The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) REPORT NO.: RES36899 DOCUMENT OF THE WORLD BANK RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF WAPP APL4 (PHASE 1) - CÔTE D'IVOIRE, SIERRA LEONE, LIBERIA, AND GUINEA POWER SYSTEM RE- DEVELOPMENT APPROVED ON MAY 31, 2012 TO REPUBLIC OF SIERRA LEONE,REPUBLIC OF LIBERIA ENERGY & EXTRACTIVES AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Deborah L. Wetzel Senior Global Practice Director: Riccardo Puliti Practice Manager/Manager: Charles Joseph Cormier Task Team Leader: Clemencia Torres De Mastle, Pierre Jacques Lorillou The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) I. BASIC DATA Product Information Project ID Financing Instrument P113266 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 31-May-2012 15-Dec-2020 Organizations Borrower Responsible Agency The CLSG Regional Transmission Company,WAPP Republic of Sierra Leone,Republic of Liberia Secretariat Project Development Objective (PDO) Original PDO The project development objectives for the two sub-projects are (i) to reduce the cost of and increase the electricity supply at utility level, and to increase the export capability of Côte d’Ivoire, and (ii) to increase the technical integration of the WAPP network. Current PDO The revised PDOs for the WAPP CLSG Power Interconnection are to: (a) reduce the cost of electricity supply at the utility level for Liberia and Sierra Leone and (b) increase the amount of electricity traded among all the participating countries. The Development Objective of the WAPP TA is to increase the technical integration of the WAPP network. Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-61480 17-Nov-2017 04-Jan-2018 04-Oct-2018 15-Dec-2020 59.57 4.50 55.07 IDA-61500 17-Nov-2017 11-Dec-2017 10-Oct-2018 15-Dec-2020 22.66 0 22.66 The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) IDA-D2440 17-Nov-2017 18-Dec-2017 28-Feb-2018 15-Dec-2020 17.50 1.22 16.31 IDA-D2470 17-Nov-2017 11-Dec-2017 10-Oct-2018 15-Dec-2020 22.66 1.50 20.76 IDA-51100 31-May-2012 16-Aug-2012 13-Feb-2015 15-Dec-2020 144.50 90.07 39.50 IDA-H7700 31-May-2012 20-Aug-2012 27-Dec-2012 15-Dec-2020 31.50 9.84 18.83 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. SUMMARY OF PROJECT STATUS AND PROPOSED CHANGES The West African Power Pool (WAPP- Côte d'Ivoire-Liberia-Sierra Leone-Guinea (CLSG) WAPP- CLSG Regional Interconnection Line will interconnect the four participating countries (Côte d’Ivoire, Liberia, Sierra Leone and Guinea) into the 225-kV regional energy market in West Africa. It will also enable planned hydropower plants (HPPs) in Bumbuna, Extension, Yiben and Bekongor in Sierra Leone and Mount Coffee in Liberia, and other future generation projects to connect to the WAPP grid. This integration to a regional interconnected market will bring significant benefits to the four participating countries. It will allow countries, notably Liberia and Sierra Leone, to access lower cost electricity by allowing consumer to access a larger regional market instead of being nationally restricted. Furthermore, the CLSG construction is a major addition to the national transmission backbone in Liberia and Sierra Leone. Once operational, it will provide access to electricity from national or regional sources to industrial users such as mines and plantations that have, until now, been forced to generate their own electricity. It will also expand access to electricity for the local populations along the transmission line, from the substations, but also directly for the High Voltage (HV) line, thanks to the use of the low-cost shield wire technology. Finally, the CLSG regional interconnection will also allow countries to improve the reliability of their national and regional systems because it allows for a diversification of electricity sources for any given country. It also improves the grid stability of national and regional networks, as well as increase penetration of intermittent renewable energy, because it increases access to the primary reserve (HPPs generation), a valuable flexibility tool to maintain stability in the overall grid system. The WAPP-CLSG Project was approved by the Board on May 31, 2012 and consists of two parts. The first part, and the subject of this restructuring, supports the construction of a 1,349 km transmission line that would connect the electricity grids of the four countries. It also includes technical assistance to operationalize a regional transmission company (TRANSCO CLSG), established by an international treaty among the four countries involved, to construct, own, and operate the transmission line. The second part provides technical assistance to the WAPP secretariat to support regional integration of the West African power pool market. Under the investment part of the project, the CLSG finances: (i) the construction of 1,349 km of 225 kV double circuit overhead transmission lines between the four countries, associated 10 new substations, 2 voltage regulation systems in four existing substations, and the extension of one existing substation; (ii) the acquisition and installation of a Supervisory Control and Data Acquisition (SCADA) system, a compensation system and a frequency regulation equipment; (iii) the implementation of Environmental and Social Management Plans (ESMPs) and Resettlement Action The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) Plans (RAPs); (iv) the establishment of a legal and institutional framework for the project and the support during the construction phase of the implementing entity TRANSCO CLSG; and (v) provisions for physical and price contingencies. The four governments have adopted a coordinated procurement strategy for the structuring of the bidding process and bidding documents. The project investment component was co-financed by AfDB (US$ 373 million), EIB (US$ 82 million), KFW (US$ 45 million and US$ 4.6 million in additional financing) and IDA. IDA financing included an initial credit to the Government of Liberia (GoL) in the amount equivalent to SDR 93.3 million (US$ 144.5 million), approved on May 30, 2012, signed on August 16, 2012, and effective on February 13, 2015. An additional financing (AF) was approved on November 17, 2017 to fill a cost overrun, which provided US$ 59.7 million as a credit to the Government of Sierra Leone and US$ 45.2 million to the Government of Liberia. This AF became effective on October 4, 2018 for Sierra Leone, and on October 10, 2018 for Liberia. The investment part of the project is managed by TRANSCO-CLSG, a regional transmission company owned in equal shares by the four participating national utilities. B - Status Project implementation started slowly, but since project effectiveness and the start of construction, the project advanced significantly, and there is now a concerted effort by all actors to accelerate the project and ensure electricity flow from Côte d’Ivoire to Liberia, and then, Sierra Leon and Guinea, starting between December 2019 and March 2020. Initially, effectiveness took longer than expected due the creation of a legal framework needed to build the transmission lines, the creation of TRANSCO, proper government approval of the new legal framework and the Ebola virus disease (EVD) outbreak. However, since effectiveness, construction advanced significantly and all major construction contracts are signed and effective. Corridor and land transfers to the contractors were completed in Côte d’Ivoire, and have reached 70% in Sierra Leone, 65% in Liberia, while validation of numbers is still been completed in Guinea. The project achieved 12.2% average completion for studies and construction as a whole. Works are most advanced in Sierra Leone where the first CLSG tower was erected on the Bikongor–Bumbuna- Yiben transmission line. Works are least advanced in Guinea where no line has yet been turned-over to the contractors. Reflecting on the project progress, the disbursement rate of the signed Engineering, Procurement and Construction Contracts (EPC) Contracts (all sources of financing) is around 32%. Disbursement of IDA financing for the WAPP-CLSG project amounts to 69.4% of the project (US$ 144.5 M), and 40% of the total WBG financing when taking into account the additional financing approved on November 2017(US$ 104.7 M additional for a total of IDA US$ 235.32 M) (excluding the amounts allocated to the WAPP). Based on TRANSCO’s projections for FY 2020, disbursement rate for the project is expected to reach 57% of the total IDA financing by end 2019, and 75% by mid-June 2020. C- Rationale for Restructuring During the preparation of the project As an effectiveness condition, the four governments agreed to pay the full cost of the Resettlement Action Plan (RAP) as estimated during the project planning prior to the project becoming effective. This design insured timely fund availability for TRANSCO to pay the persons affected by the project (PAP), and complete corridor preparation for construction and land ownership transfer to the contractors. As per the agreement, and based upon the 2012 RAP estimates, the government of Sierra Leone paid a total amount of (Sierra Leonese Pounds) Le24,554,796,250 (about US$5.58 million) in 2014 and 2015 to TRANSCO CLSG as its full contribution for the implementation of ESMP, RAP and interest accrued during construction (IDC). The related budget for The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) compensation activities was estimated at Le9,796,943,200 (about US$2.3 million) for the RAP including compensation for 414 PAPs for the entire 537km and five sub stations implemented in Sierra Leone. However, while project implementation has been advancing well, the project has been experiencing difficulties in Sierra Leone to finalize the implementation of the RAP : based on the final PAPs count after the contractors completed the final routing of the lines and substations in Sierra Leone, and the compensation activities carried out so far, a financial gap of Le18,913,013,516 (about US$2,320,676) was identified and needed to be financed in order to finalize the compensation payments before transferring the corridor to the contractors, already mobilized on the grounds. The RAP cost increase in Sierra Leone, which resulted in this financial gap, was due to several reasons: (i)Increased number of PAPs arising from changes in the final line routing; (ii) Ebola virus outbreak in Sierra Leone from 2013 to 2015 caused enormous challenges for the local teams to finalize the number of PAPs; (iii)Original contributions of Sierra Leone were paid in local currency (Le), which greatly devaluated since 2014; (iv)Significant increase in the crop value rates in Sierra Leone, since their publication in 2014; and (v) new activities not included in the original budget that were added to optimize construction and operation. On April 29, 2019, a Memo (included in Appendix I) requesting Regional Vice President (RVP) approval to use IDA funds to finance land expenditures or resettlement compensation for t he projects was approved, upon the request of the Government of Sierra Leone. The Sierra Leonese authorities had already financedthe cost of the RAP as it had been budgeted in the original document published in 2012. However, in their request to the Bank, the authorities explained that they were unable to cover this financial gap in a timely manner due to severe fiscal constraints. Therefore, as these expenditures were not envisioned during project preparation and the current Financing Agreement does not include a specific disbursement category for these expenditures, the project restructuring is to include a specific disbursement category for the