AFRICAN DEVELOPMENT BANK GROUP

Transcription

1 ublic Disclosure Authorized ublic Disclosure Authorized AFRICAN DEVELOMENT BANK GROU MULTINATIONAL RUZIZI III REGIONAL HYDROOWER LANT ARAISAL REORT ONEC DEARTMENT December 2015 Translated Document

2 TABLE OF CONTENTS Currency Equivalents Acronyms and Abbreviations roject Information Sheet, Executive Summa Results-Based Logical Framework and Implementation Schedule i to v 1 STRATEGIC THRUST AND RATIONALE roject Linkages with Countries' Strategies and Objectives Rationale for Bank's Involvement Aid Coordination ROJECT DESCRITION roject Description and Components Technical Solutions Retained and Alternatives Explored roject Type roject Cost and Financing Arrangements roject Target Areas and Beneficiaries articipatory rocess Bank's Experience and Lessons Reflected in roject Design Key erformance Indicators ROJECT FEASIBILITY Economic and Financial erformance Environmental and Social Impacts ROJECT IMLEMENTATION Implementation Arrangements roject Monitoring Governance Sustainability Risk Management Knowledge Building LEGAL FRAMEWORK Legal Instrument Conditions for Bank's Involvement Compliance with Bank olicies RECOMMENDATION ANNEX 1: Countries' Comparative Socioeconomic Indicators...I ANNEX 2: Tables of AfDB ortfolio in the Countries....IV ANNEX 3: Development artners' Operations in the Electricity Sub-Sector in the Great Lakes Countries IX ANNEX 4: Map of roject Area...X ANNEX 5: On-lending of ADF Resources...XI ANNEX 6: Factors of Fragility Addressed by the roject....xii

3 TABLES No. Title age No. Title age 2.1 roject Components and Cost roject Cost by Expenditure Category roject Alternatives and Reasons for Expenditure Schedule by Component 6 their Rejection 2.3 Estimated Cost by Component Key Financial and Economic Indicators roject Sources of Financing Main roject Implementation Stages bis roject Sources of Financing by Component 6 6 Currency Equivalents October Unit of Account (UA) = USD Unit of Account = EUR Unit of Account = BIF 2, Unit of Account = CDF 1, Unit of Account = RWF 1, Fiscal Year 1 January - 31 December Weights, Units and Measures T Tonne = 1000 kg kw kilowatt = 1000 Watt GW Gigawatt = kw or MW kwh kilowatt-hour = 1000 Wh GWh Gigawatt-hour = MWh MVA Megawatt-ampere = kva or VA Toe Tonne of oil equivalent MW Megawatt = W or kw kv kilovolt = Volt MWh Megawatt-hour = kwh kva Kilovolt-ampere = VA tco 2 Tonne CO 2 = 1000 kg of carbon gas

4 Acronyms and Abbreviations ABAKIR Lake Kivu and Ruzizi River Basin Authority C roject Company ADF African Development Fund CR roject Completion Report AfDB African Development Bank CU roject Coordination Unit AFD French Development Agency IB Gross Domestic roduct CIA Country olicy and Institutional Assessment IDA rogramme for Infrastructure Development in Africa CS Country Strategy aper IU roject Implementation Unit DRC Democratic Republic of Congo ublic-rivate artnership ECCAS Economic Community of Central African States RS II RE RMC overty Reduction Strategy aper Regional Envelop Regional Member Countries ECGLC Economic Community of the Great Lakes Countries EGL Great Lakes Electricity Utility RIS Regional Integration olicy and Strategy (RIS) EIB European Investment Bank RIS East Africa Regional Integration Strategy aper EC Engineering, rocurement and Construction EU European Union RO Regional Operation GRS Growth and overty Reduction SME Small-and-Medium-Sized Enterprises Strategy aper KfW Kreditanstalt für Wiederaufbau tco 2 Tonne of carbon dioxide TF Technical and Financial artners TSF Transition Support Facility (formerly Fragile NELSA Nile Equatorial Lakes Subsidiary States Facility-FSF) Action rogramme - roject to Strengthen ower Grid Interconnection of Nile Equatorial Lakes Countries UA Unit of Account BA erformance-based Allocation WB World Bank i

