Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004695 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-49710GH and IDA-H7190BF) ON A GRANT IN THE AMOUNT OF SDR 9.9 MILLION (US$16 MILLION EQUIVALENT) TO BURKINA FASO AND A CREDIT IN THE AMOUNT OF SDR 16 MILLION (US$25.9 MILLION EQUIVALENT) TO THE REPUBLIC OF GHANA FOR THE WAPP: THE FIRST PHASE OF THE INTER-ZONAL TRANSMISSION HUB PROJECT OF THE WAPP (APL3) PROGRAM July 30, 2019 Energy and Extractives Global Practice Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective December 31, 2018) CFA Francs (CFAF) for Burkina Faso and Currency Unit = Ghanaian Cedis (GHS) for Ghana GHS 5.82 = US$1 CFAF 572.89 = US$1 US$$1.39 = SDR 1 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS AFD Agence Française de Développement (French Development Agency) APL Adaptable Program Loan CAS Country Assistance Strategy ECOWAS Economic Community of West African States EEP ECOWAS Energy Protocol EIB European Investment Bank EMS Energy Management System EIRR Economic Internal Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan FIRR Financial Internal Rate of Return FNPV Financial Net Present Value GRIDCo Ghana Grid Company Limited HFO Heavy Fuel Oil HV High Voltage IFI International Financial Institution IPP Independent Power Producer ISR Implementation Status and Results Reports M&E Monitoring and Evaluation NGO Nongovernmental Organization NPV Net Present Value O&M Operation and Maintenance PAD Project Appraisal Document PAP Project-affected Person PDO Project Development Objective PI Profitability Index PIU Project Implementation Unit PPSD Project Procurement Strategy for Development RIAS Regional Integration Assistance Strategy SCD Systematic Country Diagnostic SONABEL Société Nationale d'électricité du Burkina Faso TTL Task Team Leader USAID United States Agency for International Development VAT Value Added Tax VRA Volta River Authority WAGP West African Gas Pipeline WAPP West African Power Pool Regional Vice President: Hafez M. H. Ghanem Regional Integration Director: Deborah Wetzel Senior Global Practice Director: Riccardo Puliti Practice Manager: Charles Joseph Cormier Task Team Leader(s): Nash Fiifi Eyison ICR Main Contributor: Juliana C. Victor TABLE OF CONTENTS DATA SHEET .......................................................................................................................... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 5 A. CONTEXT AT APPRAISAL .........................................................................................................5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION .............................................................. 11 II. OUTCOME .................................................................................................................... 14 A. RELEVANCE OF PDOs ............................................................................................................ 14 B. ACHIEVEMENT OF PDOs (EFFICACY) ...................................................................................... 15 C. EFFICIENCY ........................................................................................................................... 17 D. JUSTIFICATION OF OVERALL OUTCOME RATING .................................................................... 19 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ............................................................................ 19 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 21 A. KEY FACTORS DURING PREPARATION ................................................................................... 21 B. KEY FACTORS DURING IMPLEMENTATION ............................................................................. 24 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 27 A. QUALITY OF MONITORING AND EVALUATION (M&E) ............................................................ 27 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ..................................................... 28 C. BANK PERFORMANCE ........................................................................................................... 29 D. RISK TO DEVELOPMENT OUTCOME ....................................................................................... 31 V. LESSONS AND RECOMMENDATIONS ............................................................................. 32 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 34 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 40 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 43 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 44 ANNEX 5. BORROWER, CO-FINANCIER, AND OTHER PARTNER/STAKEHOLDER COMMENTS .. 51 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 52 ANNEX 7. IMPLEMENTATION DELAYS .................................................................................. 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name WAPP: The First Phase of the Inter-Zonal Transmission P094919 Hub Project of the WAPP (APL3) Program Country Financing Instrument Western Africa Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Ministry of Finance and Economic Planning, Ministere Ghana Grid Company Limited (GRIDCo), SONABEL - de l'Economie et des Finances Société Nationale d'électricité du Burkina Faso Project Development Objective (PDO) Original PDO The development objective of the first phase of the Inter-Zonal Transmission Hub Project under the WAPP APL3 is to reduce the cost of and improve security of electricity supply to Burkina Faso, while increasing Ghana’s electricity export capacity. Page 1 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 25,900,000 25,817,473 22,440,801 IDA-49710 16,000,000 15,985,010 13,906,491 IDA-H7190 Total 41,900,000 41,802,483 36,347,292 Non-World Bank Financing 0 0 0 Borrower/Recipient 5,900,000 0 0 FRANCE: French Agency for 32,300,000 0 0 Development EC: European Investment 30,900,000 0 0 Bank Total 69,100,000 0 0 Total Project Cost 111,000,000 41,802,483 36,347,293 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 29-Jun-2011 14-Dec-2012 30-Mar-2015 31-Dec-2015 31-Dec-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 13-Nov-2015 5.01 Change in Components and Cost Change in Loan Closing Date(s) Change in Financing Plan Reallocation between Disbursement Categories Change in Implementation Schedule 28-Mar-2016 7.36 Change in Financing Plan Reallocation between Disbursement Categories 29-Dec-2017 25.63 Change in Loan Closing Date(s) Page 2 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Moderately Satisfactory Substantial RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 22-Dec-2011 Satisfactory Satisfactory 0 02 11-Jul-2012 Satisfactory Moderately Satisfactory 0 03 10-Jun-2013 Unsatisfactory Unsatisfactory .06 04 12-Feb-2014 Unsatisfactory Unsatisfactory .26 05 07-Jul-2014 Unsatisfactory Unsatisfactory 2.07 Moderately 06 23-Jan-2015 Moderately Unsatisfactory 2.98 Unsatisfactory Moderately 07 27-Jun-2015 Moderately Unsatisfactory 3.23 Unsatisfactory 08 05-Jan-2016 Moderately Satisfactory Moderately Satisfactory 6.86 09 28-Jul-2016 Moderately Satisfactory Moderately Unsatisfactory 7.76 10 06-Mar-2017 Moderately Satisfactory Moderately Unsatisfactory 12.81 11 20-Oct-2017 Moderately Satisfactory Moderately Unsatisfactory 19.60 12 22-Jun-2018 Satisfactory Satisfactory 30.64 13 29-Jun-2018 Moderately Satisfactory Satisfactory 30.96 14 31-Dec-2018 Satisfactory Satisfactory 36.11 Page 3 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) SECTORS AND THEMES Sectors Major Sector/Sector (%) Information and Communications Technologies 10 ICT Infrastructure 10 Energy and Extractives 90 Public Administration - Energy and Extractives 25 Energy Transmission and Distribution 65 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 80 Regional Integration 80 Urban and Rural Development 20 Urban Development 10 Urban Infrastructure and Service Delivery 10 Rural Development 10 Rural Infrastructure and service delivery 10 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Hafez M. H. Ghanem Country Director: Yusupha B. Crookes Rachid Benmessaoud Director: Jamal Saghir Riccardo Puliti Practice Manager: Anna M. Bjerde Charles Joseph Cormier Task Team Leader(s): Issa Diaw Nash Fiifi Eyison ICR Contributing Author: Juliana Chinyeaka Victor Page 4 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Regional Context 1. Burkina Faso and Ghana are members of the regional bloc of 15 member states1 of the Economic Community of West African States (ECOWAS) covering an area of about 5 million square kilometers and had a population of about 258 million in 2005, projected to reach 380 million by 2020. The region has important energy resources with one-third of the African gas and oil reserves and over 23,000 MW of technically exploitable hydropower capacity as well as solar resources. However, these resources are unequally distributed, with around 98 percent of the recoverable oil and gas resources concentrated in Nigeria and 91 percent of the hydro potential is located in five countries2 (other gas and oil deposits were recently discovered). 2. ECOWAS as a regional group was founded in 1975 to achieve ‘collective self-sufficiency’ for member states. The principal goal of the community is to create a single trading bloc through the establishment of an open, unified, regional economic and trading union in West Africa, through, among others, the setting up of regional markets for infrastructure services, including electricity. 3. In light of (a) the large difference in natural resource allocations among the ECOWAS member countries, with significant technical potential in electricity generation in countries with modest electricity demand (such as Guinea), and (b) the inability of countries with very small markets to achieve energy self- sufficiency at affordable costs (such as Liberia) in accordance with its mandate, an ECOWAS energy policy was adopted in 1982. This led to the setting up of energy programs such as the West African Power Pool (WAPP), the West African Gas Pipeline (WAGP), and the common regional energy access program with the West African Economic and Monetary Union. 4. WAPP was established in 1999 as the principal vehicle to facilitate the integration of the national power systems and operations into a unified regional electricity market—with the expectation that such mechanism would, over the medium to long term, assure their citizens of a stable and reliable electricity supply at affordable costs. Country Contexts Burkina Faso 5. Burkina Faso is a low-income, landlocked, Sub-Saharan country with less than 100 MW of potential hydropower capacity in five identified sites (two hydropower plants have been developed, totaling 27 MW) and has no significant known fossil fuel resources. Total installed generation capacity of 1 Benin, Burkina Faso, Cape Verde, Côte d'Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo. 2 Nigeria (37.65 percent), Guinea (25.8 percent), Ghana (11.4 percent), Côte d’Ivoire (10.9 percent), and Sierra Leone (5.2 percent). Page 5 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 256 MW in Burkina Faso including imports from Côte d’Ivoire and Ghana (via small towns at the border) was not enough to avoid a precarious equilibrium between demand of 175 MW (in 2012) and supply during peak load periods. 6. The electrification rate was about 23 percent (about 40 percent in urban areas and about 3 percent in rural areas). Per capita consumption of electricity was 44 kWh. About 90 percent of the population still relied on firewood and charcoal for the bulk of their energy needs. Petroleum products are entirely imported (about 450,000 tons annually) by road at high cost from ports over 1,000 km away. This handicap contributed significantly to Burkina Faso’s inability to improve supply and expand access to electricity, since over 90 percent of electricity production is from liquid fuels. 7. At the time of appraisal, the country faced four main needs in the energy sector: (a) additional capacity to meet an increasing demand for energy services, (b) expanded access of energy services to rural and peri-urban populations in the face of the high generation cost barrier, (c) improvement of the efficiency and equity in energy services provision by reforming the tariff and subsidy policy in a context of high supply costs, and (d) achievement of sustainable supply of wood fuels used by the majority of the population while promoting alternative fuels such as liquefied petroleum gas (LPG) to households (c and d were not addressed under the scope of this project). Ghana 8. Electricity was produced from two main sources: hydro and thermal (oil/gas). Total generation capacity at the time of appraisal was about 2,100 MW, of which 1,200 MW was hydro. Several new plants under construction were going to raise capacity by 800 MW in two years. The thermal generation mix in Ghana was transitioning from crude oil to natural gas as the main source of fuel. With such a relatively low-cost gas/hydro energy mix, it was expected that the proposed Bolgatanga-Ouagadougou transmission line would help significantly reduce the cost of electricity supply in Burkina Faso and facilitate future unconstrained cross-border electricity exchanges across WAPP countries as well as financial benefits to Ghana due to increased revenue for power sales. World Bank Support 9. On June 30, 2005, the World Bank’s Executive Board of Directors endorsed the application of the Adaptable Program Loan (APL) instrument, within the framework of the World Bank’s Regional Integration Assistance Strategy (RIAS) for West Africa, as the vehicle for providing IDA credit support to the WAPP initiative. The objective of the WAPP APL program is to develop a robust platform for WAPP comprising four distinct but mutually reinforcing subregional power system infrastructure development projects. The different phases were planned such that their implementation will enable cross-border electricity exchanges in the framework of a unified regional electricity market. Combining financing support to infrastructure and technical assistance was identified as key to reaching the final objective of establishing a regional market in line with the principle of the ECOWAS Energy Protocol (EEP)—which provides a legal framework aimed at promoting long-term cooperation between the ECOWAS member states in the energy field with a view to developing an ‘open and competitive energy market’. The protocol came into force in 2006 after ratification by nine ECOWAS member states. Page 6 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 10. World Bank support for WAPP was designed as an APL with three components: APL1 for the coastal transmission backbone (CTB) connecting Côte d’Ivoire, Ghana, Togo, Benin, and Nigeria; APL2 for the backbone connecting Senegal, Mali, Guinea, Guinea Bissau, and Gambia; and APL3 for the backbone connecting Côte d’Ivoire, Burkina Faso, Ghana, Niger, Mali, and Nigeria. In total, these sets of operations represent over US$1 billion of IDA financing. This Implementation Completion and Results Report (ICR) refers exclusively to the First Phase of the Inter-Zonal Transmission Hub Project of WAPP (APL3) Program (P094919). Projects Related to the Enhancement of the Ghana Transmission Network 11. In parallel to this project, the French Development Bank (Agence Française de Developpement, AFD) is financing the 330 kV Kumasi-Kintampo-Bolgatanga Line (construction of substations and high- voltage [HV] lines) at an estimated cost of US$161 million. This project is part of grid reinforcement in Ghana, upgrading the transmission voltage to add 330 kV to the existing 161 kV. The Kintampo-Tamale- Bolgatanga section of the 330 kV line was energized on April 27, 2018. Theory of Change (Results Chain) 12. Causality. The project activities were aligned with the Project Development Objective (PDO) of reducing the cost of and improving the security of electricity supply in Burkina Faso and increasing Ghana’s electricity export capacity. The outputs are directly linked with the immediate outcome of promoting trade between the two countries and long-term outcome of promoting regional power trade across ECOWAS member states (see figure 1). 