional power tracie project appears not to maintain its' own website, but the ADB website includes a section (GMS updates) with accounts of regional integration activities in general. · NILE BASIN 1. Bank Documents a. Decisio~-Making Documents . . . - ESMAP Proposal, Opportunities for International· Power Trade in the Nile River Basin (late 1998?) . ESMAP Work Program Agreement, Opportunities for Power Trade in the Nile Basin_. (February 1999) · \ Workshop on Opportunities for Power Trade ill ·the Nile Bashi. Entebbe, Uganda, . October 1999 105 Proposal to ESMAP. Concept Note for Phase 2: Opportunities for Power Trade in.the Nile Basin (December 3, 1999} .ESMAP Proposal, Opportunities for International ·Power Trade in the Nile Basin- Phase 2(May 2000) 1 5 - ~ This document appears to be part of an, internal Bank document justifying support for a workshop. It describes the planned workshop but does not include any workshop materials. / 73 ESMAP Portfolio Tracking System, Opportunities for International Power Trade in the · Nile River Basin (2002)106 · . b. Back-to ..Office Reports None 2. External Documents a. Workshops No primary docillnents. See proposal for workshop listed above under Bank Decision- Making Documents. ) b. Other Documents Opportunities for Power Trade in the Nile Basin - Final Scoping Study (Norconsult/Statnett? September 2000) Council of Ministers of Water Affairs of the Nile Basin States, Nile Basin Regional Power Trade Project Document (March 2001) International Consortium for Cooperation on the Nile {ICCON), _Nile Basin Initiative. Strategic Action Program Overview (May 2001) c. Internet Sources The Nile Basin Initiative maintains a website (www.nilebasin.org). Under "Sequence of Events", the site lists the major events in the development of the Nile Basin Initiative through April 2002. SOUTH AMERICA · 1. Internal Bank Documents a. Decision-Making Documents UNDP/ESMAP; South America Regional Interconnection of Electricity Markets. Project· · Description. (probably earlier than ESMAP Proposal Form) ESMAP Proposal Fohn, Regional Power Trade in South America (early 1999?) 107 Interconnection of Electricity Markets in South America. Terms of Reference and Scop·e of Services for Mercados Energeticos (Argentina). Identification, comparison and 106 In the document; notes have been added from time to time. The most'recent dated note is for January ~wm. - 107 are two proposal forms, which are generally similar but differ in,some details. Presumably.one . There form superseded the other, but because neither formJs dated, it is not possible to know which is the more recent. 74 critical analysis of. different technical and institutional/regulatory· issues (late 1999?) Interconnection of Electricity Markets in South America. Phase II. Terms of Reference and_Scope of Services for Mercados Energeticos (Argentina). TechJiical and . institutional/regulatory options which could facilitate the development of electricity trade in South America (mid-2000?) · b. · Back-to-Office Reports May 3, 2000, on :April 26-28, 200,0 mission to CIER meeting in Montevideo (paper on. regional power trading and the World Bank Group attached) · June 5, 2000, ~n May 24-25, 2000 mission to CIER meeting in Rio de Janeiro a. Workshops None ( .. b. Other Documents Situation in Latin America (not earlier than February 1998) CIER-ESMAP".'USDOE, Las interconexiones regionales de mercados. electricos, Asuncion, 24 November 1999. CIER-ESMAP"-USDOE, Las interconexiones en America del Sud. Evaluacion de las restricciones a su desarrollo y propuestas para su reduccion, Uruguay, April 26, 2000 . . . CIER-ESMAP-USDOE, Las intei:conexiones en America del Sud. Proyecto CIER-03. Propuestas de desarrollo de la Fase II, Uruguay, April 26, 2000 Mercados Energeticos - PSR - Sigla, Regional Interconnection of Electricity Markets in South America Phase II (May 2000) (proposal of winning consulting fi~) 108 Report does not give separate dates for South American and Mekong parts of the mission. 75 \ Regional Electricity Market Interconnections in South America (Project CIER 03). Phase II: Proposals to Facilitate Increased Energy Exchanges (consultant report, n.d.) Draft summary of first consultant report. related to phase 2 of the ESMAP sponsored study ofCIER (May 2001) . . . Regional electricity markets interconnections - Phase I Identification of issues for the development of regional power markets in South America. (BSMAP Technical Paper 016, Decemper 2001) Regional electricity market interconnections in South America (Project CIER 03). Phase · II: Proposals to facilitate increased energy exchanges. (ESMAP TechnicalPaper 016 109, April 2002) _ . · , . II Taller Internacional de Interconexion Electrica en la Region Andina Cartagena de lndias, Colombia, Junio, 3-5/ 2002 (CIER web site posting) II Taller Internacional de Interconexion Electrica en la Region Andina CIER 2002-06-14 (CIER web.site posting) Proceso de integracion y creacion de mercados regionales en centroamerica y region andina (Documento SECIER CIG&T-06-2002. Medellin. July 19. 2002) C; Internet sources CIER maintains a website that provides summaries of ,CIER-sponsored events such as C()nferences on regional power integration. · SOUTHERN AFRICA 1. Internal Bank Documents a. Decision-Making Documents Proposals to support the Implementation of the Southern African Pow~r Pool (July 1996) 110 . World Bank Africa Regional Office, Project Appraisal Document. Southern African Power Market (June 18, 2001) b. · Back-to-Office Reports December 18, 1996, on November 25-December 1, 1996 meeting with Management Committee of the Southern African Power Pool (SAPP) 109 The December 200 I report and the April 2002 report have the same technical paper number. 110 This is not an ESMAP proposal. It is issued by Power Development, Efficient and Household Fuels Division, Industry and Energy Department and Water, Urban & Energy Division I, Africa Region. 76 2. External Documents a. Workshops , ' Proceedings of the Joint South African Power Pool and World Bank Workshop of Project Finance, Harare, Zimbabwe, May.11-12, 1997 · ' · .. b. Other oo·cuments Interconnection of the Power Systems of Malawi and Mozambique (Swedpower, June 1996/ Southern Africa Sub-Regional Strategy paper, distributed under SecM98-272, dated April 15, 1998111 .- ·. .. . ) . Donal T. O'Leary and Jean..;Pierre Charpentier, Promoting regional power trade - the Southern African Power pool; Viewpoint, Note No. 147 (June 1998) Mosad Elmissiry, The Southern African Power P~ol and· Its Impact on Bill1.ng and Metering (2000, available on ESI Africa website) Modeling Electricity Trade in Southern Africa (2002, available on Purdue University web site) · · Power System Development Study and Operation Study {Lahmeyer International, Knight Piesold, and World Bank, December 1998). U.S. Department' of Energy, Energy·· Information Administration, Southern African Development Community (February 2001, available on EIA website) . SAPP Pool Plan: Report to the Planning Subcommittee by the Generation .Planning . · Working Group (Harare July 2001). USAID Initiative ·fot Southern Africa FY 2002 Congressional Budget Justification Activity Data Sheet (2001, available on US AID website) ESKOM Power Pool Rules, Version 4.0 (March 2002) One-Year Performance of the Short Term Energy Market, April 2001-March 2002 (Dr. .. Lawrence Musabe, Harare, April 2002). · · South African Power Pool Annual Report 2001/2002 (available on SAPP web site) Development of Guidelines (Market Rules) for the Introduction of Independent Power Producers· (IPPs) and Private Service Providers (PSPs) in _the South Africari HI It is not clear from Project Appraisal Document whether this is the date of the document, the date of its distribution, or the date of"SECM98-272" under which it was distributed . .77 Electricity Supply Industry (ESI). Phase 1: Market Design Principles and Concepts. Final Report. (December 13, 2002) Development of Guidelines (Market Rules) for the Introduction of Independent Power · Producers (IPPs) and Private Service Providers (PSPs) in the South African Electricity Supply Industry (ESI). Phase 2: Review of the Eskom Power Pool. . (Draft Report, December 16, 2002) c. Internet sources SAPP maintains a website (www.sapp.co.zw) that posts documents such as annual reports. WEST AFRICA 1. Internal Bank Documents .