5 ROJECT INFORMATION SHEET Donees: Borrowers: Executing Agency CLIENT INFORMATION Burundi and Democratic Republic of Congo Democratic Republic of Congo and Rwanda Electricité des Grands Lacs (EGL) FINANCING LAN SOURCES Amount (UA million) INSTRUMENT BURUNDI DRC RWANDA TOTAL COUNTRY TOTAL ADF (BA) 7 7 Grant 7 7 Loan ADF (RE) Grant Loan TSF (illar I) Grant 5 5 Loan AfDB (private sector) Loan Other Donors (AFD, EIB, WB, KfW, EU) rivate artnership TOTAL ROJECT COST BURUNDI DRC RWANDA Type of Financing ADF Grant ADF/TSF Grant ADF/TAF Loan ADF Loan Currency UA UA UA UA Interest Rate Type NA(*) NA NA NA Interest Rate Spread NA NA NA NA Service Charge NA NA 0.75% / yr. 0.75% /yr. Commitment Fee NA NA 0.50% / an 0.50% / yr. Other Charges NA NA NA NA Maturity NA NA 10-year grace period and 30 years of reimbursement 10-year grace period and 30 years of reimbursement (*)NA: Not applicable ii

6 FIRR 7.84% FNV USD million EIRR 13.35% ENV USD million TIMEFRAME AND MAIN MILESTONES Concept Note Approval 3 September 2015 roject Approval 16 December 2015 Effectiveness 30 April 2016 Closing Date 31 December 2022 Completion 31 December 2023 Last Reimbursement 31 December 2056 iii

7 EXECUTIVE SUMMARY 1. roject overview: The Ruzizi III Hydropower lant roject which is part of the rogramme for the Development of Infrastructure in Africa (IDA) concerns Burundi, the Democratic Republic of Congo (DRC) and Rwanda. It entails the construction of a run-of-river dam (on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower dam), a 147 MW power plant and a distribution station. Burundi s current total capacity will double, while Rwanda s will increase by half. DRC s share will contribute to raising supply in the Eastern region currently not connected to the interconnected network, while also significantly reducing the percentage of energy of thermal origin. The project will help to meet the needs of the population and of the economy, in general, in accordance with the national development strategies of the countries concerned, which underscore the importance of ensuring reliable and affordable electric power supply to achieve sustainable economic transformation. The specific objectives of this operation are to: (i) contribute to the development of Ruzizi III for hydropower generation; and (ii) strengthen regional economic integration through the creation of an electricity market. The plan is to implement a project at a total cost of UA million (of which UA 98.5 million financed by the Bank s public sector window and UA million expected from the private window) over a period of six (6) years, one year of which constitutes the development phase. This is the first regional project designed as a public-private partnership () aimed at optimizing the hydropower potential of the Ruzizi cascade. For its implementation, a private partner, acting in the capacity of investor/developer, will be recruited and awarded a concession. This partner will be required to develop the project, be a majority partner in a project company (C) with the three countries concerned and secure the necessary financing. 2. Needs assessment: The project feasibility study was assessed based on several previous studies concerning electricity demand, in particular the IDA study. The three countries are experiencing enormous problems in meeting demand for electricity due to the lack of major investments for over a decade in a context of population growth and multiplication of socio-economic development efforts. Existing infrastructure allows coverage of less than 35% of demand in the project area, estimated at about 3800 GWh by All the studies concur that this estimate is below potential demand. 3. Bank's value added: The Bank is providing assistance to the three countries concerned to develop the energy sector. It became involved at a very early stage by financing transaction advisory services. The Bank is helping to structure the project and facilitate dialogue among stakeholders. By being the first to approve the project, the Bank is playing a key catalytic role in leveraging the required concessional financing to significantly reduce the cost of energy (from USD 0.19 to USD 0.11/kWh) and initiate the development phase. The Bank is strengthening the project's credibility and sustainability, and is participating in the creation of an electricity market. It is also asserting its leadership role in the African energy sector. Its intervention will help to build resilience and address the situations of fragility that characterize the Great Lakes Region. Close attention will be given to gender issues by putting a specialist at countries disposal during the project s final design and throughout the implementation phase. 4. Knowledge management: Using several Bank windows, this is an innovative project that supports large-scale clean energy generation initiatives with a transformational impact on the economies of the beneficiary regional member countries. The experience that will be acquired in managing this type of multinational project structured as a will contribute to the implementation of the Bank's green growth strategy. Such experience will create opportunities for replication, particularly for Ruzizi IV. Therefore, the project is in keeping with the Bank's strategic vision for the development of the African energy sector through the promotion of universal access to modern energy on a low-carbon, inclusive growth path. iv