13. Critical assumptions. The following conditions were critical to the achievement of the project outcomes and ensuring sustainability: (a) all components funded by AFD and the European Investment Bank (EIB) are completed along with IDA-funded works; (b) institutional strengthening of the national utilities, Ghana Grid Company Limited (GRIDCo) and Société Nationale d'électricité du Burkina Faso (SONABEL), under the project will reinforce their capacity to operate and maintain the transmission facilities in conformity with standards; and (c) availability of energy in Ghana from cheaper sources to trade in respect of the signed Power Sales Purchase Agreement. Page 7 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Figure 1: Results Chain of the Project Activities Outputs Outcomes Long-term Outcome Critical Assumptions (a) AFD- and EIB-funded components completed with IDA works. (b) Institutional strengthening of the national utilities, GRIDCO and SONABEL, under the project will reinforce their capacity to operate and maintain the transmission facilities in conformity with standards. (c) Availability of energy in Ghana from cheaper sources to trade (a) 188 km 225 kV transmission line constructed Construction of new (b) 330/225/161 kV substation in Reduced transmission line Bolgatanga, Ghana, cost of between Ghana and constructed supply in Burkina Faso and (c) 225/90 kV Zagtouli substation Burkina construction and extended and new one in Faso upgrade of Burkina Faso substations (d) SCADA, EMS, protection, and communication systems installed (a) 330/161 kV 200 MVA transformer installed at Upgrade of existing Aboadzé substation Reduced HV grid in Ghana outages in (a) Facilitate energy (b) Feasibility study of 330 kV Burkina Faso trade within Dawa-Bolgatanga due to lack of WAPP transmission line complete generation Project management (b) Improve and technical socioeconomic assistance development (a) 25 villages electrified (3,474 Electrification of households connected) in villages along Burkina Faso transmission line corridor Increased export (a) Capacity-building program capacity for the concerned utilities in for Ghana Capacity building and HV system planning, O&M of institutional support HV transmission systems, SCADA development, O&M, commercial transactions, grid telecommunications, and protection Note: EMS = Energy Management System; O&M = Operation and maintenance; SCADA = System control and data acquisition. Page 8 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Project Development Objectives (PDOs) 14. As per the Financing Agreements, the PDOs was stated as follows: “The PDO is to reduce cost of and improve the security of electricity supply to Burkina Faso, while increasing Ghana’s electricity export capacity.” There were no changes to the PDO during implementation. Key Expected Outcomes and Outcome Indicators 15. The original PDO-level indicators were as follows:  Average weighted annual cost of electricity supply3 in Burkina Faso (in U.S. cents)  Annual total duration of outages in Burkina Faso due to generation capacity deficit/load shedding (hours)  Annual total hours of operation of the interconnection line (hours) Table 1. Summary of the Project’s Results against the PDO Indicators Expected Outcomes Outcome Indicators Reduction in the average weighted Total generation cost derived from cost of self-generation and imports annual cost of electricity supply in per total energy injected in the system. Average weighted cost of Burkina Faso generation reduced from US$0.2634 per kWh to US$0.20 per kWh. Reduction in the number of Number of outages reduced from 130 hours per year to 8 hours per outages/load shedding due to year. generation capacity deficit Ensured operational availability of Total number of hours the line should be in operation in a year is 7,884. the newly constructed interconnector 16. The results framework was not modified during implementation. Components (As Approved) 17. The project was estimated at US$111 million (see table 2) and designed with five components:  Component 1: The 225 kV transmission line between Bolgatanga (Ghana) and Ouagadougou (Burkina Faso) (US$84.2 million; US$16.4 million financed by IDA). This component aimed to construct a 225 kV transmission line from Bolgatanga in the northern part of Ghana to the capital of Burkina Faso. It included the following elements: o Subcomponent 1.1: Construction of about 210 km of 225 kV transmission line o Subcomponent 1.2: Construction of a new 225/161 kV substation in Bolgatanga, Ghana 3 At utility level. Page 9 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) o Subcomponent 1.3: Extension of the 225/90 kV Zagtouli substation and construction of a new 90/33 kV substation in Burkina Faso o Subcomponent 1.4: Installation of telecommunications systems, SCADA systems, and Energy Management Systems (EMS) o Subcomponent 1.5: Implementation of Environmental Management and Resettlement Action Plan and strengthening the management of the Kaboré Tambi National Park  Component 2: Reinforcement of the transmission grid in Ghana (US$6 million financed by IDA). This component was devoted to funding HV network reinforcements needed in Ghana to facilitate the transmitting of 100 MW over the proposed interconnection line and studies of grid reinforcement projects required to provide N-1 reliability. Given the level of preparation and financing available for the 161 kV reinforcement, it was agreed to finance the following items: o A 330/161 kV 200 MVA transformer to be installed in Aboadzé o The pre-investment studies of the 161 kV Atebubu-Tamale line  Component 3: Electrification of rural localities along the right of way in Burkina Faso (US$9 million financed by IDA). This component was targeted to fund the design and engineering studies as well as works relating to the use of the shield wire of the 225 kV interconnection line to provide electricity to localities no further than 6 km from the right-of-way. This was to benefit about 3,400 households in Burkina Faso.  Component 4: Supervision/owner’s engineer (US$4.2 million financed by IDA). This component was for the financing of a single owner’s engineer to supervise works in both Ghana and Burkina Faso and ensure proper coordination. The owner’s engineer assignment included the finalization of the bidding document to the commissioning of the facilities (outputs of Components 1, 2, and 3).  Component 5: Capacity building and institutional support to GRIDCo and SONABEL for project implementation (US$7.6 million, US$6.3 million financed by IDA). This component was specifically for building the capacity of the two concerned utilities, GRIDCo and SONABEL, in HV system planning, O&M of HV transmission systems, SCADA development, O&M, commercial transactions, telecommunications, and HV network protection. It also included, among others, the operational expenses of the Project Implementation Units (PIUs). Page 10 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 2. Project Components, Costs, and Funding Sources (US$, millions) Total Project Component IDA EIB AFD SONABEL GRIDCo Cost 1. 225 kV transmission line between Bolgatanga 16.4 30.9 32.3 3.4 1.2 84.2 (Ghana) and Ouagadougou (Burkina Faso) 2. Reinforcement of the transmission grid in 6.0 — — — — 6.0 Ghana 3. Electrification of rural localities along the right 9.0 — — — — 9.0 of way in Burkina Faso 4. Supervision/owner’s engineer 4.2 — — — — 4.2 5. Capacity building and institutional support to 6.3 — — — 1.3 7.6 GRIDCo and SONABEL for project implementation Total 41.9 30.9 32.3 3.4 2.5 111.0 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION 18. The project underwent three Level 2 restructurings to introduce the following changes: • The first restructuring was approved in November 2015, to (a) extend the closing date of the grant to Burkina Faso by 36 months from December 31, 2015, to December 31, 2018, and the closing date of the credit to Ghana by 24 months to December 31, 2017, due to delays in procurement, change in technical scope, and construction challenges and (b) introduce changes in the Financing Plan, which included reallocation between disbursement categories under the grant to Burkina Faso (IDA H719-BF) as follows: Table 3. Reallocation between Disbursement Categories under Grant to Burkina Faso Original Amount of the Revised Amount of the Grant Category Grant Allocated (SDR) Allocated (SDR) (a) Works, goods, and consultant services 5,600,000 4,000,000 under Part 2 of the project (b) Goods, services other than consultant 3,800,000 5,400,000 services, training, and operating costs under Parts 3 and 4 of the project (c) Works, goods, and consultant services 500,000 500,000 under Part 1.4 of the project Total 9,900,000 9,900,000 • The second restructuring was approved in March 2016, to change the Financing Plan and reallocate disbursement categories under the credit to Ghana (IDA 4971-GH). Page 11 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 4. Reallocation between Disbursement Categories under the Grant to Burkina Faso Original Amount of the Credit Revised Amount of the Credit Category Allocated (SDR) Allocated (SDR) (a) Works, goods, and services under 2,400,000 340,948.40 Part 1.1 (b) Works, goods, and services under 6,100,00 8,159,051.60 Part 1.2 (c) Works, Goods, and services under 300,000 300,000 Part 1.3 (d) Works, goods, and services under 3,700,000 3,700,000 Part 2 (e) Goods, services, and training 2,6000,000 3,500,000 under Parts 3 and 4 (f) Unallocated 900,000 0.00 Total 16,000,000 16,000,000 • The third and last restructuring was completed in December 2017, to extend the closing date of the credit to Ghana by additional 12 months to December 31, 2018, as works financed under the credit were not fully completed due to further implementation delays. 19. There were no changes to the PDO and outcome targets, PDO indicators, or project components in all restructurings. 20. No additional financing was required from financiers under the project. Other Changes 21. The proposed reallocation of proceeds among disbursement categories under the first and second restructurings aimed to resolve challenges in implementing a joint procurement strategy among the financiers. The IDA team proposed to withdraw IDA financing from the portion of the transmission line on the Ghana side and to reallocate the financing (US$3.8 million) toward construction of the 330/225/161 kV Bolgatanga substation in Ghana under Subcomponent 1.2. AFD agreed to reduce its financing of Subcomponent 1.2 commensurately and reallocate this financing to Subcomponent 1.1. 22. There were changes to the technical scope and design after detailed engineering studies, which did not significantly modify the loan design and activities. Changes included the relocation of the end-line substation in Ghana from Bolgatanga I substation to the Bolgatanga II substation, with subsequent changes to the line routing, including modifications to the total length of the HV 225 kV overhead transmission line from 210 km (171 km in Burkina Faso and 39 km in Ghana) to 188 km (171 km in Burkina Faso and 17 km in Ghana), as well as the line topology design from a single circuit to two circuits (the first leg consisting of 21.9 km from Zagtouli substation to Angle point A5 and the second leg from A5 to Ouagadougou East Substation) and the corresponding changes to the narratives of the Environmental and Social Impact Assessment (ESIA) and Resettlement Action Plan (RAP) documentation; procurement of composite insulators instead of glass insulators and All Aluminum Alloy Conductor Trapezoidal-Wire (AAAC/TW) overhead conductors instead of AAAC Aster 570 mm2 conductors for the transmission line; procurement of 50 MVA 90/33 kV transformer instead of 40 MVA 90/34.5 kV transformer; supplementary Page 12 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) commissioning services for Synchronous Digital Hierarchy (SDH) and Programmable logic controller (PLC) equipment at Bolgatanga II substation; contractual extensions to correspond project delays; electrification of 25 villages along the right-of-way of the new transmission line to be accomplished through existing 33 kV distribution lines; and 34.5 kV insulated shield wires from the transmission line under construction, as opposed to full electrification through the latter as originally conceived. Pre- investment studies were carried out for the proposed 330 kV Dawa-Bolgantanga transmission line instead of the 161 kV Atebubu-Tamale transmission line. 23. Change initiated in the context of the December 2017 restructuring was to extend the closing date of the credit to Ghana from December 31, 2017, to December 31, 2018. This was to ensure completion of construction works and commissioning of the 161/225/330 kV Bolgatanga substation financed under the credit. Delays in construction were caused by late delivery of power transformers at the project site due to (a) challenges in releasing the transformers from the port because of dispute between the supplier and transporter and (b) closure of bridges on delivery route for maintenance. Rationale for Changes and Their Implication on the Original Theory of Change 24. Changes were aimed at adjusting project financing arrangements and delivery time lines to ensure that the project is completed to achieve its objectives. The changes in financing of project activities and extension of closing dates of funding agreements did not necessitate change in the original PDOs or trigger new safeguard policies. The changes did not have impact on the theory of change. Table 5. Summary of Physical Investments at Project Closure Physical Investment Burkina Faso Ghana Transmission line 171 km 225 kV transmission line 17 km 225 kV transmission line (from Zagtouli S/S to border at Dakola/Paga). (from Dakola/Paga to Bolgatanga 2 22 km of this is double circuit from Zagtouli S/S) to tower A5 terminating at Ouagadougou East S/S. Substations Extension of 225/90 kV Zagtouli S/S 330/161 kV 200 MVA transformer at Aboadze S/S for N-1 contingency New 90/33 kV 1 x 50 MVA Burkina Faso S/S 330/225/161 kV Bolgatanga 2 S/S Electrification of 14 villages supplied from existing 33 kV villages network 11 villages supplied by shield wire of 225 kV transmission line from a 34.5 kV Note: S/S = Substation. Page 13 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Relevance of Objectives: High 25. The PDO was to reduce cost of and improve the security of electricity supply to Burkina Faso, while increasing Ghana’s electricity export capacity. While the project underwent three restructurings, the original PDO was retained. Restructuring changes were introduced to redeploy proceeds of the finances following agreement among international financial institutions (IFIs) and to extend the project closing date to compensate for implementation delays. 