The World Bank Noor Solar Power Project (P131256) REPORT NO.: RES39203 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF NOOR SOLAR POWER PROJECT APPROVED ON SEPTEMBER 30, 2014 TO THE MOROCCAN AGENCY FOR SUSTAINABLE ENERGY (MASEN) WITH GUARANTEE FROM THE KINGDOM OF MOROCCO ENERGY & EXTRACTIVES MIDDLE EAST AND NORTH AFRICA Regional Vice President: Ferid Belhaj Country Director: Jesko S. Hentschel Regional Director: Paul Noumba Um Practice Manager/Manager: Erik Magnus Fernstrom Task Team Leaders: Moez Cherif, Manaf Touati, Manuel Jose Millan Sanchez The World Bank Noor Solar Power Project (P131256) ABBREVIATIONS AND ACRONYMS AF Additional Financing CSP Concentrated Solar Power CTF Clean Technology Fund DFI Development Finance Institutions DDO Deferred Drawdown Option EA Environmental Assessment EDF Electricité de France FM Financial Management IBRD International Bank for Reconstruction and Development ICR Implementation Completion and Results Report IP Implementation Progress MASEN Moroccan Agency for Sustainable Development OPCS Operations Policy and Country Services PDO Project Development Objective PV Photovoltaic RVP Regional Vice President TF Trust Fund US$ United States Dollars The World Bank Noor Solar Power Project (P131256) BASIC DATA Product Information Project ID Financing Instrument P131256 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 30-Sep-2014 31-Dec-2022 Organizations Borrower Responsible Agency MASEN MASEN Project Development Objective (PDO) Original PDO The PDO is to increase (a) installed capacity (megawatt) and (b) electricity output (megawatt-hour), especially during peak hours, of the Noor-Ouarzazate Solar Complex. Current PDO The PDO is to increase innovative solar power generation in Morocco. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-88470 08-Jun-2018 31-Dec-2022 100.00 0 100.00 IBRD-84400 30-Sep-2014 19-Dec-2014 05-May-2015 30-Jun-2020 400.00 166.39 207.89 TF-17509 30-Sep-2014 19-Dec-2014 05-May-2015 30-Jun-2020 119.00 119.00 0 The World Bank Noor Solar Power Project (P131256) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. PROJECT STATUS 1. Overall status. The Morocco Noor Solar Power Project was approved on September 30, 2014 for a total amount of US$519 million: US$400 million from the International Bank for Reconstruction and Development (IBRD) and US$119 million from the Clean Technology Fund (CTF). The project was initially named “Noor-Ouarzazate Concentrated Solar Power Project” from 2014 to 2018. 2. Additional Financing. An Additional Financing (AF) to scale up the project was approved by the Board on June 8, 2018 with the closing date of December 31, 2022, in order to add a third project component to fund the two Noor-Midelt solar power plants through an additional financing of US$100 million and a US$25 million from the CTF. A project restructuring was also approved by the World Bank management in May 2018 to: (i) reallocate US$100 million from Component 2 (Cost Mitigation Mechanism) to Component 3 (Noor-Midelt Power Plants and Associated Infrastructure Facilities), (ii) extend the closing date of the original IBRD and CTF loans from June 30, 2020 to December 31, 2022, and (iii) change the project name from “Noor-Ouarzazate Concentrated Solar Power Project” to “Noor Solar Power Project”, given the project scale-up to the whole Noor solar program. However, no amendment to the original IBRD and CTF loans has been signed to date by the Borrower and the World Bank to reflect these changes. The proposed restructuring envisages further changes to the original IBRD and CTF loans (see the Section II below). All above changes will be reflected in the amendment that will be signed after this restructuring. The IBRD and CTF loan agreements for additional financing have not been signed yet due to the procurement delays for Noor Midelt plants. MASEN intends to sign the AF legal agreements, as soon as the proposed restructuring is approved. 