·a. Decision-Making Documents ESMAP Proposal form. Regional Power Trade in West Africa (May 1999?) West Africa. Development of a Regional Power Pool. Terms of Reference and Scope of Services for Consultant (mid-1999?) Regional El~ctricity Trading in West Africa. ESMAP Work Plan (Revised March 7, 2001). Attached is USAID Draft Technical Assistance Plan 2001-2002) World Bank Africa Regional Office, West Africa Power Market Development Project. Project Concept Document (July 15, 2001) b. Back-to-office reports Jrine 27, 2000, on June 15-16, 2000 meetings in Abidjan October 13, 2000, cm September 25-29, 2000 meetings in Lome, Togo. (WAPP .Memorandum of Understanding attached) July 25, 2001 on July 16-20, 2001 meeting with Institutional Working Group in Abidjan (Terms of Reference for consultant and comments by consultant attached) 2. External· Documents a. Workshops None. 78 b. Other Documents -Daniel J. Plunkett, Policy Challenges· in the West Africa Electricity Project, African Economic Policy Discussion Paper Number 38 May 2001 Regional Integration Assistance Strategy for West Africa (Report No. 22520-AFR, July 11, 2001) . . · c. Internet sources ECOWAS maintains a website, but it _appears to contain no references to regional power trade. GENERAL DOCUMENTS Memorandum from Robert Sadove, Senior Advisor, EGY, to Yves Rovani, Director, . · EGY, April 17~ 1985. Subject: Review of Energy Assessments and ESMAP ESMAP Annual Report (April 1987) ~ ESMAP in the Nineteen-Nineties. The. Findings of the Commission to Review ESMAP (October 1990) ESMAP Work Program 1992-1993. Part IL Country Summaries (09tober 1991) ESMAP. A Briefing Note (September 1~?2) ESMAP Annual Report 1992(October1992) ESMAP Annual Report 1993 ., ESMAP Consultative Group Meeting. World Bank, Washington, D.C.. April 15, 1994. · Proceedings. ESMAP Annual Report 1994 UNDP/ESMAP, Development ofregional electric power markets (October 1994) ESMAP Annual Report 1995 ·J.P. Charp.entier and K. Schenk, International pow:erinterconnections, Viewpoint March 1995 UNDP/ESMAP, impact of power sector reforms on international electricity trade, vol. 1 · (Main Report) (January 1996) UNDP/ESMAP, Impact of power sector reforms on international electricity trade, vol. 2 (Annexes: Case Studies) (January 1996). \ , 79 ESMAP; Status of Ongoing Activities as of March 31, 1996 (April 1996) ESMAP 1996 Annual Report ESMAP Agenda. Work Program and Budget for 1997 (April 17, 1997) ·ES MAP, Activity Proposals (March 1997) , ESMAP, Status of Ongoing Activities as of March 31, 1997 (April 1997) ES MAP, Status of Ongoing Activities as of September.JO, 1997 (October 1997) ESMAP, Status of Ongoing ESMAP Activities as of September 30, 1997 (November1997)· ESMAP, Status of Ongoing ESMAP Activities as of September 30, 1997. (Novemberl991) . ESMAP, Status of Ongoing ESMAP Activities as of December 31, 1997 (February 1998) ESMAP 1997 Annual Report ESMAP, Status of Ongoing ESMAP Activities as of May 31, 1998 (June 1998) (revised) ESMAP, Energy and Development Re.port 2000 (April 2000) World Bank Institute, How to Develop Regional Power Market. A Two-Day Training Course (Washington, D.C., April 17-18, 2000) Handbook on Regional Electricity Trade. Per June 27, 2000 back-to-office. report; the handbook is being prepared by the E7 and a first draft is available upon request. World Bank, Toward a Systematic Approach to Regional Integration (Feb. 14, 2001 ESMAP ,. Annual Report 2000.:.2001 ESMAP Business Plan 2002-2004 (April 2002) ·General.Documents with No Date Reference Jean-Pierre Charpentier, Regional Power Markets .. From Dream to Reality (1999 or later)· (attached annexes briefly describe regional power projeets except Nile Basin) Fiona Woolf, Regional Trading Issues (PowerPoint, 10 pp., no conference reference) 80 . Appendix 3: Persons Contacted 'This report is based primarily on documents, but a number of individuals have provided valuable information that has supplemented the documents and provided insights into them: Jim Barker, Consultant . Jean-Pierre Charpentier, World Bank Dominique Lallement, World Bank Barbara A. Miller, World Bank. Diane Minogue, Consultant Jan Moen, Technfoal,Advisory Group Alexandra Planas, World Bank Kazim Saeed, World Bank / Ramon Sanz, Consultant There are two notable omissions from the list of contacts. It proved not to be possible to establish contact with the World Bank staff that are currently involved with the South American and West African projects. As a result of this, and of the lack of very .I recent documents, the most recent events discussed in the sections on th~se projects are now more than a year in the past. ' ( 81 Appendix 4: Appendix to ESMAP's Management Reponse: Presentations at the World Bank informal workshop of January 21, 2004 · \ Regional Electricity Market Integration in South America,) (by Nelson DeFranco) 1.- Introduction -I The Project Regional Interconnection of Power Markets in South America has , the general objective of identifying issues .and to develop proposals of regulatory guidelines and i~stitutional arrangements related to technical and commercial aspects that would facilitate the in~rease of regional energy trade ·in South America. It was designed to be carried out in 3 phases under the support of ESMAP and coordination of CIER-Comisi6n de lntegraci6n Energetica Regional (South America Regional ·Commission for Energy Integration) · in collaboration witb the US Department of Energy and the World Bank. The first of two phases of the project were completed in May 2000 and April 2002 a,nd published as ESMAP Technical Paper 016. Phase 1 studied the technical, regulatory and institutional barriers to regional energy trade, f whereas phase II defined proposals for overcoming such barriers and providing · guidelines for the incentive of interconnections. . ,, , Phase III has the objective of implementing some_ regulatory and structural options to improve the South American electrical integration recommended during phase II. . Previous studies undertaken by CIER 112 have determined that the regional electric integration yields an important increase in the efficiency of generation, due to the hydroelectrfo and hydro-thermoelectric complementarities, hourlyl load diversity . and seasonal complementarity. Furthermore it allows an important saving in the :capacity required to ensure the supply of the demand under conditions of severe drought, to meet system maximum requirements, and to face emergency situations. Teserves in.the region are usually high and have often exceeded 40% of the required maximum demand. As most countries in the region are highly dependent on hydroelectricity, the region therefore can .obtain large benefits with its integration. These studies have shown that the econrn;nic value of integration is equivalent to the reduction of over 6,000 ·MW of installed capacity in the region, namely some US$ 6 to 9 billion when considering the benchmarks of US$1,000 to_ l,500/Kw of a competitive hydro capable of producing firm energy at the system load factor. From· an environment point of view, the reduction of capacity requirements that would otherwise come in part from natural gas-fired generation and the possibility of considerably reducing or even phasing out production of some existing coal-: and oil-fired generation would bring benefits in terms ofreduction of NOx, SOx andGHG. 