8 RESULTS-BASED LOGICAL FRAMEWORK Country and Name of roject: Multinational (Burundi, DRC and Rwanda) - Ruzizi III Regional Hydropower lant roject Goal : Increase renewable energy generation for the sustainable socio-economic development of ECGLC countries RESULTS CHAIN Indicator (including CSI) ERFORMANCE INDICATORS Baseline Situation (2015) 2023 Target MEANS OF VERIFICATION RISKS/ MITIGATION MEASURES IMACT OUTCOMES OUTUTS Increase in electricity trading between ECGLC countries through the supply of sustainable energy to achieve economic growth and poverty reduction Improved reliability of energy supply and cost of the countries' energy mix Volume of energy trade Electricity access rate 36 MW and 125 GWh (Ruzizi II) Burundi: 7% Eastern DRC: 18% Rwanda: 22% Average cost of electricity (USD/kWh) Burundi: 0.10 DRC: 0.05 Rwanda: 0.20 Demand satisfaction rate Burundi: 1/3, Rwanda: 85%, DRC: 1/3 coverage Over 247 MW or 1030 GWh Burundi: 20% Eastern DRC: 42% Rwanda: 90% Burundi: 0.12 DRC: 0.05 Rwanda: < 0.15 Demand coverage at peak period of 100% in the participating countries (for East DRC) Creation of new jobs Number of jobs created NA Creation of 800 to 1,000 direct and indirect jobs during implementation, 100 of which for women and 450 permanent jobs in the operational phase Reduction of greenhouse gas emissions Carbon dioxide emission avoidance ,000 tco2 per year 1. The Ruzizi III plant is constructed 2. The Ruzizi III power distribution system is constructed 3. Institutional support is provide to ECGLC countries to increase regional electricity trading 4. Audit reports and quarterly status reports are prepared 1. Installed capacity 2. Length of high voltage line and number of sub-stations constructed 3. Training programme implemented 4. Number of women trained 5. Report of study on optimization of power trading opportunities and maximization of project benefits 6. Audit reports and quarterly reports MW (in 2023) 8.3 km by 2023 & 01 in 2023 Training programme fully implemented by (15 per country) 01 5 and 20 Annual electricity company and S reports National statistics; Bank country reports/economic data; UND reports AfDB supervision mission reports; Quarterly Activity Reports; roject Completion Report; Trade Ministry Reports; Ministry of Energy, Economy and Finance Reports AfDB Supervision Mission Reports Executing Agency Reports roject Completion Report 1: Regional electricity trade does not materialize; Mitigation Measure: Support institutional capacity building for energy trading in ECGLC countries 2: Collapse of shareholding agreement which supports the roject Company; Mitigation Measure: maintain close supervision during operation and establish a strong dispute resolution forum. 3. Other Risks: political stemming from the fragility of the peace process and political instability in Burundi and in the Ruzizi lain, institutional structure, financing (counterparty risk, co-financing risk), trade, technical, implementation including fiduciary and coordination risks. Mitigation Measures Commitment of the three countries that signed a communiqué on 8 March 2013; undertaking by governments to include counterpart funding in their budgets. A donor coordination mechanism is established; ongoing energy distribution networks; establishment of ABAKIR, water resource management and incorporation of lessons learnt from Ruzizi II development. KEY ACTIVITIES BY COMONENT 1. Component 1: Support for Ruzizi III Implementation - (i) provide States with their equity participations; (ii) provide States with resources to be on-lent to the roject Company; 2. Component 2: Support for Regional Cooperation and Integration Contribute to the conduct of different studies; and 3. Component 3: roject Management (i) institutional support to EGL; (ii) monitor works implementation; (iii) establish a panel of independent experts; (iv) prepare a procedures manual; (v) audit project accounts; and (vi) monitor ESM implementation. Inputs: AfDB Group: UA133.5 million including public sector (UA 98.5 million) and private sector (UA 35 million); Utilisation: Component 1: UA million; Component 2: UA 4.06 million; Component 3: UA 3.94 million Co-financing: EIB (USD 120 million + USD 50 million private sector window); WB (USD 150 million); AFD (USD 15 million + USD 30 million private sector window); KfW (USD 30 million); EU (USD million); Commercial debt (to be confirmed following assessments) v