3. Progress towards PDO and IP. Progress towards achievement of the Project Development Objective (PDO) and overall Implementation Progress (IP) are both rated Satisfactory. The project has disbursed US$166.4 million (42 percent) of the original IBRD loan and 100 percent for the original CTF loan. 4. Relevant legal, fiduciary, and safeguards aspects. All legal covenants and safeguards requirements have been complied with, and there are no deviations from safeguards requirements during implementation thus far. The project is in compliance with social and environmental safeguards (current ratings in the Implementation Status and Results Report are Satisfactory). Regarding Financial Management (FM), the latest audit reports of the project are up-to-date and deemed satisfactory. The FM rating is Satisfactory. B. RATIONALE FOR RESTRUCTURING 5. The Moroccan Agency for Sustainable Energy (MASEN or the Borrower) received two bids from two investor consortia for the Noor-Midelt power plants in May 2019. Noor-Midelt I plant was awarded to a consortium led by Electricité de France (EDF) Energies Nouvelles based on a competitive tariff that is significantly lower than anticipated during The World Bank Noor Solar Power Project (P131256) project preparation. The award of Noor-Midelt II plant was cancelled as the preferred bidder’s proposed tariff was significantly higher than that of EDF-led consortium and MASEN had pre-established a rule ensuring that any bidder could only be awarded one plant. MASEN is now rebidding the Noor-Midelt II plant, while enlarging its technology choice to battery storage in addition to concentrated solar power (CSP) and photovoltaic (PV). Thus, MASEN expects to get bids that are at least as competitive as those of the EDF-led consortium for the 2nd plant. 6. As a result of the tariff for Noor-Midelt I plant being lower than anticipated, MASEN will need to raise less debt from Development Finance Institutions (DFIs) than estimated during appraisal. It has, therefore, asked the World Bank and other DFIs to reduce the loan amounts that had been previously approved for the project. Since Noor-Midelt II plant is delayed, the closing date of the original IBRD and CTF loans will need to be extended. The closing date of the additional IBRD and CTF loans will also need to be extended given the procurement delays incurred by Noor-Midelt I. II. DESCRIPTION OF PROPOSED CHANGES 7. The proposed restructuring includes the following changes: (a) Reduce the additional IBRD Loan No. 8847 (under the AF) from US$100 million to US$63 million and allocate all the amount (but excluding US$157,500 for the capitalized Front-end Fee) to the Noor-Midelt I plant under Component 3.A; (b) Allocate the portion of the original IBRD Loan No. 8440 (US$100 million1) that was approved to be reallocated2 from Component 2 to both Noor-Midelt I (Component 3.A) and II (Component 3.B) entirely to Noor-Midelt II (Component 3.B); (c) Change the estimated overall cost of Component 3 from US$2.2 billion to US$1.6 billion; (d) Extend the closing date of the original and additional IBRD and CTF loans from December 31, 20223 to June 28, 2024; and (e) Change disbursement estimates. 1 Equivalent cumulative amount of negotiated EUR and USD amounts under the original IBRD Loan No. 8440. 2 Under the restructuring approved in May 2018, $100m of the original IBRD loan was approved to be reallocated from Component 2 to Component 3. However, the amendment to include this change has not been signed to date as explained in the paragraph 2. 3 Under the restructuring approved in May 2018, the closing date of the original IBRD and CTF loans were approved to be extended from June 30, 2020 to December 31, 2022. However, the amendment to include this change has not been signed to date as explained in the paragraph 2. The World Bank Noor Solar Power Project (P131256) 8. Reduction in the amount of additional IBRD Loan. It is proposed to reduce the additional IBRD Loan No. 8847 (under the AF) from US$100 million to US$63 million and allocate all the amount to the Noor-Midelt I plant under Component 3. This is due to cost savings as a result of competitive selection of private developer. The reduction in the project cost has a positive impact on economic analysis (as the project is even more viable than anticipated), while expected results would remain unchanged. 9. Reallocation between Disbursement Categories. It is proposed to allocate the US$100 million (from the original IBRD Loan No. 8440) that was previously approved to be reallocated from Component 24 to Component 3 entirely to the Noor-Midelt II plant under Component 3.B, instead of being split equally between Noor-Midelt I and II plants as envisaged previously. 