PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE
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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Country Sector(s) Theme(s) Lending Instrument Project ID Borrower(s) Implementing Agency Environmental Category Date PID Prepared/Updated Estimated Date of Board Approval Decision Other Decision I. Project Context Country Context PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE CASA-1000 Community Support Program (P149410) SOUTH ASIA Afghanistan Report No.: Transmission and Distribution of Electricity (70%), Irrigation and drainage (10%), Other social services (10%), Water supply (10%) Rural services and infrastructure (70%), Rural policies and institutions (30%) Investment Project Financing P Ministry of Finance MRRD B-Partial Assessment 27-Feb Jun Afghanistan is a landlocked state falling within both Central Asia and South Asia (and to some extent Western Asia). It is bordered by Turkmenistan, Uzbekistan and Tajikistan in the north, Iran in the west, Pakistan in the south and east, and China in the far northeast. It has a population of approximately 30 million, and after decades of war is highly under-developed and one of the poorest countries in the world. 2. With a GNI per capita of $570, Afghanistan is the lowest income country in South Asia and emerging from over three decades of conflict. It remains an extremely fragile state with weak state and local institutions and faces enormous development challenges, including high levels of poverty (36 percent) and unemployment. Despite the ongoing conflict and insecurity, there have been some significant advances in institutional strengthening and rapid economic growth of 9 percent per year in , driven in large measure by huge foreign aid flows of close to $16 billion per annum. With foreign aid set to decline from 2014 with the withdrawal of international forces and the labor force expanding by about 300,000 per year, the Afghan economy urgently needs to find ways to sustainably accelerate broad-based growth in the medium term - implying, inter alia, adequate and stable electricity supply to meet expanding demand. Even under reasonably optimistic scenarios, growth in Afghanistan is projected to fall from a 10-year average of over 9 percent to between 5 and 6 percent over Additionally, unemployment, already at 8 percent in , is projected to rise
2 further, with potentially destabilizing effects. In this context, Afghanistan is actively seeking ways to accelerate growth through increased private and public investment, with a particular focus on addressing the country severe infrastructure bottlenecks. 3. A highly aid dependent country in conflict and with extremely fragile institutions, Afghanistan is in the midst of a critical security and economic transition. Presidential elections are scheduled for April 2014, and the Government is assuming leadership for both security and development from the international community by the end of Aid levels are expected to fall as is growth in Future aid levels remain uncertain - even if there is a smooth transition. The Central Asia-South Asia Electricity Transmission and Trade Project (CASA-1000) aims to facilitate electricity trade between hydropower surplus countries in Central Asia and electricity deficient countries in South Asia by putting in place the commercial and institutional arrangements and the transmission infrastructure required for this trade. The four countries participating in the project Afghanistan, Kyrgyz Republic, Pakistan and Tajikistan are of considerable geostrategic importance by virtue of their location at the crossroads of China, India, Russia and the Middle East. Sustained efforts to promote institutional development and socio-economic prosperity in the CASA-1000 countries are therefore a very high priority, not only for the countries themselves, but also for the stability of the Central and South Asia regions more broadly. The CASA-1000 countries vary significantly in terms of population numbers, economic size and development trajectories, but also share several key characteristics and have complementary development needs and goals, especially in the energy sector. 4. The Afghanistan portion of CASA-1000 is a 560 km DC transmission line that will extend from the Tajikistan border to the border with Pakistan near Peshawar. Afghanistan s share of the electricity will be delivered at Kabul through a DC-AC Converter. The total cost of the CASA 1000 project is currently estimated at US$ 953 million. The Afghanistan share that will be financed with a World Bank grant to Afghanistan is estimated to be US$ 309 million including the 562 km portion of the DC transmission line located in Afghanistan and a DC-AC converter station in located in or near Kabul. Sectoral and institutional Context Access to power in rural Afghanistan 5. The percentage of the population with access to electricity in Afghanistan is among the lowest in the world. The Ministry of Energy and Water (MEW) estimates that about 30 percent of Afghans have access to electricity from grid-based power, micro-hydro, or solar panel stations. Rural areas, where more than 77 percent of Afghan population lives, remain practically unconnected to the grid or other affordable, sustainable power supply options. Some estimates put rural access to electricity at a mere 9 percent of the total Afghanistan population. The situation has improved significantly in the major urban population centers along the critical North East corridor between Mazar-e-Sharif and Kabul, following the import of power from Uzbekistan and the rehabilitation of three hydro plants (Mahipar and Sarobi completed, and Naghlu ongoing). Increasing parts of some urban centers, for example Kabul, Herat, Mazar-e-Sharif, and Pul-e-Khumri, now have a 24-hour power supply for the first time in decades. 6. Overall, across the four countries the line will have a transmission capacity of 1,300 MW in either direction. About 560 km of the line will be in Afghanistan, which will cost an estimated US$395 million and will generate 300 MW. The financial benefits of the project include the incremental revenues from the sale of imported power in Afghanistan and Pakistan. Afghanistan will have the possibility of buying up to 300 MW from CASA-1000 or can re-export the electricity to Pakistan. The additional 300MW brought by CASA-1000 would also help Afghanistan meet its growing demand. 7. Based on the current routing of the CASA-1000 Afghanistan section, the transmission line is expected to pass through approximately 700 communities spread over 23 districts in 6 provinces, with a total of 152,000 families along the 4 kilometer corridor of influence (COI). Overall in the six