26. Consistency with the World Bank’s RIAS and the EEP. This project has been a logical continuation of World Bank assistance to the ECOWAS energy program and WAPP initiative, which the World Bank has supported and continues to support to finance strategic investments in the power sector, particularly to develop interconnected power systems and cross-border transmission corridors within the incumbent countries and consistent with the World Bank’s vision of transforming WAPP into a regional power market. 27. Burkina Faso Country Assistance Strategy (CAS) 2010–2012 and now the Systematic Country Diagnostic (SCD) emphasize the reduction of cost of electricity and dependence on hydrocarbon fuels. The interconnection links Burkina Faso for cross-border trade of surplus bulk power from Ghana and is a major component in the creation of the transmission system backbone in Burkina Faso. This project is transformative both nationally and regionally in several ways as it is an enabler of binational and regional trade. 28. The 225 kV Ghana-Burkina Faso transmission line is being used to import clean and cheaper power from Ghana to Burkina Faso to reduce Burkina Faso’s acute power shortages due to lack of generation and allows Burkina Faso to avoid petroleum fuel imports for generating electricity. This project is the second cross-border interconnection for Burkina Faso, increasing the country’s import capacity by a 200 MW margin. The existing interconnection is with Côte d’Ivoire (100 MW capacity). The project is expected to reduce overreliance on a single interconnection with Côte d’Ivoire that has historically suffered from reliability issues. 29. Combined imports of 180 MW from Côte d’Ivoire (80) and Ghana (100) represent over 50 percent of total electricity supply capacity for Burkina Faso. Import of cheaper power helps Burkina Faso reduce the excessive reliance on heavy fuel oil (HFO)/diesel as primary energy source, which results in reduced government subsidies for HFO/diesel-based generation. This also helps SONABEL reduce the average cost of generation. Imports for the country will be augmented with the completion of the WAPP Ghana-Burkina Faso-Mali under preparation and the WAPP North Core project under implementation. It is expected that significant benefits from regional trading could be achieved over the coming years as it is expected that every country within the West Africa power pool will be interconnected by the early 2020s. 30. Burkina Faso has also indicated its interest, to countries in the region, to strengthen the reliability of supply (which will be addressed through the ECOWAS Battery Energy Storage Systems and Page 14 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Synchronization Project currently under preparation) to build trust in trade, which is the subject of the ECOWAS directive on securitization of payments adopted in December 2018 that comes into force in January 2020. 31. Imports from cleaner and cheaper sources will help Burkina Faso reduce greenhouse gas emissions generated within the country as a result of displacement of hydrocarbon-based thermal generation, in particular diesel. 32. The Ghana CAS 2008–2012 and now the SCD emphasize the Government of Ghana’s desire to become a net electricity export country. Ghana is utilizing this transmission line to export power to Burkina Faso from its excess generation capacity, currently consisting of hydro and HFO but eventually gas-fired energy resources. This project also paves way for the development of the second phase of the intra-zonal network that will link Burkina Faso and Mali and strengthen the interconnection between WAPP Zone A4 and Zone B,5 which will further increase Ghana’s electricity export capacity. 33. Based on these factors, the relevance of project objectives is rated ’High’. The PDO has been and remains consistent with the objectives of Burkina Faso and Ghana’s former CASs and now the SCDs as well as the ECOWAS and World Bank’s efforts to develop a regional electricity market. Accordingly, this project represents a real breakthrough across the incumbent countries’ economies as it contributes significantly to lower electricity costs, improve supply security, increase electricity trade, and improve the electricity access rate, which would benefit large numbers of poor households. By mitigating power shortages and creating economic transformation opportunities in both countries, the project will strengthen regional and bilateral relations, enabling them to eventually materialize the wider regional electricity market. B. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Rating of efficacy: HIGH 34. The PDO was to reduce cost of and improve the security of electricity supply to Burkina Faso, while increasing Ghana’s electricity export capacity. By the revised closing date of December 31, 2018, the project fully attained its development objective, even though the transmission line was in operation only for six months. The Bolgatanga-Ouagadougou transmission interconnection project was completed by the commercial operation date of June 28, 2018. During the ensuing operation of the line until the project closing date of December 31, 2018, the project achieved the targets of reducing the cost and improving the security of supply to Burkina Faso as well as increasing Ghana’s electricity export capacity. 35. The PDOs for this project were not revised during implementation, and the two intended objectives remained unchanged. The specific baseline, target values, and individual assessment for each of the PDO outcome indicators are provided in table 6. 4 WAPP Zone A countries include Niger, Nigeria, Benin, Togo, Ghana, Côte d’Ivoire, and Burkina Faso. 5 WAPP Zone B countries include Liberia, Sierra Leone, Liberia, Guinea, Guinea-Bissau, Mali, Senegal, and The Gambia. Page 15 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 6. PDO Targets and Achievements at Project Closure Target Actual PDO-level Indicators Baseline Achievement Value Value Average weighted annual cost of electricity supply in 0.2634 0.25 0.2 120% Burkina Fasoa (US$/kWh) Annual total duration of outages in Burkina Faso due to 130 8 <8 ≈100% generation capacity deficit/load sheddingb (hours) Annual total hours of operation of the interconnection line 0 7,884 8,497 108% (hours) Note: a. and b. Data from SONABEL/GRIDCo Operation Statistics. Objective 1: To reduce cost of and improve the security of electricity supply to Burkina Faso 36. Reduction of the cost of electricity supply in Burkina Faso. As mentioned in table 6, the average weighted annual cost of electricity supply in Burkina Faso has been reduced from its baseline value. The average cost of electricity in Burkina Faso has dropped to US$0.2 per kWh, that is, US$0.05 per kWh below the targeted cost of US$0.25 per kWh. The project has a positive impact on the cost of electricity supply since cheaper hydropower from Ghana flows into Burkina Faso owing to the new interconnector, thus displacing more expensive electricity generated locally using HFO fuel. Consequently, the project has achieved the intended objective and is, therefore, rated ‘High’. 37. Improvement in security of electricity supply in Burkina Faso. Operational statistics from the Bolgatanga-Ouagadougou transmission interconnection evidence a positive impact of the line on overall system reliability. According to reported data, the project targets have been exceeded. Following the commercial operation date, the transmission line has operated 8,497 hours per year against the target of 7,884 hours, indicating an availability of 97 percent against the targeted of 90 percent. Most outages were planned for relay settings and equipment inspections. During this time, the Bolgatanga-Ouagadougou transmission interconnection has helped reduce power outages due to electricity generation from 130 to the target of 8 per year. Consequently, the rating for this project is considered ‘High’. Objective 2: To increase Ghana’s electricity export capacity 38. Increase in Ghana’s power export capacity. About 222 GWh of energy has been transferred on to Burkina Faso from Ghana, as reported by SONABEL’s operation statistics, thus surpassing the annual target (158 GWh) after only sixth months of operation. The capacity of the transmission line is 200 MW; consequently, Ghana’s ability to export electricity has increased by 200 MW. Accordingly, the rating for this PDO is considered ‘High’. Table 7. Electricity Exports from Ghana to Burkina Faso through the New Transmission 225 kV Interconnector Year Month Export (kWh) Total (kWh) 2018 June 2,330,800 July 27,248,700 221,694,900.00 August 32,912,000 September 31,513,400 Page 16 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Year Month Export (kWh) Total (kWh) October 40,519,100 November 43,605,100 December 43,565,800 2019 January 43,242,400 78,606,800.00 February 35,364,400 Note: Data from SONABEL’s Operation Statistics. 39. Attribution. The key outcomes achieved are attributed to the project for the following reasons: (a) imports from Ghana via the interconnector represent 23 percent of the current supply mix for Burkina Faso and at less than 50 percent the cost of self-generation from thermal sources; (b) self-generation in Burkina Faso was increased by solar generation but this represented a minor contribution totaling 29 GWh (percent) versus over 200 GWh imports from Ghana via the interconnector and the reduction in outages during peak hours due to lack of generation is grossly attributed to the interconnector; (c) Ghana’s electricity export capacity has been increased by a margin of 200 MW with the availability of the interconnector. 40. Other achievements. Without this project, a number of communities close to Ouagadougou and along the transmission route will not have access to electricity, and capacity building for utilities on live network operations among others would not have been realized. A feasibility study to further reinforce the Ghana grid to facilitate regional power trade was completed under this project. Justification of Overall Efficacy Rating 41. Based on the achievements of the three aspects of the PDO, the overall efficacy of this project is rated ‘High’. 42. Adequacy and availability of the grids in Burkina Faso and Ghana improved because of the project activities, thus leading to more reliable networks in each country. Likewise, the Bolgatanga-Ouagadougou transmission interconnection has increased Ghana’s power export capacity. Other WAPP member countries, particularly Mali and Niger, will benefit from Burkina Faso’s increased ability to wheel power from Ghana and Côte d’Ivoire. All key results indicators were met. The overall efficacy is therefore rated ‘High’. C. EFFICIENCY Assessment of Efficiency and Rating Rating: Substantial 43. A regional project involving more than one donor will have agreement with cross-conditionalities. In addition to those, this project added covenants stemming from the fact that it was expedited to the Board on the last day of the IDA cycle. The complexity of meeting the legal covenants delayed implementation readiness. Although the project was approved in June 2011, it took 18 months for the project to be effective in December 2012, because of the multiplicity of arrangements and formalities to Page 17 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ensure accomplishment of cross-effectiveness of the project legal covenants under the various financing agreements for the World Bank, EIB, and AFD. 44. The multiplicity of project financiers created coordination challenges. Bringing together consensus among the financiers on a joint procurement strategy where each financier had to approve the same bidding document proved challenging. This was because financiers struggled to agree on some procurement aspects; for instance, there were differences in views regarding the terms of reference for hiring the owner’s engineer. Also, the procurement procedures conflicted and while the World Bank/IBRD procedures would allow reimbursing for taxes, it was not the case with AFD. Likewise, requirements for prequalifications were not similar for all the financiers. Moreover, given the binational nature of the project, the bidding documents had to be translated into French before approval by the financiers and the translation alone took time to complete. To overcome this issue, the IDA team proposed to withdraw IDA financing from the portion of the transmission line and to reallocate it to the financing for building the 330/225/161 kV Bolgatanga substation in Ghana under Subcomponent 1.2. AFD agreed to reduce its financing of Subcomponent 1.2 commensurately and reallocate it to project Subcomponent 1.1. 