9 Yr0/M Yr1/M Yr2/M Yr3/M Yr4/M Yr5/M Yr6/M Yr7/M S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA MJ J A S O N D J F MA M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M roject reparation hase Finalization of negotiations with investor/developer (I/D) reparation and signing of roject Agreements Finalization of project preparation by financial partners EGL capacity building Establishment of project company (C) Mobilization of commercial debt by C Training Activities (EGL,Steering Committee and representatives of States) roject Development hase Establishment of the Steering Committee Recruitment of advisors reparation of general project implementation schedule Finalization of geotechnical studies Updates of ESIA and FR Implementation of ESM, FR and compensation of As reparation of BDs and launching of bidding for EC contract Bid preparation Establishment of the Steering Committee Establishment of Water Management Agency (ABAKIR) Construction hase Detailed designs for civil works and hydroelectric structures Civil works and hydroelectric structures Detailed designs for equipment Detailed designs for transmission line and substation Maufacturing of transmission line and substation equipment Manufacturing of electromechanical equipment Installation of transmission line and substation equipment Installation of electromechanical equipment Commissioning of transmission line and substation Filling of dam Commissioning of dam Operational phase Industrial commissioning (for 12 months) Environmental and social monitoring IMLEMENTATION SCHEDULE OF RUZIZI III REGIONAL HYDROOWER ROJECT vi

10 MANAGEMENT S REORT AND RECOMMENDATIONS TO THE BOARD OF DIRECTORS CONCERNING THE ROOSAL TO ROVIDE FINANCING TO THE DEMOCRATIC REUBLIC OF CONGO AND RWANDA FOR THE RUZIZI III REGIONAL HYDROOWER LANT ROJECT Management hereby submits the following report and recommendation concerning a proposal to award (i) a UA 21 million grant to Burundi; (ii) a UA 45 million TSF grant (illar I) to DRC; and grant (iii) a UA 15 million TSF loan (illar I) to DRC; and (iv) a UA 17.5 million ADF loan to Rwanda, to finance the Ruzizi III Regional Hydropower lant roject. 1 STRATEGIC THRUST AND RATIONALE 1.1 roject Linkages with Countries' Strategies and Objectives Due to the dominance of fossil fuels in electricity generation, the ECGLC countries are experiencing serious electricity supply problems that impede their economic activities. Moreover, despite their relative socio-political stability, these countries continue to suffer from the effects of over a decade of wars, marked by acute socioeconomic problems, vulnerable economies and, consequently, difficulty in attracting investments. The project is a regional solution entailing the implementation of an integration project in three countries of Central and Eastern Africa, and involves the construction of a regional hydropower plant in collaboration with the private sector. It supplements ongoing ECCAS initiatives. The project is in keeping with illar I of the Bank's Regional Integration Strategy apers (RIS) for Central and Eastern Africa, which are anchored on regional infrastructure At country level, the ongoing national development strategies of the three countries underscore the need to increase electricity generation. For Burundi, developing the electricity sector is one of RS II's main objectives. illar II of the Bank's Country Strategy aper prioritizes the development of national and regional energy projects in order to significantly increase supply of reliable and affordable electricity, and improve countrywide access to electricity. For DRC, the project is in keeping with the GRS, the main reference framework for all development operations. GRS is focused on 4 pillars, including illar (iii) on improving access to basic social services and strengthening human capital, and illar (iv) on environmental protection and climate change adaptation. The project's objectives are consistent with illars 1 and 2 of the CS. In the case of Rwanda, one of the pillars of the Economic Development and overty Reduction Strategy aims to support growth and economic transformation by improving the connectivity of Rwanda's economy. This strategy aims to increase electricity generation and access. The project is in line with illar I of CS on infrastructure development The project, which also aims to set up a public-private partnership for the generation of abundant supplies of electric power is in keeping with the Bank's energy policy and Ten-Year Strategy targeting inclusive and green growth through the promotion of non-polluting energy. Furthermore, the project aligns with the Bank's Strategy for Addressing Fragility and Building Resilience in Africa, , whose Focus Area 2 (romote Resilient Societies Through Inclusive and Equitable Access to Employment, Basic Services and Shared Benefits from Natural Resource Endowments) considers equitable access to electricity as a factor likely to strengthen the legitimacy of governments, establish trust between States and citizens and consolidate peace dividends in post-crisis contexts. 1.2 Rationale for Bank's Involvement This projects targets the objectives of the Bank's Ten-Year Strategy ( ) and its Energy Sector olicy. It takes into account the need to increase the population's access to electricity by strengthening green energy generation, with a view to sustainable development. It is in keeping with the operational priorities defined by the Bank in terms of regional integration infrastructure and private sector development. It also aims to build the capacity of two States in transition (Burundi and DRC) as 1