112 Project CIER 02: 'wholesale Markets and Interconnections, which preceded the ESMAP- spcinsored Regional Interconnections ofPower Markets in South America study (Phase I and 11) 83 The promotion of energy integration in South America is therefore a high priority activity. _ It reduces the amount of investments required to sustain its · development, increase the productivity of the capital stock and thus its return, mobilizes the resources in a productive manner and reduces risks. It also helps mitigate price volatility and generate suitable conditions for new investments. Energy interconnection is taking place in the region, despite the regulatory and institutional barriers to trade and diverse regulations in the countries. The regulatory response of the countries has been to considt:r in each national market the export or the import as a demand or generation belonging to that market itself. This approach permits to keep the organization and the efficiency of each market under a trade scheme associated to its national characteristic, however it lets forgo the potential efficiency gains from a larger integration, in terms of short term exchanges (spot transactions), complpmentary (ancillary) services, transits among markets, and capacity support to name a few reasons. Ali this notwithstanding, in a first level of integration, efficiency gains can be obtained to warrant some interconnections, utilfzing such regulatory response. Along this line, it Is worth mentioning the existence of the agreements amohg _the countries of the Southern Cone and the Andean sub-region, which provide the foundations upon which the integration process can be furthered. Also some· important interconnections have been built. Some recent examples are the 2,000 MW, 500kV link between Argentina and South Brazil and the 260 MW, 230 kV link between Ecuador and Colombia. However, as the exchanges increase, it is necessary to better organize the market of such exchanges. It is not feasible to develop efficient regional transactions, . if the transactions must be submitted to different, and often restrictive, requirements irreach of the interconnected markets and, principally, it is not feasible to develop the required interconnections, when the private sector is supposed. to promote them, if those transactions are constrained and their benefits can't be captured by the investor. The studies already undertaken consider that, under _the regulatory environment existing in the region, the sector integration among countries will be preferentially p~omoted by the private sector, since .it does not have borders and will pursue profitable opportunities allowed by such regulations. Under the existing rules, · _or with minimum agreements towards convergence, an integration driven by the private sector in both the electric and the gas sectors will exist. However it does not reach the optimum level and does not resolve adequately the following issues:_ , • Inefficiencies due to asymmetries between countries • Low level of optimization of the complementarities of the electric sectors • Administrative requirements constraining system transactions . when opportunities arise for ancillary services • Higher regulatory risks for the investors because: i) many of the benefits are measured as differences between these markets and then a small change· in the_ rules of one country could be critical and its risk affects the business being developed; and 84 ii) rise of forces against export; when. the price for domestic consumption increases in the export market 2. The Proposed Phase Ill Objectives Considering the issues identified in the first two phases, a suitable proposal for Phase III would require not only to adapt the national characteristics to the new · structure of the national market affected by the interconnections~· but· also to organize the regional energy market, in order to achieve efficiency levels similar to those . obtained at the national ievel. · Because of that, Phase II in particular developed guidelines for the required regulations' and the necessary institutional framework in each characteristic zone and for each bilateral exchange. On the basis of these conclusions and recommendations it . is highly , desirable· and timely to design and- implement the I. activities needed for applying these recommendations on selected projects of the region. Consequently, the proposed Phase III will cover: ' ' ' ' i) Instruments for the effective implementation of bilateral trade· between countries of the Andean regibn; ii) Instruments for the effective. implementation of a regional electric market betw~en countries already interconnected in the ·Mercosur area. · · For the bilateral exchanges, the proposal should take into account that the ultimate objective is the formation of a regional electric market, sci that the rules to be established for the bilateral trade should allow .a suitable transition towards a multilateral market. 3. Scope of the Phase Ill Activities The scope of the activities to be developed under the envisaged Phase Ill .can be described by the following tasks: .3.1 nstruments for the effective implementation of bilateral interconnections and trade between countries of the Andean Region · This task will compi::ise: a) Adjustments to the national regulations to facilitate the implementation of bilateral trade. a.1) Prepare proposals- to the govemmerits, and sector enterprises c0nceming the adjustments to the national regulations necessary to facilitate t~e energy trade.in spot operations and firm contracts. The criteria to be used, in line with .the studies already done, will contemplate: 85 ·• To facilitate international spot exchanges without constraints, that · result in cost savings for the trading countries; _ e No discrimination against agedts of the countries i~volved; • Reciprocity among countries; • Respect to the contracts in accordance with the norms of each country; • Coordination of the system dispatches of the co·untries to achieve the economic operation of the whole; •. Open access to available transmission capacity; and . • Respect to the general criteria of operational security, and quality and . reliability of service agreed to under each bilateral arrangement. · a.2) Prepare an action plan for each country for the adjustment of the principle.s and regulatory norms currently in force, so that they accept or provide incentive, as the case may be, for the execution of interconnection investments, spot transactions and firm contracts. This action plan will describe the modifications needed in the current dispositions that are incompatible with the expressed market principles, while seeking to minimize the impact on the existing regulations that conform to the peculiarities of the institutions and system of each country and do not oppose those principle.. b) Interconnection agreements b. f) Prepare proposals to the governments concerning interconnection agreements on a bilateral level, that render feasible firm · , interconnections as well as spot trade and firm contracts, among the countries; or proposals. 3.2 Instruments for the effective implementation of a regional electric market between interconnected countries of the MERCOSUR Region such as Chile, Argentina and Brazil This task will comprise: a) Proposal for a regional electric market Prepare a proposal to the governments concerning a regio.nal electricity market organization, elaborating Terms of Reference, the. planning of the activities and budget required for the instrumentation of the regulation and the. institutional set-up required in the region. The underlining criterion will be .that the implementation of such market takes place with the minimum interference and modifications in the remaining mechanisms and regulatory dispositions in force in the countries, respecting the singularities of the systems and institutions that do not interfere in the mtiltifateral trade. In particular, the following will be contemplated: 86 • Preparation of a draft .agreement of a multilateral regional electric integration that complements or r!!places existing bilateral memoranda of understanding and joint declarations among the countries. • Preparation of a draft memorandum of understanding. that defines the objectives and scope, and functions of the following agencies of a regional market to be created. ' o · Coordinating Commission for Regional Regulation (CRR) o ·Coordinating Commission for Regional Operation (CRO) o Coordinating Commission for the Commercial management of . the Regional Market (CMM) • Preparation of the Terms. of Reference of a project for the design of a regional electric · market, the organizational structure, governance, coordination means of regional market agencies and its budget arid a implementation plan, with degree of detail that is compatible with its · use by the country authorities and sector enterprises as a basis of discussion for achieving conclusions and that also permits to move towards to the preparation of the respective operating procedures. b) Agenda and schedule for implementation of the regional electric market. ·. b.1) Prepare a proposal to the governments, containing an agenda and a . schedule for the implementation of the regional electric market. · It should carefully reflect the requirements and estimate the time for achieving coverage in regulatory matters; and accordingly establish the phases of a transition .process from the existing regulations based on bilateral trade into the multilateral trade. 