3 Provinces namely Parwan, Kunduz, Baghlan, Laghman, Nangarhar and Kabul only 33% of communities along the COI have access to power either through connection to the electricity grid, micro-hydro power, solar or other power sources. However the coverage ranges from 0 100% between the 23 districts. For on-grid connections in three provinces (Kunduz, Baghlan and Parwan) 10%-30% of the population has connection to the electricity grid, while less than 10% of the population in two provinces (Laghman and Nangarhar) is connected to the grid. The range of connection to the grid for the Kabul population was estimated to be around 50 percent. It is important to note that the communities along the corridor of influence (COI) cannot be directly supplied with electricity from the CASA 1000 transmission line, being of a very high voltage. 8. As part of the CASA-1000 project, the participating countries will therefore implement individual Community Support Programs (CSPs) in each country. The aim of these programs would be to increase the shared prosperity associated with the project for communities along the CASA-1000 corridor. This represents a departure from usual practice since, given the relatively modest ecological and social impacts of high voltage transmission lines, people living along the transmission corridor are not typically provided with special benefits. The CSP in Afghanistan will be implemented during the project s thereby enhancing security during construction phase and benefitting communities along CoI. II. Project Development Objective(s) The proposed Project Development Objective is to provide access to electricity or other social and economic infrastructure services to communities in the project area in order to strengthen community support for CASA-1000 transmission line. III. Project Description Component Name 1. Community Grants for sub-projects The component will provide grants directly to communities to fund economic infrastructure sub-projects. Preference will be given to power-sector sub-projects. However where they already exist (estimated 30% of communities have access to power along the COI), or in cases where a power sub-project is not technically feasible given the terrain and resources in the locality, then communities can use their grant to fund other investment sub-projects for their own rural and social development. The grant amount will be calculated (following the same arrangements under NSP), by the number of families in a community at the rate of US$ 200 per family, but with a maximum ceiling. For CASA-CSP the ceiling will be US$ 30,000 per community, since the average grant per community in NSP III in these 6 Provinces for power sector subprojects is US$ 27,000 and this has been used as the basis for estimating the funds needed for this component.
4 Component Name 2. Community mobilization The objective of this component is to engage communities to increase the shared prosperity associated with the CASA-1000 transmission line which will pass through their villages, by facilitating community participation in sub-project planning, implementation and Operations and Maintenance. This is expected to create the conditions for smooth construction of the CASA-1000 transmission line, while ensuring sustainability of CSP sub-projects and maximizing the development outcomes for the rural poor. To enable CDCs to perform their roles, Facilitating Partners will be contracted to build capacity and ownership through (i) participatory planning of community development priorities; (ii) community governance and accountability systems and processes, and mechanisms for conflict resolution; (iii) community participatory monitoring of work being implemented in the localities; (vi) basic bookkeeping and contracting for management of community-implemented investment schemes; and (vii) communication with subnational and national government and contractors building the CASA-1000 transmission line. It will also cover the Facilitating Partner costs as per the NSPIII arrangements, which includes the basic facilitation cost per CDC and additional allowances in-case of insecurity, remoteness and seasonality for a period of 3 to 4 years work. Component Name 3. Project Implementation Support CSP will adopt a cost sharing mechanism with NSP, with regards to operational expenditures (excluding FP costs). As CSP will use the NSP implementation arrangements which include staffing and systems for financial management, procurement, project management, monitoring, etc at the central and provincial level, it will be difficult and inefficient to link specific cost elements to the CSP. Since the inception of NSP, the share of operational expenditures to the overall NSP funding has been around 8%. For simplicity and efficiency, CSP will have a funding allocation of 8% of the overall grant towards operational expenditures. While operational expenditures will be pre-financed from NSP funds, CSP will reimburse the NSP Operations Fund float account cumulatively up to 8% of total CSP funding till the end of the project in a gradual manner. Any incremental operating costs on account of CSP will be absorbed within that 8%. (i) Sub-component 3 (a): Third Party monitoring (US$1.5 million): Given the nature of this project, technical requirements and the limitations on conducting regular field visits due to security restrictions, the services of a TPM will be sought. Primarily to monitor (on a sample basis) FP engagement with communities, financial monitoring of grants, physical and quality checks of sub-project implementation etc is regularly reviewed, and any delays or issues are addressed on an ongoing and timely basis.
