The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Power Sector Financial Recovery Program (P157571) EUROPE AND CENTRAL ASIA | Armenia | Energy & Extractives Global Practice | Requesting Unit: ECCSC | Responsible Unit: GEE03 IBRD/IDA | Program-for-Results | FY 2016 | Team Leader(s): Abdulaziz Faghi Seq No: 4 | ARCHIVED on 04-Sep-2018 | ISR33645 | Created by: Emil Zalinyan on 27-Jul-2018 | Modified by: Abdulaziz Faghi on 23-Aug-2018 Program Development Objectives Program Development Objective (from Program Appraisal Document) The proposed Program Development Objective is to support the Borrower’s efforts to ensure adequate and reliable electricity supplythrough improvement of the financial standing of the state-owned power generation companies and the private power distribution company. Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Highly Satisfactory Overall Implementation Progress (IP) Satisfactory Highly Satisfactory Implementation Status and Key Decisions Implementation of all activities under the Power Sector Financial Recovery Program-for-Results, which is supported by the World Bank, is on track. All targets under Disbursement Linked Indicators (DLIs) for the second semester of 2017 and some targets under DLIs for 2018 have been achieved as planned. The financial standing of the state-owned power generation companies (Armenian Nuclear Power Plant and Yerevan Thermal Power Centre) and the private power distribution company (Electric Networks of Armenia) continues to demonstrate improvement. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P157571 IBRD-86150 Effective USD 30.00 30.00 0.00 26.82 3.18 89% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P157571 IBRD-86150 Effective 27-Apr-2016 12-May-2016 19-Jul-2016 30-Jul-2021 30-Jul-2021 Program Action Plan Action Description Include the Program budget into the state budget for 2016. Responsibility Recurrent Frequency Due Date DLI# Status 9/4/2018 Page 1 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Client No 31-May-2016 Completed Comments Include the Program review into the annual work-plan of the internal audit unit of the Ministry of Energy and Natural Action Description Resources. Responsibility Recurrent Frequency Due Date DLI# Status Client Yes Yearly In Progress Comments Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Substantial Moderate Moderate Technical Design of Project or Program Low Moderate Moderate Institutional Capacity for Implementation and Sustainability Moderate Moderate Moderate Fiduciary Substantial Moderate Moderate Environment and Social Low Low Low Stakeholders Substantial Moderate Moderate Other Moderate Substantial Moderate Overall Substantial Substantial Moderate RiskComments Comments "Other Risk" relates to financial planning of the implementing entities. Results PDO Indicators by Objectives / Outcomes Total annual electricity supply by ANPP is maintained IN00631449 9/4/2018 Page 2 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) ►Total annual electricity supply by ANPP is maintained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 2300 GWh 1868.9 GWh 719.7 GWh 2300 GWh Date 01-Feb-2016 01-Oct-2017 31-Mar-2018 30-Jun-2021 The indicator measures total ‘Annual’ generation and the data presented for this period cover total electricity supply through Q1/2018. Therefore based on this trend the total annual electricity supply is expected to be Comments met by the end of CY2018. Total annual electricity supply by YTPC is maintained IN00628059 ►Total annual electricity supply by YTPC is maintained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1400 GWh 1381 GWh 302.8 GWh 1400 GWh Date 01-Feb-2016 01-Mar-2017 31-Mar-2018 30-Jun-2021 The indicator measures total ‘Annual’ generation and the data presented for this period cover total electricity supply through Q1/2018. Therefore based on this trend the total annual electricity supply is expected to be Comments met by the end of CY2018. Average interruption frequency per year in the project area is maintained IN00628060 ►Average interruption frequency per year in the project area is maintained (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 1.10 1.08 1.74 at least 1.1 Date 01-Feb-2016 01-Mar-2017 31-Mar-2018 30-Jun-2021 Comments IN00628061 Customers served in the project area (Number, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 1,040,000.00 1,038,000.00 1,019,000.00 1,040,000.00 Direct project beneficiaries IN00628062 ►Direct project beneficiaries (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3,018,000.00 3,018,000.00 2,969,900.00 3,038,000.00 Date 01-Feb-2016 01-Dec-2017 01-Apr-2018 30-Jun-2021 Comments IN00628063 Female beneficiaries (Percentage, Custom Supplement) 9/4/2018 Page 3 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Baseline Actual (Previous) Actual (Current) End Target Value 1,618,000.00 1,618,000.00 1,559,197.50 1,628,368.00 Intermediate Results Indicators by Results Areas Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00628064 ►No new non-core business related expenditures, borrowing and lending incurred by ANPP (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Mar-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00628065 ►No new non-core business related expenditures, borrowing and lending incurred by YTPC (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 01-Mar-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00628066 ►Liquidation of Haigasard (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Decision on liquidation was made and liquidation Revaluation of assets is Value No plan was approved by Liquidation i completed. the Shareholder’s Meeting. Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00628067 ►Reduction of cash deficit of ANPP due to the Program (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 9/4/2018 Page 4 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Value 18.50 No deficit No deficit No deficit Date 01-Mar-2016 01-Dec-2017 30-Jun-2018 31-Dec-2017 Comments Elimination of cash outflows of state-owned power companies for non-core business related reasons IN00628068 ►Reduction of cash deficit of YTPC due to the Program (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 85.40 33.00 31.90 44.80 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00628069 ►Reduction of the principal amount of outstanding commercial loans of ANPP to be refinanced under the Program (million US$) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.50 8.50 8.50 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2017 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00628070 ►Reduction of the principal amount of outstanding commercial loans of YTPC to be refinanced under the Program (milion US$) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.60 4.60 4.60 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2017 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00628071 ►Recovery of ANPP’s receivables from ENA (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 15.00 15.00 15.00 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2016 9/4/2018 Page 5 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00628072 ►Recovery of YTPC’s receivables from ENA (million US$) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 25.00 25.00 25.00 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2016 Comments Reduction of expensive commercial loans, recovery of receivables and repayment of payable for gas IN00628073 ►Reduction of YTPC's gas payable under Contract referred to in Supplemental Letter No. 3 (in billion AMD) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 12.16 2.36 3.13 3.86 Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments End-user tariffs reflecting changes of electricity supply costs IN00628074 ►Loss (profit) at the private power distribution company due to difference between actual and forecast cost of electricity purchased. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No profit at power No profit (loss) at power distribution company due distribution company to forecast cost of due to forecast cost of Value Yes No purchased electricity purchased electricity exceeding the actual exceeding the actual cost. cost. Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 30-Jun-2021 Comments End-user tariffs reflecting changes of electricity supply costs IN00628075 ►Loss (profit) at YTPC due to US$/AMD exchange rate fluctuation driven changes to AMD denominated payments for natural gas. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No profit (loss) at YTPC No profit at YTPC due to due to change in gas change in gas price Value Yes price caused by No caused by fluctuation of fluctuation of AMD/US$ AMD/US$ exchange rate. exchange rate. 9/4/2018 Page 6 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Date 01-Mar-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments End-user tariffs reflecting changes of electricity supply costs IN00628076 ►Percent of tariff-setting related questions and inquiries (gender-disaggregated) responded to by PSRC within stipulated service standards for response time (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 100% 100% 100% 100% Date 01-Mar-2016 01-Dec-2017 30-Jun-2018 31-Dec-2020 Comments Maintaining the generation capacity of the gas turbine at YTPC’s CCGT plant IN00628077 ►Overhaul of the gas turbine at YTPC’s CCGT plant (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The overhaul is The overhaul is expected expected to be Value n/a to commence in July Overhaul is c completed by end of 2018. 2018. Date 01-Feb-2016 01-Dec-2017 30-Jun-2018 31-Dec-2018 Comments Disbursement Linked Indicators DLI_IND_TABLE ►DLI DLI 1: Decision at the shareholder meetings of ANPP and YTPC, prohibiting the non-core business related expenditures, lending and borrowing by the above companies. (Output, 2,832,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No decision Decision was made Decision was made -- Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 2: Liquidation of Haigasard (Output, 2,000,000.00, 75%) Period between Baseline Actual (Previous) Actual (Current) January 1, 2020, 9/4/2018 Page 7 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) and December 31, 2020 Liquidation is Decision on liquidation is Revaluation of assets is registered by the Value Exists as legal entity made and liquidation pl completed authorized state agency Date 01-Mar-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 3: No new non-core business related expenditures, borrowing and lending incurred by ANPP (Output, 2,500,000.00, 76%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 ANPP incurs non-core Value business related Yes Yes Yes expenditures Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 4: No new non-core business related expenditures, borrowing and lending incurred by YTPC (Output, 2,500,000.00, 76%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 YTPC incurs non-core Value business related Yes Yes Yes expenditures Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 5: Reduction of principal amount of outstanding commercial loans of ANPP (in million US$) (Output, 4,260,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 0.00 8.52 8.52 -- Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments 9/4/2018 Page 8 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) ►DLI DLI 6: Reduction of principal amount of outstanding commercial loans of YTPC (in million US$) (Output, 2,300,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 0.00 4.60 4.60 -- Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 7: Reduction of YTPC's gas payable under Contract referred to in Supplemental Letter No. 3 (in AMD) (Output, 4,982,000.00, 100%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 12,161,962.00 2,360,000.00 3,128,031.00 3,858,962.00 Date 01-Feb-2016 01-Mar-2017 30-Jun-2018 -- Comments ►DLI DLI 8: ENA’s margin for each new tariff period fully reflects the loss (revenue) accrued due to difference between the forecast and actual cost of electricity purchased by ENA during the preceding tar (Output, 2,000,000.00, 70%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No Yes Yes Yes Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- Comments ►DLI DLI 9: Tariffs for YTPC and Hrazdan TPP for each new tariff period fully reflect the loss (revenue) resulting from difference between forecast and actual cost of purchased natural gas due to fluctuati (Output, 2,000,000.00, 70%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value No Yes Yes Yes Date 01-Feb-2016 01-Dec-2017 31-Jul-2018 -- 9/4/2018 Page 9 of 10 The World Bank Implementation Status & Results Report Power Sector Financial Recovery Program (P157571) Comments ►DLI DLI 10: Electricity supplied by YTPC (Output, 4,551,000.00, 74%) Period between January 1, 2020, and December 31, Baseline Actual (Previous) Actual (Current) 2020 Value 1400 GWh 1093.2 GWh 302.8 GWh 1400 GWh Date 01-Feb-2016 30-Sep-2017 31-Mar-2018 -- Comments 9/4/2018 Page 10 of 10