87 •' Evaluation of ESMAP Regional Power Trade Portfolio-Phase II Final Report - Part 11-8 (by Robert Means) . . . B. The Role of ESMAP in Promoting Regional Power Trade The lessons that can be drawn in this report regarding ESMAP's role in promoting ·regional power trade of necessity are concerned with the broad structural features of ESMAP's support. It is not possible, for example, to assess whether progress in a certain region.would have been faster if workshops had been conducted differently or Bank missions had conferred with different persons. Possibly conclusions on some of these issues could have drawn if inore documents had been available. Principally, however, issues such as these would require a different kind of study, one based in part on extensive interviews with persons within and outside the Bank. 1 · · At the broader level, three lessons emerge from the presei;it study. These · concern: (1) The role of regional institutional and technical development in determining ES MAP' s agenda; (2) The importance of political support and institutional development; and (3) The significance of close links between the ESMAP project and a ministerial-level regional body. These lessons are ·discussed in the following three sections. 1. Regional Development and the ESMAP Agenda A full agenda for ESMAP support of regional power trade would include at least the following activities: (I) Studies of institutions and of opportunities for trade. (2) Creation of technical and/or policy-oriented bodies specifically concerned with regional power trade. (3) Training for regional personnel. . (4) Creation and maintenance of effective political support for regional trade. A recent. example is Babson's study of cross-border economic cooperation in the Mekong region, cited above note 75. The present consultant has benefited greatly from discussions with a number of persons, which have served to place documents in context and to fill in gaps where the documents are silent. However, it has not been possible to fest the views expressed in these discussions against the views of a .broader range of persons, including officials _in the five regions. For this reason, the conclusions of this report generally have been limited to ones that receive at least some support from the documentary record. 88 (5) Preparation of an intergovernmental agreement. Regional institutional and technical development may affect that agenjfa in two ways. First, ESMAP support for some activities may not be ·needed because the activities ·already have been completed or are adequately supported by existing institutions. ESMAP's actual agenda in South America mid Southern Africa has been much briefer than the full agenda listed above. In South America, CIER already provided a well- established regional technical body, and the existing agreements for economidntegration among the Mercosur countries apparently made an intergovernmental agreement - unn~cessacy. Those agreements probably also evidenced politicai support at least. for economic iritegration in general. ESMAP support in. South America therefore appears to · have been largely limited to the first item Off the agenda: studies of institutions and trade 1 opportunities: ESMAP's involveirent with Southern Africa was even more narrowly focused. This was partly because its· involvement before a .well-defined agenda could be developed. Even if its involvement had been longer, however, it is likely that· the prin.cipal and perhaps the only item on its agenda would have been support for the new Coordination Center. · The second potential effect of local conditions arises where there are wide disparities in the· deve_lopment ·of the region's .national power systems. Such disparities exist in Southern Africa and the Me_kong region, and in both regions,, an additional item on ESMAP's agenda has. been to assure the countries with less developedrpower systems . that the benefits of power trade would be equitably shared. 2. The Implications of Political Support and Institutional Development It is important to distinguish the success and importance of ESMAP's role in promoting the development of regional power trade from the success of that '- development. The importance of this distinction may be seen by comparing. the development of regional power trade in Southern Africa and in the Mekong River Subregion. -The Southern African Power Pool (SAPP) is the only functioning power pool outside (jf Europe and North America. Iii the other four regions supported by ESMAP, trade has not moved beyond long-term bilateral sales, and in s9me regions even that trade is very limited in volume and scope. In Southern Africa, trading through the power pool began in 1999 and since then has been expanded to include short,.term and hom-ahead sales. Within the universe of developing country power trade, SAPP must be colinted as the outstanding success. Yet ESMAP support has made at most only a marginal contribution to .that success. · Southern.Africa contrasts sharply with the Mekong region. The Mekong is the oldest of the still-active regional projects. ESMAP has been involved with promoting power. trade in the region since 1996. After nearly seven years, however; cross-border trade still has not moved beyond a limited amount of bilateral trade. And yet, the progress that has 89 ,,.-_ occurred has depenped heavily on the impetus provided by ESMAP-ADB support. There was no movement towards regional power trade prior .to their involvement and apparently nothing that would have initiated that movement in their absence. Paradoxically, therefore, ESMAP's Mekong project has been much more successful than its Southern African one. In the Mekop.g region, ESMAP's joint involvement with ADB appears clearly to · have maqe a difference. Without that involvement, the movement towards regional·power trade probably would not exist; with it, there appears to be a reasonable prospect that the movement will ,_..eventually - be successful. In Southern Africa, on the other hand, it is likely that SAPP would have begun operation around 1999 even without any support from ESMAP. That support may have been· useful, but if so, its usefulness probably was only at the margin. · · West Africa perhaps resembles the Mekong: there is little to suggest that the · development of regional power trade institutions would have begu'n without support from ESMAP and US AID, andthe long-run prospects for that development still are uncertain. In both the Nile Basin and South America, on the other hand, ESMAP's contribution has been very useful. However, the movement towards,power trade in those regions has not been solely a creation of that contribution, and the success of that movement seems, if perhaps not absolutely certain, at least highly likely. Lying behind these differences in the relationship between ESMAP support and the success of regional power trade is an important distinction in the nature of the role played by ESMAP. For present purposes, the specific roles played by ESMAP noted .in the preceding section can be divided into two categories. In one category, the inputs provided by ESMAP can largely determine the outcome of the activity it supports; in the other, they cannot. An · example of the first category is support for a survey of existing regional opportunities for cross-border trade. If the funding is adequate and the firm selected to conduct the survey is competent, a useful survey should be almost certain. A short course for the participating national utilities' technical staff generally would also fall into . this category. . . Tlie prime example of the second category is the promotion of an effective political consensus in favor of regional power trade. In some regions this may not be necessary. In others, it may be the most important activity undertaken by ESMAP. Yet m possible input by ESMAP ·can guarantee that the consensus will be created or sustained. This distinction is closely related to the definition of ESMAP's agenda, ·discussed above. The existence' of effective political support for regional power trade means that the tasks requiring support from ESMAP are likely to fall under the first of the two categories. It also means that efforts to develop regional power trade are likely to be successful. Where effective political support does not already exist, or its continued 1 existence is uncertain, the creation and maintenance of that support may become the most 90 importaµt element in ESMAP's role, but even with ESMAP support, long-run success is likely to be uncertain. Figure 1 Political Support and Institutional Development Regional Institutional Development Strong High . bow S. Africa Political Support· t