11 well as Rwanda's resilience by providing basic services through inclusive development as recommended in the Great Lakes Regional Fragility Assessment Report, which identified the following factors of fragility (reflected in the project design) (see Annex 6): (i) volatility of the security situation and political instability; (ii) the different forms of exclusion and social inequalities, including those based on gender; and (iii) extreme poverty and unemployment, especially youth unemployment. By helping to improve the region's socio-economic situation, the project could serve as a major instrument of dialogue in the political and security stabilization process With annual generation of about 710 GWh, evenly distributed among the three countries, it will help to avoid greenhouse gas emissions equivalent to 151,000 tonnes of CO 2 per year. The Ruzizi III project will significantly transform the electricity sectors in the countries concerned. Its implementation will contribute to: (i) optimal exploitation of the Ruzizi River's energy potential to improve security of supplies and access to electricity; and (ii) the strengthening of regional economic integration by creating a market for electricity At continental and regional level, the project is in keeping with the IDA riority Action lan and is among the priorities defined in the Bank's Regional Integration olicy and Strategy (RIoS, ). RUZIZI III is a developmental project, given the role it will play in the electric power system of the Great Lakes Region. Because of its geographic location - between DRC and Rwanda - it will contribute to the activities of three of the five African ower ools: CA (Central Africa); EA (Eastern Africa); and SA (Southern Africa). The IDA study also proposes an optimal date for the commissioning of Ruzizi III between 2015 and 2017, since this plant is part of the plan for the more cost-effective, long-term development of the Great Lakes Region The three countries concerned have made implementation of Ruzizi III one of their development priorities. They have contacted different partners, including the Bank, regarding the optimal development of the Ruzizi River s hydropower potential. They have initiated an innovative approach consisting of developing a regional project in the form of a public-private partnership The Bank Group provides real value added to the development of the Ruzizi III project in that it is a continuation of its previous actions and provides support to two fragile States to set up a complex project. The Bank has sound knowledge of the sector's context and actors since its intervention is based on its recent experience in the region, including the provision of transaction advisory services with support from NEAD/IF and the construction of a transmission line to supply Burundi. This value added is reflected in the Bank's involvement, through its public and private sector windows, in the form of guidance to the countries concerned but also as facilitator between the different actors participating in the project, in particular, the future private sector partner and the different donors. The Bank's level of commitment, particularly reflected in the advanced stage of project appraisal and the volume of concessional resources mobilized by the leverage effect mechanism of regional operations, now enhances the project's credibility by strengthening its feasibility, with a significant reduction in the cost of electricity generation The Bank's leadership in the development of Africa's energy sector must be maintained, especially in the Great Lakes Region, confronted by socio-political upheaval, until the implementation of the Ruzizi III project. 1.3 Aid Coordination In the three countries, aid is coordinated through groups established for consultation between the public sector, civil society and technical and financial partners (TF). These groups meet regularly to monitor and evaluate the implementation of the sector's different development activities. In the case of Ruzizi III, TF coordination will be mainly carried out by Electricité des Grands Lacs (EGL), an ECGLC specialized institution with a specific mandate for the project's implementation. Since the launching of project development activities, several TFs have made various contributions channelled 2