45. The economic costs to achieve the project objectives were reasonable for a power transmission project. It facilitated leveraging of around US$79.6 million of investments in the construction of the transmission line between Ghana and Burkina Faso (interconnection) or roughly US$419,000 per km. When a share of the reinforcement of Ghana’s internal power transmission to 330 kV investment (50 percent) is included, the total cost of the investment is estimated at US$159.3 million. In addition to improving Ghana network reliability and efficiency, the reinforcement also allows a higher level of power transit on the interconnection line. 46. At appraisal, it was assumed that exports from Ghana to Burkina Faso would increase transmission losses by 5 percent of the energy transmitted (3 percent on the Ghanaian network, 2 percent on the interconnection) and the transmission line transit capacity would be set at 100 MW with reinforcements of the Ghanaian network. Furthermore, the line load factor was set to 75 percent (SONABEL would absorb as much cheap energy as possible with the assumption that not all the line transit capacity would be needed during off-peak periods). At completion, the effective transmission losses were 1.13 percent in 2018 (the line had operated for only half a year). 47. The project’s economic internal rate of return (EIRR) is 29.7 percent, which is reasonably high. This would translate into a net present value (NPV) of US$230 million at 10 percent discount rate. Table 8 provides a comparison of the main results post completion with the same at the appraisal phase. Page 18 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 8. Summary of Economic Analysis at Appraisal and Post Completion At Appraisal Post Completion Investment (CAPEX) (US$, thousands) 141,600 159,340 Interconnection 87,300 79,624 Reinforcement 54,300 79,716 Avoided cost of generation - Burkina Faso (US¢/kWh) 18.5 17.7 Incremental cost of generation - Ghana US¢/kWh 7.6 8.2 Incremental transmission losses (%) 5.0 2.3 Discount rate (%) 10 10 EIRR (%) 32.6 29.7 ENPV (US$, thousands) 284,000 230,357 Note: CAPEX = Capital expenditure; ENPV = Economic net present value. 48. The financial analysis shows that of the two countries, Burkina Faso (SONABEL) will enjoy higher financial return (37 percent at appraisal and 29.6 percent post completion) as the interconnection line will allow the country to buy cheaper power from Ghana to replace expensive power generated from diesel plants. The project is still financially viable for Ghana (12.2 percent at appraisal versus 13.47 percent post completion). D. JUSTIFICATION OF OVERALL OUTCOME RATING Rating: Satisfactory 49. The project remains highly relevant and despite delays in reaching effectiveness, lengthy procurement, and safeguards hurdles, activities were duly completed. This project opened pathways for real breakthrough for Burkina Faso as it contributes significantly to lower electricity costs, improve supply security, increase electricity trade, and improve the electricity access rate, which would benefit large numbers of poor households. At the same time, the project promotes the strengthening of a regionally oriented economy where Ghana has started to benefit from trading its excess generation capacity. The project was a catalyst in bridging commercial relations between two neighboring countries within West Africa. The completion of this project reduced Burkina Faso’s overreliance on a single cross-border interconnection for imports. Burkina Faso’s imports contributed over 50 percent of electricity supplied in 2018. The project led to a significant reduction of HFO imports resulting from a displacement of electricity generated locally by imports from Ghana. The project has strengthened the reliability of power supply in Burkina Faso through a substantial reduction of service interruptions during periods of peak demand when electricity prices are higher. 50. The project met energy import, reliability, and transmission loss targets and based on the high relevance of objectives, high efficacy, and substantial efficiency, the overall outcome of the project is rated ‘Satisfactory’. E. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 51. Gender-based outcomes were contemplated and linked to a number of direct project beneficiaries, of whom an estimated 31 percent are females according to an audit financed by the World Page 19 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Bank to assess impact following project completion. Specifically, the construction of the distribution network and connection of households financed by IDA under the project have provided electricity access to 25 poor neighborhoods/villages in the outskirts of Ouagadougou and along the of right-of-way of the 188 km transmission line. Connectivity to the grid is expected to enhance the standard of living of the local population and help power local economic activities for women along the corridor. Specific areas of benefits include the following:  Gender equality: Long-term empowerment for women as they embark on new and diversified economic activities.  Improved sustainable use of natural resources: Reduction of fuelwood used for cooking and heating water, reduced deforestation, prevention of soil erosion and inundations, improved soil fertility, and so on.  Special training for women: Capacity building in GRIDCo and SONABEL provided an opportunity for female staff to get specialized training, including trainings in live line works, substation automation, and various trainings in procurement. Overall, the project has generated a gender impact during implementation as well as for future operation. However, the definite scope of the gender impact can only be captured through a survey. Institutional Strengthening 52. Component 5 of the project design encompassing the technical assistance activities had resources to contribute to the capacity building in the energy sector, which has resulted in enhancement of SONABEL and GRIDCo’s technical and project management capacity for project implementation. Dozens of staff from both utilities participated in local and external training sessions covering themes such as (a) HV system planning, (b) hotwire O&M of HV transmission systems, (c) development and O&M of SCADA systems, (d) procurement, and (e) telecommunications and HV network protection. Feedback from management representatives from both utilities indicates that the trainings were very effective and will lead to better grid O&M in both countries. Likewise, implementation of future transmission projects will benefit by avoiding unnecessary delays observed under the implementation of this project. Staff of the PIU also highlighted benefits of working closely with the project management consultant financed under Component 4. Mobilizing Private Sector Financing 53. Private sector participation was not envisioned for this project. Poverty Reduction and Shared Prosperity 54. The increased cross-border electricity trade will help decrease the cost of electricity and improve grid performance and quality of electricity, which will lead to reduction in self-generation for most businesses and will benefit low-income grid-connected customers as well. This in turn will have a good economic effect toward poverty alleviation and shared prosperity, through lower cost electricity, economic growth, job creation, and improved and more sustainable financial state of the electricity sector Page 20 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) facilitating expanded access to poor peri-urban and rural population and freeing public resources for priority social programs. 55. Newly connected households having access to electricity have seen their conditions of life improving. Likewise, employments have been created or maintained because of the sustained supply of electricity. For instance, some of the benefits include the following:  Deployment of electricity-powered household appliances: Fans, refrigerators, water pumps, domestic mills, electric cooks/stoves, entertaining (TV, movie players/recorders, play stations), IT (laptops and computers), and communication (cell phones) technologies.  Improved health conditions: Better sanitary and indoor air pollution levels, reduced infant mortality, reduction in respiratory illnesses, and reduced levels of soot and other particulate matter produced by burning fuelwood and/or kerosene. Food/medicine refrigeration is now more feasible with available reliable power supply.  Improvements to household economy: Increased value of land, creation of microenterprises, agro-processing and value addition, food vending, convenience/repair shops, and so on. Other Unintended Outcomes and Impacts 56. The project will help develop the WAPP competitive market even though it was not directly considered during the design. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION Project Justification 57. A regional thrust launched in 1982 to use regional energy resources optimally necessitated this project. Access to sustainable and affordable energy was one of the main priorities of ECOWAS to alleviate poverty and improve competitiveness of member states’ economies. This political commitment led later to the setting up of energy programs such as WAPP in 1999. ECOWAS member states acknowledged that a major shortcoming in the region was the lack of sufficient generation capacity and adequate transmission infrastructure (within and between national power systems) to establish a sustainable regional electricity market. Therefore, the project was driven first by pooling together the power supply of WAPP countries and second by the need to improve Burkina Faso’s security of supply and reduced electricity costs. 58. The project was given priority because the ECOWAS energy strategy was based on the recognition that the differences in energy endowments as well as the imbalances between domestic energy resources and needs constituted the basis of regional energy trade opportunities. On the one hand, Burkina Faso has no significant known fossil fuel resources, the electrification rate was about 23 percent (about 40 Page 21 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) percent in urban areas and about 3 percent in rural areas), about 90 percent of the population still relied on firewood and charcoal for the bulk of their energy needs, and petroleum products are entirely imported by road at high cost from ports over 1,000 km away, which is a handicap acting as a brake on Burkina Faso’s ability to expand access to electricity, since over 90 percent of electricity production is from liquid fuels. At the time of project approval, the total generation capacity in Burkina Faso was 256 MW, which was insufficient to meet peak demand. Power demand was growing at 7 percent per year and electricity imports from Côte d’Ivoire and Ghana (via small cities at the border) were just enough to ensure a precarious equilibrium between demand and supply during non-peak load periods. On the other hand, Ghana’s generation mix was transitioning crude oil to natural gas as the main source of fuel for generating electricity. Furthermore, Ghana’s total generation capacity was about 2,100 MW, of which 1,200 MW came from hydropower plants. At the time, the development of gas transmission and process facilities to exploit Ghana’s own gas reserves were seen with the low-cost gas/hydro energy mix potential to significantly reduce the cost of electricity supply in Burkina Faso. Moreover, this project laid the base for the development of the second phase of the intra-zonal network that would link Burkina Faso and Mali and strengthen the interconnection between WAPP countries. Project Design Technical solution 59. The construction and operation technologies of transmission lines were well-known and proven. In addition, the project was to be implemented according to internationally accepted technical criteria and standards, with the assistance of IDA-financed consultants. The line was relatively short and simple to build. The 225 kV voltage chosen for the line was compatible with the existing Burkina Faso and WAPP voltage levels. Ghana and Burkina Faso already had experience with electricity trade and day-to-day operations. The rural electrification component would allow the connection of rural communities on the right-of-way using the transmission line shield wire. This would not involve major additional costs and would contribute to poverty alleviation in these villages. PDO and Results Framework 60. The PDO was concise and aligned to expectations of an interconnector transmission project in a power pool at a shallow integration stage such as WAPP. The countries involved already had interconnections and trade with other countries, and therefore the target outcomes were to reduce cost of power supply, improving the security of electricity supply and enabling trade. The results framework was consistent with such a high-level outcome project. The indicators were specific, measurable, achievable, relevant, and time bound (SMART). Economic Analysis 61. The economic justification for the proposed interconnection line was initially assessed by the project feasibility study.6 The study compared two expansion plans over the 2010–2030 time horizon, one with and the other without the interconnection. The economics of the interconnection project appeared 6225 kV Bolgatanga-Ouagadougou Interconnection Project - Update of Feasibility Study, Volume 3: Economic and Financial Study, December 2010, by Studi International, Africon and STEG International Services. Page 22 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) strong. In the base case scenario, the project EIRR projected was 32.6 percent and the project NPV was estimated at US$284 million at the appraisal stage. The economics of the investment also appeared robust to variations in the major economic and technical parameters, such as project costs, load factor, and fuels costs. Procurement 62. The project design drew lessons from previous WAPP programs (APL1 and APL2) to the effect that regional projects cannot be executed on time by the state utilities working in isolation. As part of the project design, the transmission line was agreed to be procured jointly by GRIDCo and SONABEL. This required that all procurement issues had to be cleared by all the three funding agencies (EIB, AFD, and World Bank/IDA) involved in the project. There was an informal agreement by both the EIB and AFD to use World Bank guidelines and Standard Bidding Documents, which was documented in the Project Appraisal Document (PAD) of the World Bank. Implementation Arrangements and Coordination 63. Implementation arrangements were well considered with a dedicated PIU established for the day- to-day implementation management of the project in each country’s territory. The project preparation supported the establishment of a Joint Implementation Committee by the two utilities (comprising high- level management staff of the two utilities) and the recruitment of a single experienced international owner’s engineer to support PIUs in both countries to mitigate against lack of adequate coordination. Safeguards 64. Ghana and Burkina Faso completed