Weak Mekong figure 1 offers a framework for thinking about. the importance of political support and institutional development and their implications for ESMAP's role. In the figure, Southern Africa stands w:ell up into the northwest quadrant. Regional political support was strong, and SADC provided a well-developed regional institution that already had created subordinate institutions dealing speCifically with regional power issues. Within the framework of SADC, the process of creating a regional power pool was well advanced by the time the Bank became involved~ The tasks that remained, such as providing technical support for the power pool's control center, fell under the first of the categories described above. In another setting, ESMAP might have performed an important role in supporting those tasks. In the Southern African. setting, the tasks evidently received adequate support from other institutions. The worksmp on project financing that ESMAP did support may have been useful, but it could not be regarded as Central to the purpose of creating a functioning powerpool. · The Mekong region is located at the opposite comer of the figure. There is no evidence of high-level political1support for regional power trade during the early years of, the ESMAP project,. and there still is no evidence of strong support today. The early attitude appears to have been more one of acquiescence than of support. Even today, notwithstanding the February 2000. statement of policy, power trade .appears to rank below ti number of other activities within the area of regional economic cooperation and integration. 2 · Regional power trade institutions also are ·less well developed for the Mekong than for the other regions. 3 The GMS Ministerial Conference meets annually but appears to 2 On ADB's website, "GMS updates" gives accounts of periodic meetings of the GMS Ministerial Conference and Senior Officials' Meetings. Activities of regional economic cooperation and integration appear always to be on the agenda, but in most of the meetings, regional power trade has not been included in the activities discussed - or at least has not been included in the activities that the ADB considered important enough to include in its accounts of the J=~ 3 " . ' ASEAN institutions are better developed. However, China is part of the Mekong region but not part of ASEA1'j, and in the area of.power trade, the Bank and ADB have worked through the Mekong institutional structure. 91 have no institutional existence between meetings and to have created no standing ·i institutions. For the impiementation of its decisions, it relies on another ad h)c body, the Senior Officials., Meeting. There is, moreover, no formal institutional lillk between the Ministerial Conference and Senior Officials' Meeting on one hand and the Electric Power Forum and Regional Experts Group on the other. 4 The result has been very slow progress. .The slow pace may initjally have been due to the need to create institutions - the Electric Power Forum and Regional Experts Group - and to conduct studies. Now it appears to be due to the lack Of a strong drive towards regional power trade at the· highest political levels. The problem now may not be so much one of overcoming political opposition as of keeping regional power trade on the active political agenda, and this task is made the more difficult by the lack of a body such l:!-S a Ministerial Conference electric power sub-committee that would have both a vested organizational interest in power trade and the ability to take effective action in support of ! that interest. · A major role for ESMAP and the ADB appears now to be, in effect, to serve as a substitute for such a body. The commitment of resources required by that role is not large, but it is continuing. The role is likely to end only when it can be passed to a regional body that has both the interest and the necessary influence to maintain progress towards regional power trade. · If placed in the figure, the other three regions .would fall somewhere between Southern Africa and the Mekong. In Mercosur and CIER,. South America started with regional institutions that were di,fferent from those-of Southern Africa but at least equally well developed. Neither the Nile Basin nor West Africa began with such institutions. The Nile Basin Initiative has created strong institutions, but successful· institution building in that region has been at least partly due to NBI's unique characteL Regional power trade is only one part Of its broader program. That program carries a political weight much greater than could be expected for a regional power trade project alone. One. of the consequences of that importance has been the creation of high- level regional institutions to support the initiative. . ' Regional power trade institutions · also have been created for West Africa. They appear still to be less well developed than those of Southern Africa or the Nile Basin. Unlike the GMS Ministerial Conference, however, ECOWAS has a permanent secretariat and has involved itself in the regional power trade project from an early point. It app~ars that continued development of those institutions and, more importantly, the maintenance of political support for regional power trade may be more dependent on continued outside support in West Africa than in South America or the Nile Basin. Where the other regions outside · the .Mekong ·appear principally to differ from . Southern Africa is in the political commitment to regional power trade. It is not that corilrn.itment is lacking. In Southern Africa, however, the strength and focus of the . 4 This point is discussed further in the following section. . · ' 92 . coffimitment had placed the region on the path to regional power trade even before the . Bank become involved .in the process. This· did not occur in any other region. -3. The Significance of Close Links to Ministerial-Level Regional Body A third lesson to be drawn from ESivlAP's experience concerns the significance of formal links between tre project and a ministerial-level regional body. An explicit - connection exists for the Southern African, Nile Basin and West African projects. For all .three of these proje~t~, it is possible to &aw an organization chart with lines leading from the project to the regional political body, and the record of events indicates that these links have more than a paper existence. 5 The existing structure of CIER probably , provides .an effective link between the project and the regional national governments in the case of South America: No such links appear to exist for the Mekong project.· At the project level, there is an Electricity Power Forum and a Regional Experts Group. At the regional level, there is the GMS Ministerial Conference and the Senior Officials' Meeting. So far as: appears, there is no formal organizational link .between the project-level organizations a.nd the regional-level ones. There are,. for example, no references to· a power trade sub- committee of the Ministerial Conference or Senior Officials' Meeting. · - As the Mekpng project illustrates, progress towards regional power trade is possible without a close link to a high-level regional body. As the Mekong project also illustrates, however, that progress may be slow and may depend on continuing support from ESMAP or other outside institutions. The relevant question for this evaluation is, was this a ~' shortcoming that might have been corrected? Back-to-office reports and other documents are silent on this point. Possibly the silence implies that no thought was given to the problem, or the matter may have been considered but the Bank and ADB staff involved with the project may.have concluded that efforts in that direqtion would be futile. It also is possible that the project's isolation from any high-level regional body was at least partly a by-product of the Bapk's decision to give the ADB the lead in overall Mekong region activities 6 . Whatever the reason, the. isolation appears to have carried a cost at least in terms of the rate of progress. 5 : Formal links appear also to be lacking for the South America project. Because of the existingMerco~r ~greements, , however, this appears riot to be a' significant problem for that project. See note 60 above. 6 See. Babson, cited above note 74. . 93 Greater Mekong· Subregion Options for tire Structure of Power Trade Market. Barry Trembath ESMAP BBL Jan 22 2004 GREATER MEKONG SUBREGION ' ' L ··::r·· (_,. UAtk... no.1lrMplWI Olli.:..1·.