RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING RWANDA ELECTRICITY ACCESS SCALE-UP AND SECTOR WIDE APPROACH (SWAP) DEVELOPMENT PROJECT

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1 Public Disclosure Authorized The World Bank REPORT NO.: RES30161 RESTRUCTURING PAPER Public Disclosure Authorized ON A PROPOSED PROJECT RESTRUCTURING OF RWANDA ELECTRICITY ACCESS SCALE-UP AND SECTOR WIDE APPROACH (SWAP) DEVELOPMENT PROJECT APPROVED ON OCTOBER 15, 2009 TO THE REPUBLIC OF RWANDA Public Disclosure Authorized ENERGY & EXTRACTIVES GLOBAL PRACTICE AFRICA REGION Public Disclosure Authorized Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leaders: Makhtar Diop Diarietou Gaye Riccardo Puliti Sudeshna Ghosh Banerjee Yadviga Viktorivna Semikolenova, Norah Kipwola

2 ABBREVIATIONS AND ACRONYMS EUCL EWSA FA FY GoR IPF ISR PDO PIE PIU SDR UNOPS US$ Electricity Utility Company Limited Electricity, Water and Sanitation Authority Financing Agreement Fiscal Year Government of Rwanda Investment Project Financing Implementation and Status Report Project Development Objective Project Implementing Entity Project Implementing Unit Special Drawing Rights United States Office for Project Services United States Dollars

3 BASIC DATA Product Information Project ID P Original EA Category Partial Assessment (B) Approval Date 15-Oct-2009 Financing Instrument Investment Project Financing Current EA Category Partial Assessment (B) Current Closing Date 30-Nov-2017 Organizations Borrower MINECOFIN Responsible Agency REG-EDCL,Energy Utility Corporation Limited Project Development Objective (PDO) Original PDO The project development objective is to improve access to reliable and cost-effective electricity services for households and priority public institutions Summary Status of Financing Ln/Cr/Tf Approval Signing Effectiveness Closing Net Commitment Disbursed Undisbursed IDA Feb Mar May Nov IDA Oct Feb Jun Nov Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No

4 I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Rwanda: Electricity Access Scale-up and Sector Wide Approach Development Project (EASSDP - P111567) is a US$130 million equivalent Investment Project Financing (IPF). The project is composed of US$70 million equivalent original IDA Credit and an Additional Financing (IDA Credit-51930) in the amount of US$60 million equivalent. The Project Development Objective (PDO) is to improve access to reliable and costeffective electricity services for households and priority public institutions. The project has the following components: (a) National Grid Rollout; (b) Green Connections; and (c) Technical Assistance, Capacity Strengthening, and Implementation Support. Progress towards achievement of the development objective and implementation progress are rated Moderately Satisfactory in the most recent Implementation Status and Results Report. A. Implementation progress by component is as follows: 2. Component A - National Grid Rollout: There are six PDO level indicators. First, under the PDO indicator Households connected to electricity under the Government Program EARP, which refers to the connections made under the Government Electricity Access Rollout Program, 720,924 (equivalent to a national access rate of about 29.7 percent) connections against a target of 768,000 were achieved by September 30. In addition, the project has exceeded the target of number of new connections, i.e., 245,114 by September 30, 2017 compared to the target of 148,000. Second, 84 percent of all health facilities, 75 percent of schools, and 94 percent of administrative offices were connected to the electricity grid by September 30, 2017, against targets of 80 percent, 100 percent and 100 percent respectively. Third, the rolling monthly average of interruptions on medium voltage has increased relative to target, owing to systems faults, switching related to the ongoing works and maintenance, and sometimes loads shedding due insufficient generation capacity. Fourth, the average cost per connection had further dropped to US$ from the design estimate of US$1,019 per connection. Fifth, the number of project beneficiaries at September 30, 2017 were 1,127,524 against a target of 651,200; and sixth, project beneficiaries who are female at September 30, 2017 were 586,312 against a target of 333,526. In addition, the distribution network has been extended by 5,889 km exceeding the project target of 4,200 km. The drop in the connection rate of health facilities is due to the inclusion of hospitals, and health posts in the numbers which were not being considered earlier (earlier numbers took into consideration health centers only). 3. Component B - Green Connections: Through a Level-two restructuring of the project, approved on May 25, 2016, the World Bank reallocated US$8.17 million (SDR 5.9 million) for activities related to solar water heaters under this component towards activities under Component A, due to lack of time for implementation under the project. Activities earlier envisioned under the component are now being implemented through funds provided by the Nordic Development Fund. 4. Component C - Technical Assistance, Capacity, Strengthening, and Implementation Support: The component activities have supported project implementation, the Sector-wide Approach Project (eswap) framework and process, and institutional development and sector strategies. In addition, the project has supported a number