the ESIA studies covering the entire transmission line between Bolgatanga and Ouagadougou. These studies were cleared by World Bank and disclosed in-country and then at the InfoShop. The two countries prepared, consulted upon, and disclosed RAPs following review by the World Bank before appraisal. At appraisal, it was considered that GRIDCo and SONABEL had adequate capacity to satisfactorily manage the potential negative dimensions of transmission line projects and substation construction. It was also concluded that standard environmental and resettlement management practices would suffice to minimize any concerns during construction and operation. Risk Assessment 65. At appraisal, most risks were correctly identified, and mitigation measures outlined. However, there were shortcomings as there was no formal agreement signed among financiers that captured that AFD and the EIB had accepted to use the World Bank procurement guidelines and Standard Bidding Documents to mitigate the “Risk of incompatibility in procurement procedures among the 3 lenders.” In addition, there was no mitigation measure for the risk of delays due to cross-effectiveness covenants between the World Bank, EIB, and AFD, which was identified at appraisal because the World Bank was the first among the co-financiers to approve the project. The overall risk was rated ‘High’ at project approval. Page 23 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) B. KEY FACTORS DURING IMPLEMENTATION 66. The project experienced significant delays from late effectiveness, inadequate coordination of IFIs’ procurement procedures leading to extensive procurement clearance processes, and gaps in project management. Project effectiveness took place 18 months after Board approval, and procurement only started 29 months after project approval and the project eventually closed three years beyond the originally intended closing date. Implementation Delays 67. Effectiveness was late. Project effectiveness was originally scheduled for November 7, 2011, following Board approval in June 2011. However, it was not until December 2012 that all legal covenants needed to meet effectiveness conditions for the project were met by SONABEL and GRIDCo, a period of 18 months. As a multidonor regional project, the Financing Agreements contained mandatory cross- conditionality covenants. However, the EIB and AFD were late in preparing and approving their respective Financing Agreements and not consistent with tentative time lines indicated when the project was approved by the World Bank Board of Executive Directors. 68. Lack of proper coordination and consensus among financiers led to procurement delays that had to be resolved by reallocation of funds under Financing Agreements. For instance, the process of recruiting the owner’s engineer began in October 2011 when the World Bank’s ‘no objection’ was obtained with the issue of the Request for Expression of Interest in November 2011 and evaluation of Expressions of Interests received completed by December 2011. There was also a need to prepare an Request for Proposal (RFP) in French and English since the line was to be jointly procured by SONABEL and GRIDCo, but the World Bank did not have a corresponding French version on its website at the time, as traditionally, issuance of French versions of English procurement documents takes some time. Translation of the RFP into French by SONABEL took longer than envisaged. Though the World Bank found the document acceptable, AFD and the EIB needed to do a full review of the document to satisfy their procurement requirements. The process to hire the owner’s engineer concluded with award of contract in December 2013. This was because all three funding agencies had to approve the final RFP that had been approved by the World Bank and this also took a considerable time. 69. The EIB, AFD, and the World Bank also took some time to decide on the use of prequalification for the procurement of Works for the interconnection project as requested by AFD and the EIB.7 The EIB confirmed in June 2013 the need for prequalification but that the process could only be undertaken with the participation of the owner’s engineer. The owner’s engineer selection had delayed significantly already. Following the EIB’s rejection of the request made by GRIDCo and SONABEL to initiate the prequalification process for the transmission line and substation packages, GRIDCo and SONABEL reviewed the situation and made another request in July 2013, observing that a lot of time had already been lost due to the delays in the engagement of the owner’s engineer and therefore requested the EIB and AFD to reconsider their position on the issue to forestall further delays in the implementation of the 7The new procurement framework mitigates such challenges as there is no obligation for the World Bank to be the lead supervisor and an alternative procurement arrangement can be agreed between donors as identified in the Project Procurement Strategy for Development (PPSD). Page 24 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) project. It was proved that seeking the consent of the three funding agencies was challenging and finally led to the restructuring of the financing of the project to forestall further delays. 70. In view of differences in procurement procedures, the World Bank proposed to reallocate its funding of US$3.8 million for the interconnection line on the Ghana side to increase its allocation for the construction of the 330/225/161 kV Bolgatanga substation while AFD would reduce its financing for the 225 kV substation and top up its allocation to fully fund the Ghana section of the interconnection line.8 Thus, AFD would co-finance the interconnection line with the EIB which was funding the Burkina Faso section while the World Bank would co-finance the Bolgatanga substation with AFD. The contract for the supply of 330/225 kV autotransformers and 225 kV reactors was transferred to AFD. The World Bank/IDA thus financed the 330/225 kV Bolgatanga II substation works contract. AFD also agreed to allocate its funding for the substation component to fully fund the contract to supply 330/225 kV autotransformers for the substation and the transmission as shown in Table 9. Table 9. Funds Reallocation (US$, millions) Initial Allocation Proposed Reallocation AFD AFD Description World Bank World Bank Contribution Contribution Construction of 40 km 225 kV transmission 2.5 3.8 6.3 0.0 line from Bolgatanga to Ghana border (revised to 17 km) Construction of a 225/161 kV substation at 6.6 9.9 2.8 13.7 Bolgatanga including the supply of 2 225/161 kV autotransformers (revised to construction of 330/225 kV switchyard Provision of the SCADA system at 0.5 0.5 0.5 0.5 Bolgatanga substation including fiber optics and PLC communication facilities Total 9.6 14.2 9.6 14.2 71. In general, procurement processes were lengthy and associated contract approval processing was slow. The average times for the satisfactory completion of bidding documents, the bidding period, bid evaluations, and contract effectiveness were long. The main reasons for the protracted period were changes introduced to the Standard Bidding Documents originally used, changes made to unsuitable technical specifications prepared earlier, the slow pace of document preparation by staff due to lack of an adequate number of staff at SONABEL, and lack of dedicated procurement staff on the PIU. The average delay between original bid submission deadlines indicated in the PAD and actual bid submission dates was 31.3 months, equivalent to 2.4 years. The average duration from the evaluation of bids until the achievement of contract effectiveness was 10.2 months. Details are provided in annex 7. 72. The first goods, works, and non-consulting services contract under the project was only signed in June 2015 for the electrification of rural localities under Component 3, that is, 4 years after project approval and nearly 1.5 years after effectiveness of Financing Agreements. 73. Implementation time. Construction activities were completed earlier than originally anticipated, 8 Each donor entirely finances separate contracts. Page 25 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) which, to a degree, compensated for delays at the outset. Coordination among the Two Implementing Agencies 74. Ghana’s PIU was perceived as well staffed, functional, and capable, while SONABEL’s PIU was perceived as slow, inadequately staffed, not functional, and lacking the required motivation. To mitigate challenges from having two separate PIUs, a joint supervisory entity was put in place—the Joint Implementation Committee. 75. The utilities adopted a joint procurement strategy for the implementation of the project that seems to have worked satisfactorily. This covered the following contracts: (a) Joint engagement of the project management consultant (owner’s engineer) (b) Joint engagement of the transmission line contractor for the implementation of the interconnection project (c) Strategy for the implementation of the substation works and SCADA works (d) Establishment of the Joint Supervision (Implementation) Committee 76. GRIDCo and SONABEL faced some challenges because of the difference in their official languages in Ghana and Burkina Faso, but the utilities eventually managed to overcome the difficulties. Health, Safety, Environment, and Social Impacts 77. There were gaps in the implementation of health and safety and social management plans’ monitoring by SONABEL. The management of the utilities and the owner’s engineer did not anticipate the need for deploying health and safety supervisors at all project sites. Only one health and safety supervisor was deployed by the owner’s engineer for all construction sites, which were separated by hundreds of kilometers in some instances. This was a general practice for several projects. However, the need for deploying more supervisors in projects that cover a wide area to ensure that safeguards measures are complied with to the fullest became evident when two accidents resulting in two fatalities occurred in July 2017, spaced less than a month from each other. In one incident, a transmission tower gave way while a team of two workers installing the transmission tower were carrying out assembly works. The tower fell to the ground while carrying the two workers. One worker was declared dead at the scene while the other was seriously injured and admitted at the hospital. The second fatal incident involved the drowning of a minor in a pool formed in the excavated tower foundations that had been filled up with rain water. 78. The World Bank’s team conducted a detailed mission and supported SONABEL, the owner’s engineer, and the contractor to come up with a 20-point action plan to mitigate further occurrence of accidents and deal with social issues following the accidents. The actions included the following: (a) certify workers carrying out installations especially at heights, (b) involve community organizations/nongovernmental organizations (NGOs) in the implementation and/or monitoring of social activities including public sensitization, (c) secure all work sites with wooden barricades before starting any work, (d) apply compensation provisions advocated for such cases and provide evidence of reports and the initiation of compensations, and (e) perform the sacrificial rituals in accordance with the demands Page 26 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) of customary authorities. 79. With regard to social impacts, there were delays in payments of compensations to project- affected persons (PAPs). The delays were attributed to the following key reasons: (a) some PAPs presented incomplete documentations to back their claims for compensation, which took considerable time to verify and assess claims and (b) depending on the season, farmers migrated to other locations in Ghana and were not always available for asset inventory surveys and valuation of compensation. In addition to compensation delays, the World Bank could not establish the effectiveness of the Grievance Redress Mechanism in place under the project as the issue was highlighted in later stages of the project when a complaint regarding delayed compensation was escalated. There was no formal Grievance Redress Mechanism in place although there was a default/verbal Grievance Redress Mechanism process involving traditional and local government authorities that served as interlocutors between local communities (including PAPs) and the project when project-related complaints arise. Factors Subject to World Bank Control 80. There were four task team leaders (TTLs) between project design and project close. Transitions between TTLs were adequately managed and did not affect implementation progress. When construction works commenced, the World Bank was active in supporting the client with recommendations to help advance slow-moving contracts. Project implementation progress was properly rated throughout implementation. However, the Implementation Status and Results Reports (ISRs) also did not flag gaps in the supervision of safeguards on time. The ISRs rated ‘overall safeguard compliance’ ‘Satisfactory’ throughout project implementation except in the later stages of the project following the fatal accidents and shortfalls in the implementation of an effective Grievance Redress Mechanism. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A. QUALITY OF MONITORING AND EVALUATION (M&E) Rating: Substantial M&E Design 81. The M&E design was appropriate and consistent for an interconnection project within a power pool at the integration stage and with concerned countries already involved in power trading. Annex 1 in the PAD provided a results framework with PDO and intermediate indicators, baselines, expected annual targets, the frequency of reporting, the data collection instruments, and the borrower units in charge of data collection. GRIDCo and SONABEL were entrusted with the task of collecting and regularly sharing data on the progress of project implementation, and the PIU was responsible for the overall project monitoring. 82. The main indicators of ‘Average weighted annual cost of electricity supply in Burkina Faso’, ‘Annual total duration of outages in Burkina Faso due to generation capacity deficit/load shedding’, and ‘Annual total hours of operation of the interconnection line’ are aligned to power trade and cost reduction (Guidance Note to prepare PDO and indicators for interconnector transmission projects (IPF) in Sub- Page 27 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Sahara Africa drafted in March 2019 confirms this). There were six intermediate indicators in the results framework, which were specific, measurable, achievable, relevant, and time bound. 