-:llli<:I. ,.,.,. l'l•l,l::lo~ ... •1i:•:4'V"" . ·tf>oo di<~?•~ ...... .-~.....:>~... 11('" ..,..~ ....",. .......-:- t,.,. ".,..Uno;..,("'~.... ~,., ....,...;.... &::>o":U<1V!'yl'.""t"'7.1''1'1""""'4" ==-=·="""= ':======="'°=· km ' i 3UI'>..,.. ~- :. ! 94 B~ckground Country Population ·GDP($ Electricity· (millions) millions) Production (kWh mil.) China 1,472 1,237, 145 1,654,000 Myanmar 48 4,800 6,-139 ' I Laos 5 1,680 3,602 .Thailand 61 126,407 108,418. Cambodia 12 3,677 478 Vietnam 80 35,110 35,563 - Source: SIMA Database, ADB, CIA ·world F.actbook, Economist Intelligence Unit Chronology of Achievements • 1995 Electric Power Forum established · • 2000 Policy Statement on Regional Power Trade in Greater Mekong Sub-Region • Nov. 2002 Intergovernmental Agreement for Power Trade (IGA) ,, • Nov. 2003 IGA enters into force ·• 2004 inception meeting of Regional Power trade Coordinating Committee (RPTCC) . 95 Intergoverninental Agreement on Power Trade • Establishes Regional Power Trade Coordination Committee (RPTCC) • Principles: - Cooperation and mutual benefit . . :. Gradualism (progressive development of regional electricity trade) __, ·Enviromnentally Sustainable Development • -Objectives: - Cost minimization in planning and operation - Full cost recovery, equitable sharing o(benefits - Reliable and economic electricity to all parties Objectives and Methodology ofthe ESMAP Report · • Objective: identify options for ·expanding power trade within the region • Methodology: Confidential meetings with key -decision makers to determine issues of concern • Areas offocus :· ~ General investment environment ·._Most likely cross border projects - Receptivity to development of uniform · procedures and coordination processes . 96 Maj or findings • Regional regulation concept accepta~le to stakeholders • Uniform-Guidelines are welcomed by all parties • government policy officials • transmi~sion system operators. • developers · • Transmission infrastructure, regional and in-country, is inadequate • A gradual step-by-step development of the regiorlal market is practical and desirable: -:-.Initial transactions based on.long term contracts (PPA) ·- Bilater:al trading for short-term transactions to evolve .. Evolution of regional market structu.res Initial lndustry Structure: Intermediate-term Long-Term Industry cross border PPAs and (2010-2020) Industry Structure: Expansion radial transmission for Structure: Incremental of i~terconnections delivery; limited local investment to link to form strong network 'interconnection of .. transmission nodes to ' ' ' distribution systems form beginning of a network; expanded· local interconnection of distribution systems ----. LIMITED COMPETITION: EXPANDED COMPETITION: 'FULL COMPETITION: Years SINGLE BUYER AND LONG INTRODUCTION OF LIMITED EXPANDED BILATERAL TERMPPAs BILATERAL TRADING TRADING AND POSSIBLE THROUGH LONG AND SHORT CENTRALLY ADMINISTERED SPOT MARKET TERM CONTACTS. POSSIBLE HOURLY ENERGY BROKER OR BULLETIN BOARD FOR SPOT TRADING 97 2003 GMS Transmission Network Malaysia· Transmission Infrastructure • Transmission infrastructure is in~dequate to support . regional market . · ·• New cross border lines are directly related and funded to deliver generation ca,paGity and energy from specific projects under long term contracts • Rules have not been established in every member country regarding which entities: - will build new transmission\ and · . - have right of access • Uniform terms and conditions for transmission have not been established within the region . 98 •' ', Transmission Infrastructure (CQnt.) • Recommendation: - Establish priorities for transmission projects - Identify projects which .create regional network - Develop Pricing methodology for regional third party access . . . : Institutional development· study to:, · · • Identify which entities may: · - build new transmission and - have right of access • Recommend,uniform terms and conditions for transmission Regulation • Economic regiilatory agencies have not yet .. been . · established in most GMS countries • Some countries plan to establish such entities. •r • Regional regulation should be built ·on · basis of strong domestic member country regulators· . 99 \ Regulation ·Recommendations ! Recommendation: - An institutional development study to support: • division of authority between regional · and member country regulators • staffing and organization plan for- regional I 1. regulator_ • processes and procedures • terms and conditions for access to and use of the regioIJal network , Role of Regional Power Trade Coordinating . Committee , • Facilitate cross-border trading before regional market has been formally designed and implemented ·•Act as Project manager and ultimate decision maker • Establish subcommittees and working_ groups e Structure working groups to create "embryo" or I shadow institutions -regional coordinator (RC) '--regional regulator (RR) 100 Illustration of Implementation Organizati_onal Structure, 'Regional Power Trade Coordinating Committee! (RPTCC) Regional Coordinator Subcommittee i Regional Regulator Subcommittee I . (RCS) I (RRS) 1 II I t Grid Code Working Group 1 • · 1 I Markel Rules Working Group Transmission Tariff Working Group I Processes and Procedures '--------' Plan~ Design Criteria I System Operations , Pricing . ! Terms and Conditions .L _ _ _ _ _;,_ _ _ _ _ ,I ___ _J ~----· for Acces.s Strategy and Next Steps • Support Infrastructure investments to expand bilateral trading • Provide Technical Assistance for clearly defined demand-driven needs - Power , Trade Operating Agreements (ADB) ~ Institutional Development (WB) 101 Nile Basin Regional Power Trade Project and Power Forum . JiS Overview of NBI . JiS Characteristics of NBI power systems iiS ESMAP support JiS R~gional Power Trade Project - NILE RIVER BASIN BASSIN DU Nil ; =::::.,,.. ..,,,.,,. . Nile Basin geography - - - WJNllDto5/AO$.!'(u)f.lt;/dQr~ U&YA ~10 countries: Burundi, D.R. Congo, Egypt, (Eritrea), Ethiopia, Kenya, Rwanda, Sudan,. Tanzania, Uganda '"" ~300 m people ~overty:4 of 10 poorest ~limate variability \ ····--··-... .. ,: 25Environmental vulnerability 102· ( The Nile Basin Initiative ( POUC( Shared Vision: to achieve sustainable GUlDEUNES FOR socio-economic development through THE NlLE. RIVER ·equitable utilization of, and benefit from, BASIN STRATEGIC: ACTION the common Nile Basin water-resources. PROGRAM' £S"Riparian owned & managed £S"Highest-level commitment £S"l5 NOT a new economic grouping £S"IS managing/developing river; removing barriers because of river; promoting regional cooperation beyond ·.river Shared Vision Program: N~le Basin · , management ~asin-wide, riparian-driven, & multi- SVP.·projects $m sectoral .1. Transl:Joundary environ. action · 40 2-S'Transboundary 'institution' building: 2. Regional power trade 13 relationships/trust; skill/capacity; .· 3. Efficient water use.in.agriculture 5 information/analysis 1· ·4.Water re1t. planning &mgmt.· 28 rtnabling environment for 5.Confidencebuilding & ·15 cooperative development ·stakeholder awareness 6; Applied ,training 20 25Nile Basin TF: NBI-executed grants 7. Socioeconomic development & 11 .benefit sharing 2-S'All. roll out during FY2004 ' 8. SVP coordination - 132 . ·--Total 103 Subsidiary Action Programs: Nile Basin development A!S'Major cooperative investment programs in 2 sub-basins agreed by riparians .£S"lrrigation, power generatio~interconnection, watershed manage1Tient, fisheries, flood mgmt. ~tr(!tegic social & environmental assessment & options analyses from the start A!S''High-risk/high'."reward', likely including dams A!S'l st phase c. US3bn; public & private financing A!S'New instruments needed for regional public good investments A!S'Early projects (Board FY05?): ERR + multiple cooperation objectives · ~ -~· Main power sector issues/ characteristics • Limited access to electricity(< 10°/o in mos~ NBI countries) and . unreliability of supply . • Rapid demand growth • Diversity of resources • Geography • Limited cross-border electricity trade ( < 50 MW) • Electricity sector reforms underway in most NBI countries · 104 Infrastructure gap: access to electricity '. I c 1,000 0 ;:; D. . 800 E :I UI 600 c 0 400 u u cu 200 iii 0 c o. .!!! !ti ·a. !ti >. !ti ·2 !ti "C 0 rn !ti c: "iii .!!! c. 0 u Q) C> e Cii 0 c: Q) !ti N c: !ti !ti LL. !ti ..c: C> Q) . c:. Cii >. C> w u e ... !ti . ·'- Q) C> z w :c: ~ c: C> CJ C> :cc Q) ~ !ti 0 E !ti :::> c: c1; !ti t I- ... :::;;;: ~ t t t .. () "C t :I cc ;::::: s: 0 . Nile basin has huge. potential for co-operative development of hydro-resources and increased inter-connection and trade 700,000 ~-- . ·--·---··------..