5 of relevant sector studies including: (i) Financial Performance Review and Outlook of the Energy, Water and Sanitation Authority (EWSA, the former utility); (ii) review of the Kigali City 15 KV distribution network investments needs; and (iii) support to EWSA restructuring aimed at improving the utility performance and including review of the EWSA organizational structure, Management Information System assessment, assets separation, and legal services. 5. During a May 2017 supervision mission, three actions were agreed with the Project Implementation Unit (PIU). The first action, to fill vacant positions of social safeguards specialist and chief accountant were not completed as planned. The social safeguards specialist recruitment is complete and the successful candidate will be on board in the PIU by December 1, The chief accountant position had to be relaunched because the recruitment process did not generate an acceptable candidate. The second action, to address the reasons for qualification in 2015 and 2016 audit reports are partially addressed, and the progress report is attached to this restructuring package. The third action, the complete outstanding environmental and safeguards measures was completed. 6. The progress towards the achievement of the PDO and Implementation Progress are both rated Moderately Satisfactory. 7. The project has two legal covenants. The Financing Agreement (FA), Section VI, A, 1 (The Project Implementing Entity (PIE) shall earn, for each of its fiscal year ending on December 31, 2015, an annual return of not less than zero percent (0 percent) of the average current net value of its fixed assets in operation) is now partially complied with. The PIE has started valuation of the fixed assets of the Electricity Utility Company Limited (EUCL). The FA, Section IV, A, 2 (The PIE shall produce, for each of its fiscal year (FY) after its FY ending on June 30, 2010, funds from internal sources equivalent to not less than ten percent (10 percent) of the annual average of the PIE s distribution capital expenditures incurred, or expected to be incurred, for that fiscal year and the next following fiscal year, including customer contributions in aid of construction) is partially complied with. The PIE is collecting customer contributions on a monthly basis from EUCL. The Government of Rwanda (GoR) has committed to pay the arrears from the EWSA amounting to approximately 10 Billion Rwanda Francs to the PIE through the budget. B. Project Disbursement and Commitment: 8. Cumulative disbursements as of October 31, 2017, stand at percent of the total US$130 million equivalent credit. The current project closing date was extended to November 30, 2017 through a level-two restructuring approved on June 5, All contracts not yet disbursed on the project are on schedule to be delivered before the current closing date, except one major contract, Purchase of Trucks, which the Project Implementation Unit (PIU) intends to purchase from the United Nations Office for Project Services (UNOPS), that could not be signed in time. On September 26, 2017, while the PIU was ready to sign the contract, they were informed by UNOPS that they could not commit to delivering the contract for the purchase of trucks by the project closing date of November 30, As a result, the PIU stopped the contract signing process. To enable the PIU to sign the contract, and to ensure delivery of the trucks and disbursement before project closing date, the GoR has requested a four-month extension to the project closing date, to March 31, The Task Team confirms that the requirements of World Bank IPF Directive and Policy regarding closing dates will be met, specifically, (i) the project objectives continue to be achievable; (ii) the performance of the

6 Borrower remains satisfactory; (iii) the World Bank and the Borrower agree on actions that will be undertaken by the Borrower to complete the project; and (iv) there are no outstanding audits, or IFRs for the credit. II. DESCRIPTION OF PROPOSED CHANGES The following changes are introduced: (i) closing date extension, and (ii) indicators target end date. III. SUMMARY OF CHANGES Changed Change in Results Framework Not Changed Change in Loan Closing Date(s) Change in Implementing Agency Change in DDO Status Change in Project's Development Objectives Change in Components and Cost Cancellations Proposed Reallocation between Disbursement Categories Change in Disbursements Arrangements Change in Disbursement Estimates Change in Systematic Operations Risk-Rating Tool (SORT) Change in Safeguard Policies Triggered Change of EA category Change in Legal Covenants Change in Institutional Arrangements Change in Financial Management Change in Procurement Change in Implementation Schedule

7 PDO_IND_TABLE The World Bank Other Change(s) Change in Economic and Financial Analysis Change in Technical Analysis Change in Social Analysis Change in Environmental Analysis IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators People provided with new or improved electricity service Indicator Type: Corporate Value Revised People provided with access to electricity by hhold connections-grid Breakdown Value Revised Households connected to electricity under the Government Program EARP Value Revised Household Connections from the Project Breakdown

8 Value Revised Number of Community electricity connections under the project (Energy Core ind) Value Revised Schools Breakdown Value Revised Administrative Community Centers Breakdown Value Revised Health Centers/Hospitals Breakdown Value Revised Project Beneficiaries

9 Value Revised Of which female (beneficiaries) Breakdown Value Revised Date 29-Apr Mar Nov-2017 Monthly interruptions per km of MV line (% reduction of rolling average ) Value Revised Average cost per connection [Connection Cost Index (CCI)] Value Revised Intermediate Indicators IO_IND_TABLE Transmission and distribution lines (KM) constructed or rehabilitated under the project. (Energy Core Ind) Unit of Measure: Kilometers Value Revised

10 Transformers rehabilitated/replaced Value Revised Date 01-Dec Sep Mar-2018 Improved customer complaint and resolution system in place and functioning Unit of Measure: Text Value n/a Yes Yes Revised Date 29-Apr Sep Mar-2018 New Customers Using Energy Efficient Light Bulbs (CFLs) Value Revised Date 01-Dec Sep Mar-2018 Joint Annual Sector Performance Report approved by SWG Unit of Measure: Yes/No Value No Yes Yes Revised Date 01-Dec Sep Mar-2018 Spatial grid rollout investment plan updated by EWSA and Approved by the SWG Unit of Measure: Yes/No Breakdown Value Yes Yes Yes Revised

11 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE The World Bank Date 01-Dec Sep Mar-2018 Quarterly monitoring progress reports approved by SWG Unit of Measure: Yes/No Breakdown Value No Yes Yes Revised Date 01-Dec Sep Mar-2018 LOAN CLOSING DATE(S) Ln/Cr/Tf Status Original Closing IDA Effective 31-Jan-2014 IDA Effective 30-Jun-2016 Revised Closing(s) 30-Jun-2016, 30-Jun- 2017, 30-Nov Jun-2017, 30- Nov-2017 Proposed Closing Proposed Deadline for Withdrawal Applications 30-Mar Jul Mar Jul-2018