83. The indicators captured the outputs and were a true measure of the expected outcomes for the project. First, the project was expected to reduce the average weighted annual cost of electricity supply as the cost of energy imported on the interconnection is a fraction of the cost of self-generation by Burkina Faso from HFO- and diesel-based facilities. Second, the volume of imported energy through the interconnection was expected to reduce the total number of load shedding hours due to generation deficit in Burkina Faso and third, the volume of energy trading on the line is a factor of the availability of the interconnection line and available power in Ghana to be wheeled. The quality of M&E was rated Substantial. M&E Implementation 84. Project monitoring was conducted through regular supervision missions and, most importantly, through the 13 ISRs (the Operations Portal system has 14 registered ISRs, which are mentioned in the data sheet under ‘Ratings of Project Performance in ISRs’ section on page 3 of this report). The ISRs were effective in providing the needed information related to the project implementation progress. Data on all indicators were regularly collected by the PIU and shared with the World Bank through mission meetings with the World Bank’s team. The PIU was key in coordinating the collection of data and information related to the PDO and intermediate indicators to help the TTLs update the results indicators when preparing each of the 13 ISRs that reported on the progress toward the project goals. 85. A minor shortcoming in the implementation of the M&E framework is the lack of reporting on the results framework in the owner’s engineer monthly/quarterly progress reports that the implementing agencies shared with the World Bank’s team. M&E Utilization 86. M&E was key in following up project progress through the supervision missions and the preparation of corresponding Aide Memoires and ISRs. Information provided in the ISRs allowed management to provide guidance on measures to address challenges. The project restructurings to ensure that the project achieves its objectives were a result of the team’s M&E utilization. Justification of Overall Rating of Quality of M&E 87. The M&E had appropriate PDO indicators aligned with the project context and the World Bank’s team consistently produced ISRs following missions that allowed management to be adequately informed and to be able to provide necessary guidance on project implementation and delivery. Overall, the quality of the M&E performance is rated Substantial. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 88. Environmental. The project was identified as a Category B project because of the expected moderate social and environmental impacts. Four safeguards policies triggered at approval were as follows: (a) Environmental Assessment (OP/BP 4.01), (b) Natural Habitats (OP/BP 4.04), (c) Physical Page 28 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Cultural Resources (OP/BP 4.11), and (d) Involuntary Resettlement (OP/BP 4.12). An ESIA and associated Environmental and Social Management Plan (ESMP) were developed and disclosed in 2011. 89. Three documents laying down the principles and mechanisms for the mitigation of adverse environmental and social impact and for addressing grievances were prepared: (a) the ESIA, (b) the ESMP, and (c) the RAP. The instruments guided safeguards risk and impact management during the project life cycle. 90. Social. There were gaps in the implementation of social safeguards. The quality of the safeguards monitoring to oversee health- and safety-related aspects from SONABEL was assessed to have shortcomings. Similarly, GRIDCo’s Grievance Redress Mechanism was not effective in recording complaints appropriately for references. 91. Throughout implementation and until the project closure in December 2018, safeguards rating improved and ranged between Satisfactory or Moderately Satisfactory, although there were pending social safeguard issues related to the Grievance Redress Mechanism. This is due to efforts by the PIU to rectify highlighted shortfalls and aftermath management of safeguards issues following the two fatal accidents. SONABEL and the owner’s engineers also implemented corrective measures. 92. Fiduciary. The overall financial management performance was rated Satisfactory and Moderately Satisfactory throughout the implementation period. Financial management arrangements were implemented and maintained by both GRIDCo and SONABEL throughout the implementation of the project. The interim financial reports, annual audit reports, and withdrawal applications were prepared and submitted to the World Bank. 93. Procurement. The lack of smooth organization, coordination, and communication among key financiers (World Bank, AFD, and EIB) coupled with lack slow responsiveness of implementation agencies led to lengthy procurement processes. C. BANK PERFORMANCE Project Preparation, Design, and Quality at Entry 94. Background analyses. The project concept was practical and considered the regional integration strategy. The original design relied on planning documentation prepared by WAPP and was well aligned with stated country goals and priorities. 95. From the strategic point of view, the project initiative arose from a shared interest between the ECOWAS/WAPP countries and the Ghanaian and Burkina Faso authorities and the availability of the World Bank and other donors to provide funding. The project concept was sound as the transmission line would increase electricity export capacity in Ghana and improve security of supply and reduce cost in Burkina Faso. 96. The economic and technical analysis considered various scenarios and confirmed that the project was robust under various conditions. Page 29 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 97. Risks associated with the implementation of the project were analyzed and appropriate mitigation measures were identified in the appraisal documents. However, the team failed to formalize agreements with financiers, which later proved vital during implementation. 98. The original planned project implementation period of three-and-a-half years from the approval date reflected the risks faced by the project and the proposed mitigation measures. However, agreement among financiers to use procurement procedures of the World Bank was not upheld as this was not formally signed and binding. As a result, the processing of procurement of goods for the physical investments was lengthy, which delayed implementation and slowed down disbursement. 99. The project was not ready for immediate implementation as the engineering studies and bidding documents were not finalized when the project was presented to the Board of Executive Directors for approval. However, the bidding documents were finalized by the owner's engineer that was contracted under the project. 100. Design. The project was designed well enough to achieve its objective, and although the original implementation period was impacted by delayed effectiveness, the restructuring(s) provided more time for the investments to be completed and expected outcomes achieved. 101. The owner’s engineer proposed under implementation arrangements was instrumental in supporting project implementation and keeping all stakeholders informed on project progress. 102. Commitment from the Governments of Ghana and Burkina Faso. The project was prepared keeping in mind the WAPP framework, under which member countries had already committed to improving their own power sectors and reaping the financial and economic benefits thereof. The ability to support the project was duly assessed by the World Bank team during project preparation and the World Bank team had correctly identified deficiencies and suggested the need to reinforce the team with technical assistance. Both Governments were receptive to the team’s proposal and agreed to set up a unified committee to facilitate harmonization of implementation of the project. 103. In view of these, the project preparation, design, and quality at entry is rated Moderately Satisfactory. Quality of Supervision 104. Though the World Bank’s supervision and implementation support of the project was crucial in delivering the project and achieving all targets, the supervision had minor gaps; therefore, it is rated Moderately Satisfactory. 105. The project was made effective in December 2012, with a delay of 18 months. The first restructuring for this project took place in November 2015, that is, three years after effectiveness date. The decision by the World Bank’s team to seek restructuring when procurement was well advanced was a prudent decision as it gave the team a better judgement of the additional time needed to close the project. The team focused on providing necessary support to complete the procurement of work packages and commencement of construction works to ensure that the project outputs and outcomes were fully achieved. Page 30 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 106. Regular missions for supervision were carried out twice yearly by the World Bank team. The TTLs and some of the key staff were resident in Accra and Ouagadougou. The presence of TTLs on the ground supported by a range of experts specialized in the different disciplines that were required to cover all aspects of project implementation was fundamental in resolving project implementation challenges. Throughout the period of project implementation, TTLs used the preparation and sharing of Aide Memoires as the key instrument to keep every stakeholder abreast of key developments in the project implementation and to receive from all partners their contribution to overcome ground challenges. The ISRs were used to inform World Bank management on the progress achieved and the needed support to move ahead with corrective measures and initiatives. 107. There were gaps in social safeguard coverage. Project safeguard performance ratings were either Satisfactory or Moderately Satisfactory. Lack of adequate site supervision of safeguard-related aspects was not picked up by the team until the accidents occurred and a detailed field mission was undertaken to find causes of the fatal accidents. Likewise, it was only in 2018 that the ineffectiveness of a formal Grievance Redress Mechanism that effectively documents complaints was fully established, when all compensation payments had been completed. The World Bank’s team hands-on support to the clients in addressing safeguards challenges included developing and putting in place a formal Grievance Redress Mechanism and implementing an action plan agreed following the two accidents registered on the project, which was crucial to delivering the project and developing the client’s capacity. 108. Necessary restructurings were carried out as the project encountered significant delays. The restructurings for completion delays were justified given the nature and the scale of delays. 109. The World Bank and implementing agencies responded promptly to major incidents (fatal accidents) and worked closely to put in place a system that will reduce the risk of recurrence. Justification of Overall Rating of Bank Performance 110. The project was designed to meet its objectives, but there were shortcomings in the quality at entry and the quality of supervision. The overall rating for the World Bank’s performance is Moderately Satisfactory. D. RISK TO DEVELOPMENT OUTCOME 111. The risk to the development outcome is limited for projects supporting the increase of reliability of supply. The upgraded network would remain beneficial for electricity transmission from Ghana to Burkina Faso. The risk to the development outcome would be poor maintenance of the completed facilities by the incumbent utilities, which will limit the reliability of the interconnector. Sustainable maintenance of electricity production, transmission, and distribution networks and new investments to expand those networks are the right answer to ensure sustainability of achieved outcome in the context of this project. The two utilities have good track records of assets management and maintenance. 112. In addition, power transfer can be jeopardized by a reduction in excess generation capacity in the exporter country. Likewise, a reduction of sufficiently attractive tariffs can be a deterrence for the import/export of power. Ghana currently has excess generation capacity of 1,500 MW (generation capacity of 4,100 MW against demand of 2,600 MW) and will be able to continuously meet the current Page 31 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) demands of Burkina Faso. Current contracted tariffs between the parties that will be reviewed periodically are attractive and reasonable for Burkina Faso and the risk to development outcome is limited. V. LESSONS AND RECOMMENDATIONS 113. The following key lessons were learned from this project:  Advance preparation of key technical studies and launching of major procurement packages are vital to smooth and speedy implementation. Late preparation of detailed engineering studies that led to change in scope of works and late finalization of bidding documents contributed significantly to the 36 months’ extension of the project closing date. This underscores the importance of concluding all studies and using an advanced procurement approach for large and intensive infrastructure projects. It is crucial to ensure adequate resources including relevant procurement documentation, in this case French versions of bidding documents, and project team staffing before project approval.  There is a risk of delays due to cross-effectiveness clauses among financiers. Legal covenants and cross-conditionalities can delay reaching effectiveness and implementation. As was the case with this project, it took 18 months to reach effectiveness for the World Bank because the other financiers were late in getting the project approved by their respective administrators. Multidonor projects should only be presented to the Board when guaranteed that other donors are about to do the same. Nevertheless, covenants should be restricted to the necessary.  Teams should formalize project implementation arrangements and sign binding agreements in multidonor projects. As the tendency of changes to project teams is high, teams should ensure that agreements among project stakeholders are formally signed on and integrated as part of the Financing Agreements. The new procurement framework mitigates such challenges as there is no obligation for the World Bank to be the lead supervisor and an alternative procurement arrangement can be agreed between donors as identified in the PPSD.  