10. Changes to Components and their Costs. The overall cost of Component 3 is proposed to be reduced from US$2.2 billion to US$1.6 billion in light of the significantly lower competitive tariff obtained for Noor-Midelt I than anticipated during project preparation. As a result, MASEN will need to raise less debt from DFIs than estimated during appraisal, and all DFIs are expected to reduce their financing by approximately 30 percent of their respective amounts. Adjustments to the CTF Loan Agreement for the AF will also be incorporated as a result of the proposed restructuring (including change in clause -reference to IBRD revised loan amount- and retroactive financing date, due to delays in signing). Also, the component names have been adjusted to be in line with the loan agreements. 11. Change in Loan Closing Date. It is proposed to extend the closing dates of the original and additional IBRD and CTF loans from December 31, 2022 to June 28, 2024, as (a) the PDO remains achievable; (b) the performance of the Borrower remains satisfactory; (c) the World Bank and the Borrower agree on actions that will be undertaken to complete the project on time; and (d) the project is not subject to suspension of disbursements. Extending the CTF loan closing date would allow to produce a harmonized Implementation Completion and Results (ICR) Report for both funding sources in 2024. 12. Change in Disbursement Estimates. It is proposed to change disbursement estimates given closing date extension and reduction of amount of the additional IBRD loan No. 8847. Disbursement estimates of CTF loans have also been added. 13. Results framework. The indicator target end dates will be adjusted to reflect the proposed loan closing date. 14. The terms and conditions agreed upon in the IBRD Guarantee Agreement and the CTF Guarantee Agreement remain unchanged. 4More precisely, expenditure categories No.3 “Purchase of electricity for Parts 2.A, 2.B and 2.C of the Project” and No.7 “Unallocated”. The World Bank Noor Solar Power Project (P131256) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Other Change(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank Noor Solar Power Project (P131256) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1 - Noor-Ouarzazate 2377.00 Revised Financing the Initial Investment 2377.00 Project Investment Component 2- Noor-Ouarzazate 199.00 Revised Cost Mitigation Mechanism 199.00 Cost Mitigation Mechanism Noor Midelt Power Plants and Component 3- Noor-Midelt 2200.00 Revised Associated Infrastructure 1600.00 Project Investment Facilities TOTAL 4,776.00 4,176.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-84400 Effective 30-Jun-2020 28-Jun-2024 28-Oct-2024 IBRD-88470 Not Effective 31-Dec-2022 28-Jun-2024 28-Oct-2024 TF-17509 Effective 30-Jun-2020 28-Jun-2024 28-Oct-2024 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-84400-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: GD; WRK;NON CS; PART 1.A of project 58,606,000.00 40,569,276.00 58,606,000.00 12.16 iLap Category Sequence No: 2 Current Expenditure Category: GD; WRK;NON CS; PART 1.C of project 0.00 0.00 0.00 0 The World Bank Noor Solar Power Project (P131256) Current Expenditure Category: Purchase Electricity PARTS 2A 2B and 2C of the iLap Category Sequence No: 3 Project 54,993,000.00 23,208,118.29 142,607,750.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: Intentionally left blank 71,276,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 5 Current Expenditure Category: Intentionally left blank 25,597,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 7 Current Expenditure Category: Unallocated 23,441,750.00 0.00 0.00 0 Current Expenditure Category: Goods, works and non-consulting services for Part iLap Category Sequence No: 8A 3.A of the Project 0.00 0.00 0.00 0 Current Expenditure Category: Goods, works and non-consulting services for Part iLap Category Sequence No: 8B 3.B of the Project 0.00 0.00 32,700,000.00 4.94 Total 233,913,750.00 63,777,394.29 233,913,750.00 IBRD-84400-002 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GD; WRK;NON CS; PART 1.A of project 20,000,000.00 18,832,408.41 20,000,000.00 3.04 iLap Category Sequence No: 2 Current Expenditure Category: GD; WRK;NON CS; PART 1.C of project 0.00 0.00 0.00 0 Current Expenditure Category: Purchase Electricity PARTS 2A 2B and 2C of the iLap Category Sequence No: 3 Project The World Bank Noor Solar Power Project (P131256) 18,767,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 4 Current Expenditure Category: Intentionally left blank 