5 Component Name 4. Communications and Outreach This component will finance a strong communications campaign and information-sharing activities directed to relevant stakeholders within the Provinces with a special emphasis on outreach to communities in the project areas. A multi-media communications strategy will be at the core of information sharing efforts, designed with the aim of ensuring that information on the project s implementation progress and impacts is conveyed to interested members of Government, civil society and the citizenry more broadly. To ensure that CSP communities living in the CASA-1000 corridor are effectively reached, the communications strategy will take into account their infrastructure access, literacy rates, and language. In addition, it will also ensure that feedback loops (perception surveys, community participatory monitoring and grievance handling mechanisms) between the corridor communities and the implementing agencies are put in place and regularly utilized. (See Annex: Communications plan) IV. Financing (in USD Million) Total Project Cost: Total Bank Financing: 0.00 Financing Gap: 0.00 Financing Source Amount Borrower 0.00 Afghanistan Reconstruction Trust Fund Total V. Implementation 9. The responsible agency for the implementation of CASA-CSP will be the Ministry of Rural Rehabilitation and Development (MRRD) that will use the existing implementation arrangements and institutional structures in place for the National Solidarity Program (NSP). NSP is one of the flagship development programs of the GoIRA, and was one of the priority programs that was conceived and championed by the Minister of Finance (MoF) and MRRD in 2003 when it was launched to support local good governance and rural infrastructure development. NSP is one of a number of Project Implementation Units within MRRD and has a strong team and well-functioning implementation arrangements in place. Currently in its third phase, NSP s development objective is to build, strengthen and maintain Community Development Councils (CDCs) as effective institutions for local governance and social-economic development in rural Afghanistan. To mobilize capacity for program implementation, NSP engages 29 international/national NGOs and one UN agency as Facilitating Partners (FPs). 10. The National Solidary Program, currently in its third phase, is active in 359 of Afghanistan s 364 districts and all 34 provinces (covering over 90 percent of villages). Since inception in 2002, over
6 $1.33 billion has been disbursed as block grants directly to CDC bank accounts that is used to address their community development priorities. To date, over 32,000 CDCs have been mobilized and held elections across all of Afghanistan s 34 provinces. Over 56,900 sub-projects have been completed such as water and sanitation, small scale irrigation schemes, energy/power, and transport (rural roads, culverts and bridges). In addition, rural communities have benefited from the education, and livelihood and human capital development sub-projects. 11. Specifically in the 6 CASA-CSP Provinces NSP has established over 1,960 Community Development Councils that represent over 451,000 households. Within these same districts, in the 4 kilometer COI there are approximately 700 CDCs established that represent over 151,000 households. Currently 10 Facilitating Partners are contracted under NSPIII to work with these 6 Provinces. VI. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 Natural Habitats OP/BP 4.04 Forests OP/BP 4.36 Pest Management OP 4.09 Physical Cultural Resources OP/BP 4.11 Indigenous Peoples OP/BP 4.10 Involuntary Resettlement OP/BP 4.12 Safety of Dams OP/BP 4.37 Projects on International Waterways OP/BP 7.50 Projects in Disputed Areas OP/BP 7.60 VII. Contact point World Bank Contact: Naila Ahmed Title: Rural Development Specialist Tel: / nahmed@worldbank.org Borrower/Client/Recipient Name: Ministry of Finance Contact: Dr. Mohammad Mustafa Mastoor Title: Deputy Minister
7 Tel: Implementing Agencies Name: MRRD Contact: Mamoon Khawar Title: Donor coordination Tel: VIII. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web:
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