--------·----......~------..----·-----------·------·-----·---. Ill Uganda 600,000 ----------!•Tanzania 1----------; DSudan •Rwanda 500,000 ---------iDKenya . .. Iii Ethiopia _ _ _ _ _ _ _ ___.DEritrea . ~ .. CL 400,000 DEgypt llllDRCongo .c 3l: 300,000. ----------tDBerundi C> 200,000 100,000 0 Hydro potential 2000 2010 2020 105 I Direct benefits of co-operation in ,, power sector . • Lower energy costs _ - Imports i::ould be cheaper than self-generation • Lower investment costs - Economies of scale: regional projects justify larger generation plant I - Shared reserve margins - • New and additional investment possible because risk can be lower in collaborative projects - innovative asset ownership and financing • Improved reliability and security of supply - Imports possible during emergency outages or periods of insufficient firm capacity (e.g. nationaldrought) ~ ,, ( Potential benefits to wider economy - • Increased economic activity - . - More reliable supplies at lower cost Social and developmental benefits - Increased power·availability allows parallel electrification pro.gramme - urban/rural/services • Multi-purpose benefits - e.g. irrigation, navigation, flood and drought management ' • Environmental benefits - ~eduction on fossil· fuel dependence ( e.g diesel) • Fiscal benefits - Reduced costs, and increased space for private capital, reduce financial burden on public sector · · • Peace and regional security through economic integration · - 106 "' Path.to a regional The way forward - power market lnstituatiorial and political framework established To be able to realise the Development of infrastruct~re: I • power lines · . i benefits, ~,... __J institutional and infrastructure Initial phase of trading: I • bilateral long-term contracts JI development - emergency support -foaning must be given time and l Secondary phase of trading: l\ priority. • power pools . -.spot market trading __ J ESMAP Role in NBI Regional· Power Trade Project • Supplied critical seed money for essential analytical work on power trade opportunities (Scoping Study) • Supported the consultative process needed to develop the Power Trade Project · - , • ESMAP funds were also leveraged to generate other donor pledges (Norway,. Sweden, AfDB) towards the project 107 . The Scoping Study... • Identified severa·I options for increasing .power tra,de in the region; • Suggested evaluating power trade opportunities in the context of a broader multipurpose approach; ·and · • Recommended the establishment of a basin-wide power forum. The Regional· Power Trade Project Long-Term Goal · • Improve access to reliable and low-cost power in an environmentally sustainable manner· Development Objective. • Establish. the institutional means to coordinate the development of regional power markets among the Nile Basin countries . , 108 Project Components RPT Proj.ect I ..... Regional co-ordination & project implemen,tation ..... Establishment of Nile Basin Power Forum '----. Comprehensive . Basin-Wide Study Implemented over a · four year period Establishment of Nile Basin Power Forum • Establish Power Forum: J - Define its role & functions - Define long-term institutional set-up - Initiate Forum activities. • Includes following activities: . - Long-term planning & analytical tools - Training and skills enhancement - Financial resource mobil.ization - Conduct special studies 109 Comprehensive Basin-wide Study • Study objective - analyze power supply, demand & trade opportunities in the region - in the context of multi-purpose water resources development ' • Inception study to be undertaken first - Review previous studies - Data availability & data requirements • Sequence full study to incorporate results of SAP studies and operate within funding constraints PROJECT COST Regional coordinatiqn 4.23 and implementation Establishment Power Forum 3AO .Basin~wide study 4.50 Total base cost 12.l Cpntingencies 0.93 110 PROJECT FINANCING I Pledges Estimated i Financing Cost , Needed Partners Total Norway US$ 4 million Sweden US$ 2 US$ 13 million US$ 5 million million AfDB US$ 2 TOTAL US$ 8 million All financing through the multi-donor NBTF Next Steps • Project effectiveness by May, 2004 • Parallel development of generation and transmission infrastructure at the sub-regional level 111 Key Issues and Challenges • Realize tangible benefits, including facilitation of SAP investments • Coordinate with other regional . initiatives , • Realize benefits of NBt umbrella . 112 WESTAFRICA POWER POOL ··(WAPP) , ;~~,.t,:t .... - h LC Ii R I!. ~.~.\~,0:. : '-·· ·····----~i:............-----~-..,......._...... ~~~~ -t~~~~~%ffe~~~ - ...... •:f: ~- •. - WEST AFRICA POWER POOL . ··. . (lfftPP_l ,--·--·----···--·----· M-ain-Topics -·--------.. II I . \ . l •The WAPP: Main Objective and Scope 1 I• Main Issues Facing Africa's Electricity Sectors I 1 i Expected Benefits · , Sample Electricity Tariffs . I I • Potential for Electricity . Cost Reduction , . I WAPP's Phased Implementation - - I • WAPP's Phase I Components and Schedule · I ct Additional Support Required 113 WEST AFRICA POWER POOL , ( . - _{If_API:)_ . . · r·--------The- WAPP:-oiljective-andScope__________ ! I Objective: Development of an efficient power market I I in the West Africa Region over a 15-20 year period. . I ; West Africa Region (ECOWAS) includes 15 countries: Benin, Burkina-Faso, Cape Verde, Cote d'Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, 1 Niger, Nigeria, Senegal, Sie~ra Leone and Togo. 'I. Project supported by NEPAD. WEST AFRICA PO-WER POOL ,~ (WAPP) . ·.wt:;·, At:11:1c.A-: ~-· .· ~·:.t:J. .:- .. > WEST-·AfRl.CA.·PoWER:MARKCT t.1t/4,(,;.. A L C Ii R I J\ ocVi:LorMrNi" i'Roxct . ·; J.iv rRA~isMJSsaoN· N£lWORK.5~ ( & f'RIO.RiTY:iNteitcOf".l~ECnbN ~J~qr.S: (P~5E I' *A;ii,llilT.ll..llJ. .~003:.~0d . ..,...,.....;,_ .... ,,... $"~'!.., \ ......... . N I U. f, ll. . .~y·y · ''°"~7.:..fr·:;::.- :OtHtG"1 '• .. • ... : •·· CM.\D I ~ . ·e~~~~~:·:-:· :_· -, ··. -...-:~~;:t...~~- • .•. ..·~~... , t - , .- '·\ ·.~I u~~~.~i~!~~21f~:;;: ..~. ¢~:=:~:,..,t:: :;.;$_ ... w.:~ . ..---··· w· !:.: •• ::.:::.#.!:. 114 West Africa Power Pool Main Issues facing the West Africa . . Electricity Sectors · High Costs of Electricity Impacting on Economic Competitiveness and Social Development. ~, Capacity Deficit Leading to Unreliable Power Supply. o Insufficient Regional Cooperation due to Physical, Institutional , Regulatory and Legal Constraints. o Poor Power Sector Performance and Slow Sectoral Reforms in Participating Countries. ( .WEST AFRICA POWER POOL · · _/T;r7APP) r--·----·--·-·-----.J~-~---·-·__!:__L___ . ··-J ·I . . Expected Benefits . 1 I . 1,1 Alleviate Poverty. in the ECOWAS region through 1 1 Increased Competitiveness and Social Development. ! · I l ' I i , .. Foster Regional Integration. ., . I Promote Use of Environmentally Cleaner Fuels for Electricity Generation. 115 WESTAFRICA POWER POOL · (lfAPPl_ .----·-·---------·--·----- --···----.-· ·-----· i I Sample Electricity Tariffs. US cents/kWh Average Social Tariff Industrial/ Household Commercial i . I Ghana 5.1 3.4 7.4 Cote d'Ivoire 8.5 5.0 5.5 I I Togo 10.7 10.5 10.9 Benin 12.4. 10.4 11.2. Burkina-Faso - 14.9 13.2 15;9 Mali 15.9 12.8 '13.1 I Average Europe 8.1 5.7 8.7 WEST AFRICA POWER POOL (WAPP)·. Potential for Electricity Costs Reduc~ion · through the WAPP Oil Thermal Generation in ECOWAS:B.0-10.0 cents/kWh. Thermal Generation Costs in landlocked countries such as 'Burkina-Faso, Mali, Niger:USc12-15/kWh. t:w Guinea hydropotential:USc2-3/kWh. (depends on the site) Nigerian gas could produce at about USc3.5/kWh. Cote d'Ivoire could export at about USc4.0-4.5 c/kWh (natural gas). · Cf Generation Costs could decrease by a factor of 2. 110- WEST AFRICA POWER POOL (WAPP) WAPP's Pllased Implementation Such pool can only be implemented in a Phased Approach, say in 4 phases over 15-20 years. Phase 1: 2005-2008: E,nhancing regional cooperation and increase trade flows . Phase 2: 2009-2013: Continued extension of the regional networks and firming-up ofthe institutions and frameworks. WEST AFRICA POWER POOL ------------:-·------------·--------lW-AEE)----- · -,-_,-------------·--- WAPP 's Phase'iC:omponents {2005-08) - / 1: Establishment of the institutional, regulatory, legal ·I and regional information frameworks ($8 million). I I 2: Capacity Building (Regional and National Levels) ($5 I million). · i l 3: Commissioning of key transmission links, rehabilitation of networks, generating plans, etc. ( $250 million) WEST AFRICA POWER POOL ,--·-··-····----~---·-·--(If_ \ Aff)_·--------·--------·-----···--··--··-· WAPP's Phase I Preparation and \ I Implementation Schedule (2003-2008) I ' ! ' I i I I ~t July 2003-July 2oo4: Technical, environmental, I I econ3mic and financial .studies. · I I July 2004-0ctober 2004: Project Appraisal. I IG December 2004-March 2005: Boards decisions and · 1 I initiate implementation. 