A joint procurement strategy, Joint Implementation Committee, and common owner’s engineer ensure proper coordination and effective implementation for a complex project involving multiple donors and countries. Though there were delays in carrying out the joint procurement strategy as bidding documents for the owner’s engineer and transmission line had to be in both English and French, in the long run it ensured the success of the project as there was no disruption in implementation due to multiple contractors constructing different sections of the transmission line and different owner’s engineers advising differently on the same project. The joint implementation ensured that all stakeholders were informed and involved in the project at the same level.  Adequate safeguards supervision is critical in ensuring robustness in implementing environmental and social mitigation measures. Actions implemented by the project team, as advised by the World Bank’s team, included (a) certifying workers carrying out Page 32 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) installations especially at heights; (b) involving community organizations/NGOs in the implementation and/or monitoring of social activities including public sensitization; and (c) securing all work sites with wooden barricades before starting any work, which helped curb any reoccurrence of fatal accidents. In effect, if those measures had been implemented earlier, the accidents might have been avoided.  Providing electricity access to communities along the route of the transmission line has huge impacts on the socioeconomic aspects of households benefiting from the electricity supply. This increases the social acceptability of the project and facilitates the resolution of issues related to the right-of-way during implementation of the project and safeguards the transmission line from any possible vandalism.  Hands-on support can be more influential in achieving results. In this case, resident TTLs are central to sustaining a difficult dialogue with project stakeholders, accelerating the launch of project implementation, and achieving results in a fragile environment and should be deployed in the field at project effectiveness at the latest. The development of strong relationships with implementing agencies is key to fostering robust business collaborative ties through mutual trust and understanding. This is critical to facilitate the resolution of abnormal situations arising during implementation.  Envisaged economic and commercial benefits drive government support. Under this project, the Government of Burkina Faso sent several delegations to engage their Ghanaian counterparts when delays were accumulating in completing the project. The anticipated savings from the energy imports and high economic as well as political cost of power outages during the hot seasonal period brought government support. On the Ghana side, the anticipated revenue from energy sales and transmission was also a key factor. . Page 33 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: Reduce cost of electricity supply to Burkina Faso Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Average weighted annual Amount(USD) 0.26 0.25 0.20 cost of electricity supply in Burkina Faso 31-Dec-2010 31-Dec-2015 31-Dec-2018 Comments (achievements against targets): Objective/Outcome: Improve the security of electricity supply to Burkina Faso Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Annual duration of outages in Number 130.00 8.00 8.00 Burkina Faso due to generation capacity 31-Dec-2010 31-Dec-2015 31-Dec-2018 deficit/load shedding Comments (achievements against targets): Page 34 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Objective/Outcome: Increase Ghana’s electricity export capability Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Annual total hours of Number 0.00 7884.00 8497.00 operation of the interconnection line 30-Jun-2011 31-Dec-2015 31-Dec-2018 Comments (achievements against targets): A.2 Intermediate Results Indicators Component: Improve the security of electricity supply to Burkina Faso Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Feasibility and Environmental Text No Yes Yes studies of Kintampo-Tamale line completed 01-Jun-2011 31-Dec-2013 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 35 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 330/161kV transformer at Text No Yes Yes Aboadze commissioned 01-Jun-2011 31-Dec-2013 31-Dec-2018 Comments (achievements against targets): Component: Increase Ghana’s electricity export capability Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion annual quantity of energy Number 0.00 158.00 222.00 exported from Ghana to Burkina Faso (GWh) 01-Jun-2011 31-Dec-2015 31-Dec-2018 Comments (achievements against targets): Component: Staff trained on network live O&M Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Staff trained on network live Number 0.00 81.00 82.00 O&M 01-Jun-2011 31-Dec-2015 31-Dec-2018 Comments (achievements against targets): Page 36 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Component: Rural households connected in the right of way (ROW) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Rural households connected Number 0.00 3400.00 3474.00 in the right of way (ROW) 01-Jun-2011 31-Dec-2015 31-Dec-2018 Comments (achievements against targets): Component: Direct project beneficiaries Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0.00 20400.00 20844.00 01-Jun-2011 31-Dec-2015 31-Dec-2018 Female beneficiaries Percentage 0.00 55.00 55.00 Comments (achievements against targets): Page 37 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Reduce cost of electricity supply to Burkina Faso 1. Average weighted annual cost of electricity supply in Burkina Faso Outcome Indicators 1. None Intermediate Results Indicators 1. Construction of about 210 km of 225 kV transmission line 2. Construction of a new 225/161 kV substation in Bolgatanga, Ghana 3. Extension of the 225/90 kV Zagtouli substation and construction of a new 90/33 kV substation in Key Outputs by Component Burkina Faso (linked to the achievement of the 4. Installation of telecommunications systems, SCADA systems and Energy Management Systems Objective/Outcome 1) (EMS) 5. Implementation of Environmental Management and Resettlement Action Plan and strengthening the management of the Kaboré Tambi National Park Objective/Outcome 2: Improve the security of electricity supply to Burkina Faso Outcome Indicators 1. Annual total duration of outages in Burkina Faso due to generation capacity deficit/load shedding. 1. Feasibility and Environmental Studies of the 161 kV Atebubu-Tamale line completed Intermediate Results Indicators 2. 330/161 kV transformer at Aboadzé commissioned Key Outputs by Component 1. The pre-investment studies of the 161 kV Atebubu-Tamale line (linked to the achievement of the 2. A 330/161 kV 200 MVA transformer to be installed in Aboadzé Objective/Outcome 2) Objective/Outcome 3: Increase Ghana’s electricity export capability Outcome Indicators 1. Annual total hours of operation of the interconnection line Intermediate Results Indicators 1. Annual quantity of energy exported from Ghana to Burkina Faso Page 38 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 1. Construction of about 210 km of 225 kV transmission line 2. Construction of a new 225/161 kV substation in Bolgatanga, Ghana 3. Extension of the 225/90 kV Zagtouli substation and construction of a new 90/33 kV substation in Key Outputs by Component Burkina Faso (linked to the achievement of the 4. Installation of telecommunications systems, SCADA systems and Energy Management Systems Objective/Outcome 3) (EMS) 5. Implementation of Environmental Management and Resettlement Action Plan and strengthening the management of the Kaboré Tambi National Park Page 39 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Issa Diaw Task Team Leader Tjaarda P. Storm Van Leeuwen Adviser/consultant Sunil Mathrani Senior Energy Specialist Leopold Sedogo Energy Specialist Franklin K. Gbedey Energy Specialist Moez Cherif Sr Energy Economist Fatouma Touré Ibrahima Sr Financial Analyst Fabrice K. Bertholet Sr Financial Analyst Claudia M. Pardiñas Ocaña Senior Counsel Helene Bertaud Senior Counsel Philippe Durand Lead Energy Specialist/Program Coordinator Katherine Deaton Steel Energy Specialist Africa Eshogba Olojoba Senior Environmental Specialist Claudia Sobrevila Senior Environmental Specialist Martin Henry Lenihan Social Development Specialist Moses Yao Duphey Environmental Specialist Paula F. Lytle Senior Social Development Specialist Robert De Graft-Hanson Sr Financial Management Specialist Ousmane Maurice Megnan Kolie Sr Financial Management Specialist Elizabeth Alluah Vaah ETC-Financial Management Alain Hinkati Financial Management Specialist Anders Jensen Monitoring & Evaluation Specialist Allan Rotman Lead Procurement Specialist Adu-Gyamfi Abunyewa Procurement Specialist Mamata Tiendrebeogo Procurement Specialist Mathias Gogohounga Procurement Specialist Sara Nso Junior Professional Officer Manuel Berlengiero Junior Professional Officer Lu T. Ha Senior Program Assistant Mariame Bamba Team Assistant Geraldine Agnes Wilson Team Assistant Elisabeth Marie Bambara Program Assistant Yolande Bougouma-Zagre Team Assistant, Supervision/ICR Nash Fiifi Eyison Task Team Leader(s) Page 40 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Issa Diaw Sunil W. Mathrani Alassane Agalassou Adebayo Adeniyi, Mohamed El Hafedh Hendah Procurement Specialist(s) Adu-Gyamfi Abunyewa Charles John Aryee Ashong Mohamed El Hafedh Hendah Robert Wallace DeGraft-Hanson Financial Management Specialist (s) Kolie Ousmane Maurice Megnan Rahmoune Essalhi Team Member Mamata Tiendrebeogo Team Member Leopold Sedogo Team Member Lydia Sam Team Member Ngor Sene Team Member Suzanne Rayaisse Team Member Yolande Bougouma-Zagre Team Member Thanh Lu Ha Team Member Ayishetu Terewina Team Member Leandre Yameogo Environmental Specialist(s) Africa Eshoba Olojoba Anita Bimunka Takura Tingbani Martin Henry Lenihan Senior Social Specialist(s) Fatoumata Diallo Alidu Babatu Adam B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation Page 41 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) FY07 1.225 4,071.90 FY08 6.320 72,621.22 FY09 1.800 14,700.35 FY10 9.870 94,863.00 FY11 73.423 375,221.31 Total 92.64 561,477.78 Supervision/ICR FY12 19.993 89,575.41 FY13 10.269 70,260.09 FY14 19.414 78,618.00 FY15 19.702 60,675.50 FY16 21.122 42,858.61 FY17 25.105 92,735.30 FY18 33.866 149,751.79 FY19 33.534 203,672.37 FY20 .740 1,402.15 Total 183.75 789,549.22 Page 42 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 3. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Closing Components (US$, millions) (US$, millions) 1. 225 kV transmission line between Bolgatanga (Ghana) 84.20 84.20 and Ouagadougou (Burkina Faso) 2. Reinforcement of transmission grid in Ghana 6.0 6.00 3. Electrification of rural localities along the right-of-way 9.0 6.00 in Burkina Faso 4. Supervision/owner's engineer 4.2 7.20 5. Capacity building and institutional support to GridCo 7.6 6.30 and SONABEL for project implementation Total 111 109.70 Page 43 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 4. EFFICIENCY ANALYSIS 1. The post-completion economic and financial viability of the project was assessed using the cost- benefit analysis framework for transmission-type projects. The economic and financial analyses were based on the actual capacity of the transmission line contracted, the actual costs during the project implementation, and revised projection of costs and benefits. The economic costs and benefits were calculated exclusive of taxes and subsidies and the assessment of the financial costs and benefits was carried out inclusive of taxes. Tables on assumptions used for post-completion economic and financial appraisal are provided in this annex. A. Economic Analysis 2. This annex provides details on the post-completion review of the economic and technical assumptions used in determining the EIRR on the transmission interconnection between Ghana and Burkina Faso. The main benefit of the proposed interconnection would be to enable electricity trade between Ghana and Burkina Faso. This economic analysis attempts to reassess the economic benefit that can be expected from replacing costly HFO-based thermal generation in Burkina Faso with gas-fired generation from Ghana. 3. The economic costs to achieve the project objectives were reasonable for a power transmission project. It facilitated leveraging of around US$79.6 million of investments in the construction of the transmission line between Ghana and Burkina Faso (interconnection). When a share of the reinforcement of power transmission investment (50 percent) is included, the total cost of the investment is estimated at US159.3 million. In addition to improving the Ghana network reliability and efficiency, the reinforcement also allows a higher level of power transit on the interconnection line. 4. Economic viability. At completion, the project was estimated to have an NPV of US$230 million (at 10 percent discount rate) and EIRR of 29.7 percent, compared to an appraisal-stage NPV of US$284 million (at 10 percent discount rate) and an EIRR of 31.6 percent. 5. Deterioration of the post-completion economic viability of the project is primarily due to higher natural price and lower oil price (US$67 per barrel at post completion versus US$90 per barrel at appraisal), partially offset by lower capital expenditures on the transmission line. 6. The following key planning parameters were revisited to reassess their validity for post- completion analysis: • Imports from Côte d’Ivoire. At a regional level, incremental generation costs still appear lower in Ghana than in Côte d’Ivoire due to the availability of natural gas. • Timing of new transmission investments. At appraisal, the inter-zonal study assumed that the interconnection between Ghana and Burkina Faso would be commissioned in 2014 without the reinforcements in Northern Ghana. This would limit the transit capacity to 20 MW, which would however be increased to 60 MW by network reinforcements in Ghana in 2015, and to 100 MW in 2017 owing to additional transmission reinforcements within Ghana (commissioning of 330 kV line Kumasi-Kintampo). The load factor for the line after the Page 44 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) reinforcements is assumed to remain at 75 percent. The implementation of the project took more time than planned. The line was finally commissioned in mid-2018 (four years later). • Oil prices. The post-completion analysis revises the oil price down to US$67.5 per barrel compared to US$90 the team used during the appraisal phase. The effect of this is to decrease the difference in generation costs between Burkina Faso and Ghana, thereby decreasing the economic benefits from electricity trade between the two countries. The assumptions regarding the relationship between HFO prices and crude oil prices, and the estimate for the logistical and transportation costs of bringing the HFO to Burkina Faso derived from the inter-zonal study, were revised according to the new government oil tariff enacted in January 2019. 