24,324,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 5 Current Expenditure Category: Intentionally left blank 8,709,000.00 0.00 0.00 100.00 0 iLap Category Sequence No: 7 Current Expenditure Category: Unallocated 8,000,000.00 0.00 0.00 0 Current Expenditure Category: Goods, works and non-consulting services for Part iLap Category Sequence No: 8A 3.A of the Project 0.00 0.00 0.00 0 Current Expenditure Category: Goods, works and non-consulting services for Part iLap Category Sequence No: 8B 3.B of the Project 0.00 0.00 59,800,000.00 6.61 Total 79,800,000.00 18,832,408.41 79,800,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2015 0.00 0.00 2016 51,259,527.82 170,259,527.82 2017 17,565,049.93 17,565,049.93 2018 39,825,600.25 43,560,001.07 2019 59,039,200.00 53,158,405.93 2020 97,352,222.00 70,000,000.00 The World Bank Noor Solar Power Project (P131256) 2021 132,480,800.00 95,000,000.00 2022 77,477,600.00 70,000,000.00 2023 25,000,000.00 70,000,000.00 2024 0.00 17,457,015.25 2025 0.00 0.00 . The World Bank Noor Solar Power Project (P131256) . Results framework COUNTRY: Morocco Noor Solar Power Project Project Development Objectives(s) The PDO is to increase innovative solar power generation in Morocco. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Increase innovative solar power generation in Morocco Noor Solar Projects Electricity Sales (GWh) (Gigawatt-hour 0.00 2,624.00 (GWh)) Action: This indicator has been Revised Noor Solar Projects Electricity Sales – Ouarzazate Complex 0.00 1,300.00 (GWh) (Gigawatt-hour (GWh)) Action: This indicator has been Revised Noor Solar Projects Electricity Sales – Midelt Complex (GWh) 0.00 1,324.00 (Gigawatt-hour (GWh)) Action: This indicator has been Revised Noor Solar Projects Electricity Sales during peak hours (GWh) 0.00 870.00 (Gigawatt-hour (GWh)) Action: This indicator has been Revised The World Bank Noor Solar Power Project (P131256) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline End Target Noor Solar Projects Electricity Sales during peak hours – 0.00 540.00 Ouarzazate Complex (GWh) (Gigawatt-hour (GWh)) Action: This indicator has been Revised Noor Solar Projects Electricity Sales during peak hours – 0.00 330.00 Midelt Complex (GWh) (Gigawatt-hour (GWh)) Action: This indicator has been Revised People provided with new or improved electricity service 0.00 2,200,000.00 (Number) Action: This indicator has been Revised Female beneficiaries (Percentage) 0.00 50.30 Avoided global GHG pollution (Tones/year) 0.00 1,270,000.00 Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Component 1- Financing for the Initial Investment Private Capital Mobilized (Amount(USD)) 0.00 597,000,000.00 Action: This indicator has been Revised Generation capacity of energy constructed or rehabilitated (CRI, 0.00 1,310.00 Megawatt) The World Bank Noor Solar Power Project (P131256) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Action: This indicator has been Revised Renewable energy generation capacity (other than 0.00 1,310.00 hydropower) constructed under the project (CRI, Megawatt) Action: This indicator has been Revised Noor Ouarzazate I Capacity constructed (Megawatt) 0.00 160.00 Action: This indicator has been Revised Noor Ouarzazate II and III Capacity constructed (Megawatt) 0.00 350.00 Action: This indicator has been Revised Noor Midelt Phase I Capacity constructed (Megawatt) 0.00 800.00 Action: This indicator has been Revised Grievances registered related to delivery of project benefits 0.00 100.00 addressed (Percentage) Action: This indicator has been Revised Share of female job-recruits receiving information on training 0.00 75.00 and skilled work in the Noor Midelt Phase I project (Percentage) Action: This indicator has been Revised Number of hired workers on the Noor Midelt site (Number) 0.00 1,200.00 Action: This indicator has been Revised of which female (Number) 0.00 120.00 Component 2- Cost Mitigation Mechanism Progress of Overall Construction - Noor Ouarzazate II 0.00 100.00 (Percentage) The World Bank Noor Solar Power Project (P131256) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Action: This indicator has been Revised Progress of Overall Construction - Noor Ouarzazate III 0.00 100.00 (Percentage) Action: This indicator has been Revised Progress of Overall Construction - Noor Midelt Phase I 0.00 100.00 (Percentage) Action: This indicator has been Revised IO Table SPACE . The World Bank Noor Solar Power Project (P131256)