1· i I I . I _Im pJ~!!!~QtC!tior!_ 9.0Q___ ~·---------_J l-~-11~r.~b__?90 s_~_Jy_Q~_?QQ_~_:_ WEST AFRICA POWER POOL 1 LTYAPf)_ ______ __________ · ·--·----·-·-·--------i I Additional Support Required . I l - ! I Support to preparation/implementation of Phase I of I the WAPP currently provided by African Development I. Ban~, BOAD, ~r~nce (AFD and Ministry of Foreign I Affairs), Kowe1ty Fund, USAID and World Bank. · i Additional Support needed now to cover Capacity Building, Feasibility and Engineering Studies and Investment. 118 Joint UNDP/World Bank ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) LIST OF TECHNICAL PAPER SERIES Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) ·Ethiopia Phase-Out of Leaded Gasoline in Oil Importing Countries of 12/03 038/03 Sub-Saharan Africa: The Case of Ethiopia - Action Plan. Sub-Saharan Petroleum Products Transportation Corridor: Analysis 03/03 033/03 .. And Case Snidies · Phase-Out of Leaded Gasoline in Sub-Saharan Africa 04/02 028/02 Energy and Poverty: How can Modem Energy Services Contribute to .Poverty Reducti,on · 03/03 032/03 East Africa Sub-Regional Conference on the Phase-outLeaded Gasoline in 11/03 044/03 East Africa. June 5-7, 2002. Kenya Field Performance Evaluation of Amorphous Silicon (a-Si) Photovoltaic Systems in Kenya: M~thods and Measurement ( in Support of a Sustainable Corilm.ercial Solar Energy Industry 08/00 005100 The Kenya Portable Battery Pack Expenence: Test . Marketing an Alternative for Low-Income Rural Household Electrification 12/01 05/01 Mali Phase-Out of Leaded Gasoline in Oil Importiri.g Countries of 12/03. . 041/03 Sub-Saharan Africa: The Case;: of Mali -Acti9n Plari. (French) Mauritania Phas~-Out of Leaded Gasoline in Oil IIDporting Countries of 12/03 040/03 Sub-Saha~an Africa: The Case of Mauritania - Action Plan." (French) Nigeria Phase-Out of Leaded Gasoline in Nigeria 11/02 029102 Nigerian LP Gas Sector lmpr:ovement Study 03/04 · 056/04 Taxation and State Participation ill Nigeria's Oil and Gas Sector 08/04 057/04 Regional Second Steering Committee: The Road Ahead. Clean Air Initiative In Sub-Saharan African Cities. Paris, March 13-14; 2003: 12/03 045/03 Lead Elimination from Gasoline in Sub-Saharan Africa. Sub-regional · Conference of the West-Africa group. Dakar, Senegal March 26-27, 2002 (French only) . 12/03 046/03 1998-2002 Progress Report. The World Bank Clean Air Initiative 02/02 048/04 . in Sub-Saharan African Cities. Working Paper#lO (Clean Air Initiative/ESMAP) Senegal Regional Conference on the Phase-Out of Leaded Gasoline in Sub-Saharan Africa ' . 03/02 022/02 Elimination du Plomb dans !'Essence en Afrique Sub-Saharienne Conference Sous Regionales du Groupe Afrique de l'Quest. Dakar, Senegal. March 26-27, 2002. . . 12/03 046/03. Swaziland Solar Electrification Program 2001-2010: Phase 1: 2001-2002 (Solar Energy in the Pilot Area) 12/01 019/01 Tanzania . Mini Hydropower Development Case Studie~ on the Malagarasi, Muhuwesi, and Kikuletwa Rivers Volumes I, _II, and HI 04/02 024/02 Phase-Out ofLeaqed Gasoline in_Oil Importing Countries of 12/03 039/03 Sub-Saharan Africa: The Case ofTanzania - Action Plan. Uganda Report on the Uganda Power Sector Reform and Regulation \ Strategy Workshop 08/00 004/00 -2- Region/Country Activity/Report Title Date Number WEST AFRICA (AFR) Regional Market Development 12/01 017/01 '· EAST ASIA AND PACIFIC (EAP) Cambodia Efficiency Improvement for Commercialization of the Power Sector 10/02 031/02 China Assessing Markets for Renewable Energy in Rural Areas of Northwestern China 08/00 003100 Technology Assessment of Clean Coal Technologies for China Volume I-Electric Power Production 05/01 011/01 Technology Assessment of Clean Coal Technologies for China Volume II-EnviroIUIJ-ental and Energy Efficiency Improvements for Non-power Uses of Coal 05/01 011/01 Technology Assessment of Clean Coal Technologies for China Volume III~Environmental Compliance in the Energy Sector: Methodological Approach and Least~Cost Strategies 12/01 011/01 Thailand DSM in Thailand: .A Case Study 10/00 008/00 Development of a Regional Power Market in the Greater Mekong Sub-Region (GMS) 12/01 015/01 Vietnam Options for Renewable Energy in Vietnam 07/00. OOi/OO Renewable Energy Action Plan 03/02 021/02 Vietnam's Petroleum Sector: Technical Assistance for the Revision 03/04 053/04 of the Existing Legal and Regulatory Framework SOUTH ASIA (SAS) Bangladesh Workshop on Bangladesh Power Sector Reform 12/01 018/01 Integrating Gender in Energy Provision: The Case of Bangladesh 04/04 054/04 Opportunities for Women in Renewable EnergyTechnology Use 04/04 . 055104 . In Bangladesh, Phase I EUROPE AND CENTRAL ASIA (ECAJ . Russia Russia Pipeline Oil Spill Study 03/03 034/03 MIDDLE EASTERN AND NORTH AFRICA REGION (MENA) Regional Roundtable on Opportunities and Challenges in the Water, Sanitation 02/04 049/04 And P_ower Sectors in the Middle East and North Africa Region. Summary Proceedings. May 26-28, 2003. Beit Mary, Lebanon. (CD) -3- Region/Country . Activity/Report Title Date Number . LATIN AMERICA AND THE .CARIBBEAN REGION (LCR) Ecuador Programa de Entrenamiento a Representantes de Nacionalidades · Amaz6nicas en Ternas Hidrocarburiferos 08/02 025/02 Mexico Energy Policies and the Mexican Economy . 01/04 047/04 Nicaragua Aid-Memoir from the Rural Electrification Workshop (Spanish only) 03/03 030/04 Regional Regional Electricity Markets Interconnections - Phase .I Identification of Issues for the Development of Regional Power Markets in South America 12/01 016/01 Regional Electricity Markets Interconnections - Phase II Proposals to Facilitate Increased Energy Exchanges in South America 04/02 016/01 Popul~tion, Energy and Environment Program (PEA) Comparative Analysis on the Distribution of. Oil Rents (English and Spanish) 02/02 020102 Estudio Comparativo sobre la Distribuci6n de la Renta Petrolera Estudio de Casos: Bolivia, Colombia, Ecuador y Peru 03/02 023/02 Latin American and Caribbean Refinery Sector Development Report - Volumes I and II 08/02 026/02. The Population, Energy and Environmental Program (EAP) (English and Spanish) · · 08/02 027/02. Bank Experience in Non-energy Projects with Rural Electrification 02/04 052/04 ·.Components: _A Review of integration Issues in LCR GLOBAL Impact of Power Sector Reform on the Poor: A. Review oflssues and the Literature r 07/00 002100 Best Practices for Sustainable Development of Micro Hydro . Power in Developiri.g Countries · 08/00 006/00 Mini-Grid Design Manual 09/00 007/00 Photovoltaic Applications in Rural Areas of the Developing World 11100 009100 Subsidies and Sustainable Rural Energy Services: Can we Create Incentives Without Distorting Markets? 12/00 010/00 Sustainable W obdfuel Supplies fro~ the Dry Tropical ·Woodlands 06/01 013/01 Key Factors for Private Sector Investment in Power Distribution 08/01 014/01 Cross~Border Oil and Gas Pipelines: Problems and Prospects 06103 035/03 Monitoring and Evaluation in.Rural Electrification Projects:.· 07/03 037/03 A Demand-Oriented Approach Household Energy Use in Developing Counfyies: A Multicountry 10/03 042/03 Study . Knowledge Exchange: Online Consultation and Project Profile . 12/03 043/03 from South Asia Practitioners Workshop. Colombo, Sri Lanka,. June 2-4, 2003 Energy & Environmental Health: A Literature Review and 03/04 050i04 Recommendations. Petroleum Revenue Ma·nagement Workshop 03/04 051/04 -4-, Region/Country Activity/Report Title Date Number Developing Financial Intermediation Mechanisms for Energy 08/04 058/04 Efficiency Projects - Focus on Banking Windows for Energy Efficiency Evaluation ofESMAP Regional Power Trade Portfolio (TAG Report) 12/04 059/04 Last report added to this list: ESMAP Technical Paper 059/04. •~Cl\Jf AD ai:t-..1.1 ~" u The World Bank 1818 H Street, NW Washington, DC 20433 USA el.: 1.202.458.2321 Fax.: 1.202.522.3018 nternet: www.worldbank.org/esmap Email: esmap@worldbank.org mm Dllil The World Bank