7. Other technical parameters in the economic model are derived from the inter-zonal study or from the technical and financial forecasting model of Volta River Authority (VRA). These assumptions include, among others, the incremental transmission loss rate on the interconnection, gas-fired generation costs in Ghana, and HFO generation costs in Burkina Faso. Since the reinforcements in the Ghanaian network are needed with or without the interconnection line, albeit later, this analysis keeps the attribution rate arbitrarily set at 50 percent of the estimated costs of the 330 kV reinforcements to the interconnection project. Avoided Generation Costs in Burkina Faso 8. Domestic power generation in Burkina Faso is currently a mix of hydro (in small quantities), diesel, and HFO. All recent additions of generation capacity in Burkina Faso have been engines running on HFO, which remains the least cost option for SONABEL. Burkina Faso is a landlocked country. As a result, transportation and imports are significant in the total costs of fuel delivered to SONABEL. Table 4.1 provides an update, post completion of the estimates of HFO cost to SONABEL made during the appraisal phase. Table 4.1. Costs of HFO Delivered to SONABEL in Ouagadougou At Appraisal Post Completion Crude oil price (US$/bbl.) 90 68 CIF Price at coastal depots (US$/ton) 616.87 574,56 CIF Price at coastal depots (CFAF/ton) 321,807 334,415 Coastal depots handling (CFAF/ton) 15,654 15,654 Transportation and transit (CFAF/ton) 58,324 58,324 Delivery fees to SONABEL (CFAF/ton) 14,617 29,787 Economic cost to SONABEL (US$/ton) 787 753 Source: The inter-zonal study - Appraisal. 9. As assumed during the appraisal stage, only the reduction in fuel costs and variable O&M is considered as a project benefit. Based on post-completion revised oil prices at US$68 per barrel (US$90 per barrel at appraisal), and with a specific consumption of 222 grams of HFO per kWh, the avoided cost of generation would be US¢17.7 per kWh instead of US¢18.5 per kWh at appraisal. Page 45 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 4.2. Cost of Generation with HFO in Burkina Faso At Appraisal Post Completion HFO price (US$/ton) 787 753 Specific consumption (g/kWh) 222 222 Fuel cost (US¢/kWh) 17.5 16.7 Lubricants, variable O&M (US¢/kWh) 1.0 1.0 Total variable costs (US¢/kWh) 18.5 17.7 Incremental Generation Costs in Ghana 10. With current WAGP gas prices set at US$7.30 per MMBTU, combined cycle gas turbines are still the least cost option for power generation in the post-completion phase. Incremental generation costs (including capital expenditures) have been recalculated on this basis. The revised WAGP gas price which was US$6.5 per MMBTU at appraisal experienced a 12 percent increase in the post-completion phase. On this basis, the total economic cost of incremental generation in Ghana post completion is estimated at US¢8.2 per kWh. Table 4.3. Cost of Combined Cycle Generation in Ghana At Appraisal At Completion Source Unit Heat Rate (Btu/kWh) 7,308 7,308 VRA Gas price (US$/MMBTU) 6.5 7.3 Current WAGP prices Gas costs (US¢/kWh 4.8 5.3 Investments costs (US$/kW) 1,200 1,200 Inter-zonal study Annual O&M (% of investment costs) 2.5 2.5 Inter-zonal study Discount rate (%) 10 10 World Bank Plant life (years) 15 15 World Bank Levelized capital costs (US$/kW/year) 157.8 157.8 Annual O&M (US$/kW/year) 30.0 30.0 load factor (%) 75 75 World Bank Annual generation (US$/kW/year) 6,570 6,570 Capital costs (US¢/kWh) 2.40 2.40 O&M costs (US¢/kWh) 0.46 0.46 Gas costs (US¢/kWh) 4.75 5.31 Total costs (US¢/kWh) 7.60 8.16 Technical Parameters of the Transmission Line 11. At appraisal, it was assumed that exports from Ghana to Burkina Faso would increase transmission losses by 5 percent of the energy transmitted (3 percent on the Ghanaian network, 2 percent on the interconnection) and the transmission line transit capacity would be set at 100 MW with reinforcements of the Ghanaian network. Furthermore, the line load factor was set to 75 percent (SONABEL would absorb as much cheap energy as possible with the assumption that not all the line transit capacity would be needed during off-peak periods). Page 46 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) 12. At completion, the effective transmission losses were 1.13 percent in 2018 (the line operated for only half a year). This rate of transmission losses is assumed to double from 2019 onward (2.26 percent). The transmission losses were assumed to be 5 percent during the appraisal phase. Investment Costs 13. Investment costs for the interconnection line derived from estimated project costs plus supervision costs during the appraisal phase were updated with the actual costs incurred during the implementation phase. With regard to the subsequent reinforcements of the Ghanaian network, they appear to be justified irrespective of the construction of the interconnection with Burkina Faso. Since these investments could be realized earlier in time because of the interconnection, 50 percent of their cost have been included to the interconnection project at post-completion analysis (keeping the same assumption as of the appraisal phase). Table 4.4 presents the actual cost incurred for the construction of the transmission line and the reinforcement of Ghanaian power network. Table 4.4. Updated Cost of Capital Expenditures (US$, thousands) 2013 2014 2015 2016 2017 2018 2019 Total Interconnection line Burkina Faso IDA 29 1,126 461 521 2,105 4,586 256 9,083 EIB 5,064 6,590 10,289 21,944 AFD 4,589 10,575 4,700 19,865 SONABEL 467 42 509 Total 29 1,126 928 10,216 19,271 19,575 256 51,401 Ghana IDA 942 2,295 3,066 11,218 4,629 22,151 AFD 568 2,533 503 305 3,909 GRIDCo 164 1,970 31 2,164 Total 0 942 2,864 5,763 13,691 4,965 28,224 Grand total 29 2,068 3,791 15,979 32,961 24,539 256 79,624 a Network reinforcement (330 kV) 668 808 0 51,849 28,142 29,321 48,643 159,432 Note: a. Only 50 percent of the cost is allocated to the interconnection project. Main Results 14. Based on the above assumptions, the economic justification post completion of the line is still very strong. The project EIRR is 29.7 percent, which is extremely high. This would translate into an NPV of US$230 million at 10 percent discount rate. Table 4.5 provides a comparison of the main results at post completion with the same at the appraisal phase. Page 47 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 4.5. Summary of Economic Analysis at Appraisal and Post Completion At Appraisal Post Completion Investment (CAPEX) (US$, thousands) 141,600 159,340 Interconnection (US$, thousands) 87,300 79,624 Reinforcement (US$, thousands) 54,300 79,716 Avoided cost of generation - Burkina Faso (US¢/kWh) 18.5 17.7 Incremental cost of generation - Ghana (US¢/kWh) 7.6 8.2 Incremental transmission losses (%)¢ 5.0 2.3 Discount rate (%) 10 10 EIRR (%) 32.6 29.7 ENPV (US$, thousands) 284,000 230,357 Note: CAPEX = Capital expenditure; ENPV = Economic net present value. B. Financial Analysis Main Assumptions of the Financial Analysis 15. The main assumptions related to the tariff applied to the electricity purchased from Ghana, the cost of the electricity generated in Ghana, electricity tariff and collection rate in Burkina, and the associated transmission and distribution losses are described in detail in the following paragraphs.  Project economic investment. The project’s total investment requirement is US$159 million including all sources of funding (50 percent of 330 kV reinforcement has been included). These costs include the value added tax (VAT) and duties applicable in Ghana and Burkina Faso on imported equipment where applicable.  Economic life of the project. The economic life of the project is assumed to be 40 years.  Financial discount rate. The following discount rates were used in the estimate of the financial net present value (FNPV). o Project: 12.40 percent o SONABEL: 11.49 percent o GRIDCo: 12.65 percent 16. The financial discount rates were derived from the mix of financings from IDA, AFD, EIB, GRIDCo, and SONABEL. Table 4.6 summarizes the financing package. Page 48 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) Table 4.6. Project Sources of Financing IDA Loan EIB Loan AFD Loana GRIDCo SONABEL Principal and disbursements (US$, 31,234 21,944 103,490 2,164 509 thousands) Front-end fee (%) 0.0 0.0 0.0 0.0 0.0 Commitment fee (%) 0.5 0.5 0.5 0.0 0.0 Interest/cost of equity (%) 0.75 1.40 0.25 12.77 11.64 Term (years) 38 26 18 40 40 Grace (years) 6 5 5 n.a. n.a. Note: a. Including half of 330 kV reinforcement.  Financial discount rate. The following parameters were used to estimate the cost of equity and discount rates for the project and both countries: Table 4.7. Cost of Equity Estimation Parameters Ghana Burkina Faso Power sector asset beta 0.52 U.S. 10-year treasury bond 2.33% U.S. equity risk premium 5.96% Country risk premium 7.34% 6.21%  Cost of generation. The cost of generation in Ghana is assumed to be the estimated value calculated in the economic analysis section.  Power purchase price. The current power purchase price is US¢8.92 per kWh in 2019 with 1.5 percent increase annually.  Incremental O&M costs. The incremental O&M costs are assumed to be 1.5 percent of the capital expenditures.  Distribution and commercial costs in Burkina Faso. Due to the size of the additional electricity that will be supplied to the Burkina Faso power network, incremental distribution and commercial costs are estimated to be material, that is, US¢0.93 per kWh (25 percent of SONABEL selling and general administrative cost 2016–2017).  Distribution losses. Distribution losses in Burkina Faso have been estimated to be 14.02 percent (average of 2016–2017). There is no distribution loss in Ghana.  Collection rate. A collection rate of 98.6 percent in Burkina Faso is assumed for the analysis. The collection rate in Ghana is assumed to be 100 percent.  Corporate tax rate. The corporate tax rate is currently 28 percent in Burkina Faso and 29 percent in Ghana. Page 49 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919)  Average tariff. The average tariff in Burkina Faso used for the analysis is US¢18.42 per kWh, the average of 2016–2017 weighted average tariff.  Wheeling fees. The financial analysis assumes that the project will be paying the VAT and duties on imported equipment. It will also be paying all other duties, fees, and the taxes on net business income, which is assumed for this analysis to be 30 percent.  Financing plan. All project costs will be financed through IDA credit under standard IDA credit and grant terms. The project financing plan is provided in table 4.8. 17. Financial viability. The estimated project financial metrics (at appraisal and post completion) are presented in table 4.8, indicating that the investment is still viable and provides a good financial rate of return for both Ghana and Burkina Faso. The revised post-completion financial internal rate of return (FIRR), FNPV, and profitability index (PI) of the project are 17.5 percent, US$38.5 million, and 2.24, respectively. The FIRR, FNPV, and PI were not estimated in the appraisal phase for the entire project. Table 4.8. Project Financial Viability Metrics at Appraisal and Post Completion Metrics At Appraisal Post Completion Project Discount rate (%) 12.40 FIRR (%) 17.49 FNPV (US$, millions) 38.50 PI (number) 1.44 GRIDCo Discount rate (%) 10.0 12.65 FIRR (%) 12.2 13.47 FNPV (US$, millions) 11.0 5.20 PI 1.09 SONABEL Discount rate (%) 10.0 11.49 FIRR (%) 37.0 29.60 FNPV (US$, millions) 185.0 36.60 PI (number) 2.24 18. Distribution analysis. When the financial return is distributed between Ghana and Burkina Faso, as shown in table 4.8, the project financial return tilted heavily toward Burkina Faso. The analysis shows that Burkina Faso (SONABEL) will enjoy the highest financial return (37.0 percent at appraisal and 29.6 percent post completion) as the interconnection line will allow the country to buy cheaper power from Ghana to replace expensive power generated from diesel plants. The project is still financially viable for Ghana (12.2 percent at appraisal versus 13.47 percent post completion). Page 50 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 5. BORROWER, CO-FINANCIER, AND OTHER PARTNER/STAKEHOLDER COMMENTS No issues were raised by the borrower, co-financiers, and other partners/stakeholders. Page 51 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) • Project Appraisal Document, 2011 • Integrated Safeguards Datasheet, 2010 • Project Information Document, 2010 • Implementation Status and Results Reports • World Bank Mission Aide-Memoires • Owner’s Engineer’s Progress Reports • Burkina Faso Country Partnership Strategy for FY2010–2012 • Restructuring Papers June 2015 and December 2017 • Draft SONABEL ICR, February 2019 • Draft GRIDCo ICR, March 2019 Page 52 of 53 The World Bank WAPP: The First Phase of the Inter-Zonal Transmission Hub Project of the WAPP (APL3) Program (P094919) ANNEX 7. IMPLEMENTATION DELAYS Timeline slippages during implementation Table 6.1. Average Time Lead for Submission of Bidding Documents Activity Bid Submission Deadline Duration PAD Actual Months Years Contract for consultancy Supervision of works by the owner’s engineer 25-Aug-11 15-May-13 20.7 1.7 Contracts for works Construction of 225 kV line 16-May-12 27-Feb-15 33.4 2.8 Construction of substation in Burkina Faso 15-Apr-12 26-Mar-15 35.3 2.9 Electrification at 33 kV of 14 rural villages 16-May-12 4-Dec-14 30.6 2.6 Electrification at 34.5 kV of 11 rural villages 16-May-12 4-Dec-14 30.6 2.6 Construction of substation in Ghana 15-Apr-12 14-May-15 37.0 3.1 average 31.3 2.5 Table 7.2. Average Duration of Bid Evaluations until Contract Effectiveness Bid Submission Signature of Activity Effectiveness Duration Dates Contract Months Years Contract for consultancy Supervision of works by the owner’s 15-May-13 17-Dec-13 10-Feb-14 8.9 0.74 engineer Contracts for works Construction of 225 kV line 27-Feb-15 10-Dec-15 10-Feb-16 11.4 0.95 Construction of substation in Burkina 26-Mar-15 12-Oct-15 18-Dec-15 8.8 0.73 Faso Electrification at 33 kV of 14 rural 4-Dec-14 11-Sep-15 15-Dec-15 12.4 1.03 villages Electrification at 34.5 kV of 11 rural 4-Dec-14 12-Nov-15 13-Jan-16 13.3 1.11 villages Construction of substation in Ghana 14-May-15 25-Aug-15 23-Nov-15 6.3 0.53 average 10.2 0.8 Page 53 of 53