financing of cash compensation to PAPs. This will allow TRANSCO to complete all the pending payments in full compliance with the updated RAP, and transfer the corridor on time to the contractors to maximize the likelihood of timely line completion and ensure electricity supply through the national grid during the next dry season. II. DETAILED CHANGES The proposed change consists of a reallocation between disbursement categories of resources available already under the current project, in order to allow the financing with IDA resources of an overrun costs in the total payment for lands and compensation to the people affected by the project in Sierra Leone. It is proposed to reallocate funds among disbursement categories under the IDA credit Cr. 6841 to Sierra Leone from the allocation approved by the World Bank on November 17, 2017, described in the column “Current Allocation“ of the table below. The reallocation proposed here, described in the “Proposed Allocation” column of that table reflects the changes requested by the Government of Sierra Leone in their request dated February 22nd, 2019. The IDA resources reallocated to the new disbursement category (Category 3) will finance the additional payments due to higher number of PAPs, which have increased to 1653. At the same time, changes in line routings and ef forts to minimize negative impacts decreased the number of structures affected from 38 to 19. Land for the 5 sub-stations and towers will be permanently acquired; other lands taken in the Right-of-Way (RoW) are temporary. This mostly affects trees and crops rather than individuals. However, 19 households with structures in the RoW need to be The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) relocated. Besides compensation for houses, assistance for PAP relocation and house will be provided. The overall updated assessment of the resettlement social impacts, carried out through field surveys, documents and consultations with the various stakeholders and relevant PAPs, found that the proposed project will impact: • 19 residential structures belonging to individual households; • 1606 households with tree and crop loses; • Permanent land acquisition concerns only for land under the tower footprint and 5 sub-stations, equivalent to 60 m2 under each tower. Only 28 households will be affected due to the line route avoidance of towns and villages, and remote substation locations. Channeling of funds. Funding for the compensation will be channeled through the designated account for the proposed project. Compensation payment vouchers will be processed by TRANSCO in coordination with the national authorities. As is already done, TRANSCO announces to the individual PAPs the dates and time for issuing the payment vouchers/checks, and has a safeguard team in place, which has experience in payment of compensation and resettlement support to PAPs, and works in close collaboration with the national and local authorities. The Association team found the payment system and the accountability structures sufficiently robust. The PIU has been staffed with a qualified, full-time social development specialist and a qualified, full-time environmental safeguard specialist ensuring the project’s compliance with social and environmental risks management measures as set forth in the financing agreement and the project safeguard instruments. The project task team will ensure detailed record of all compensation paid by IDA under the project, including the identification of PAPs and the specific land-based economic or physical losses for which they are being compensated and/or assisted. Each PAP will sign a document, which shall detail their entitlements under the RAP and will be provided an original copy of that signed document. The other original copy will be retained by the PMU and a scanned version will be shared with the Association. Monitoring. Each recipient countries have clear monitoring responsibilities to be undertaken for RAPs. Periodic checks by IDA's safeguards team through field visits and audio discussions on the status of released funds, completed payments, operationalization of the Grievance Redressal Mechanism, and resolution of grievances, among other measures are performed. These measures will continue to be applied during the remaining time of project implementation by the World Bank team, in coordination with the other project financiers, namely AfDB, European Investment Bank (EID) and German state-owned development bank (KfW). TRANSCO-CLSG submits periodical progress reports (with necessary evidence) with details on payment progress. At the end of implementation, the Project Management Unit (PMU), will submit a RAP implementation completion report for each country detailing all accountabilities, processes, challenges and lessons learnt. This will be reviewed and cleared by the World Bank and it will be part of the Project Implementation Completion and Results Report. Risks. The main risk relates to the inflation cost of the RAP implementation which would require a readjustment if payments delays are present. This risk will be mitigated if these payments are completed in the coming weeks. II. DETAILED CHANGES The World Bank WAPP APL4 (Phase 1) - Côte d'Ivoire, Sierra Leone, Liberia, and Guinea Power System Re-development (P113266) REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Current Current Actuals + Proposed Disbursement % Ln/Cr/TF Expenditure Allocation Committed Allocation (Type Total) Category Current Proposed IDA-61480- GD,WK,NCS,CS,T 001 RG, WKSP,OP pT 50,900,000.00 0.00 48,670,000.00 100.00 100.00 Currency: A.1vii USD GD,WK,NCS,CS,T RG, WKSP,OP pT 8,200,000.00 0.00 8,200,000.00 100.00 100.00 A.2ii UNALLOCATED 470,000.00 0.00 370,000.00 100 Resettlement Costs under Part 0.00 0.00 2,330,000.00 100 A.5 Total 59,570,000.00 0.00 59,570,000.00