12 through EGL, which makes every effort to improve operations harmonization. At EGL's initiative, several meetings have been held, including one at ministerial level in Abidjan in May 2015 on the sidelines of the ADB Annual Meetings in which the French Development Agency (AFD), the African Development Bank (AfDB), the European Investment Bank (EIB), the World Bank (WB), Kreditanstalt für Wiederaufbau (KfW) and the European Union (EU) participated. At the request of the States and following consultation, the TFs selected the EIB as leader for the overall coordination of mobilization for project financing. Since then, frequent consultations have been held between the different donors concerned at each project preparation stage This project was prepared by the different donors with a high degree of synergy. This led to the retention of the co-financing option that allows each donor to make the best possible contribution to the project. 2 ROJECT DESCRITION 2.1 roject Description and Components The project's sector goal is to tap the energy potential of the Ruzizi cascade to meet demand from the population and the economy in general, in accordance with ECGLC national development strategies, which stress the importance of reliable power supply for sustainable socio-economic transformation. The specific objectives are to: (i) contribute to the development of the Ruzizi III scheme; and (ii) strengthen regional economic integration by creating a market for electricity. Table 2.1 roject Components and Cost (UA) Component Estimated Cost Component Description 1. Support for Ruzizi III Implementation 2. Support for Regional Cooperation and Integration in the Energy Sector 435,403,085 4,060, roject Management Support 3,936,626 Total roject Cost 443,400,292 Construction of the Ruzizi III hydropower plant with an installed capacity of 147 MW in DRC and Rwanda; and implementation of the Environmental and Social Management lan Development of national energy markets and their access to the regional energy market; institutional framework for the development of regional energy projects; and support for the development of regional integration. EGL capacity building, IU operating costs, preparation of a procedures and training manual, training actions, project audit, and panel of independent experts. 2.2 Technical Solutions Retained and Alternatives Explored The technical solution retained consists in the construction of a run-of-river dam located on the Ruzizi River between DRC and Rwanda downstream from the Ruzizi II hydropower plant, a 147 MW power plant and a distribution station. This facility will supplement the existing cascade by tripling installed capacity on the river. ower will be transmitted to the three countries from the Kamanyola substation by 220 kv transmission lines. It will then be distributed equitably between Burundi's Water and Electricity Generation and Distribution Company (REGIDESO), DRC's National Electricity Company (SNEL) and the Rwanda Energy Group Ltd. (REG) (collectively called the Buyers ), in accordance with each buyer's long-term power-purchase agreement. The solution is based on the findings of the feasibility study which confirms those of various previous studies. Under the aegis of NELSA, a comparative study 1 was launched in 2005 covering an area encompassing Burundi, Kenya, Uganda, DRC, Rwanda and Tanzania, to assess the economic merit of different sites. The study report concludes that Ruzizi III is one of the best development options along with Rusumo Falls or Kabu Strategic/Sectoral, Social and Environmental Assessment of ower Development Options in the Nile Equatorial Lakes Region, Stage II, Synopsis of the Final Report, carried out for NELSA (November 2005). 3

13 Another study conducted for the period and covering all countries of the Eastern Africa ower ool, and the IDA ( period) study focused on regional integration prospects conclude that Ruzizi III forms part of the most cost-effective development plan for the energy sector in the Great Lakes Region To confirm the selection of Ruzizi III as the adopted technical solution, Table 2.2 below shows the alternatives explored and reasons for their rejection. Table 2.2: roject Alternatives and Reasons for their Rejection Options Description and Characteristics Reasons for Rejection Diesel Thermal - Installation of diesel generators - High operating costs - Relevant solution - Negative environmental impacts - Slightly higher costs than Ruzizi III - Option consisting of installing gas turbines fired by - Impacts being assessed Methane Thermal methane gas from Lake Kivu - Little feedback on such technology - Relevant solution - Option could be envisaged in the medium-to-long-term Solar hotovoltaic Wind Geothermal Small-scale hydropower 2.3 roject Type - Option consisting of installing solar panels for electricity generation - Non-relevant solution - Option consisting of installing wind generators for electricity generation - Non-relevant solution - Option consisting of producing electricity from geothermal resources - Non-relevant solution - Option consisting of generating electricity from several smaller hydropower plants - Relevant solution - High costs - Unable to supply grid with guaranteed power - Unable to supply guaranteed power to meet peak demand - Costs slightly higher than Ruzizi III - Option could be envisaged in the medium-to-long-term - Costs higher than for Ruzizi III - High connection costs - Fewer impacts - Not sufficient to cover all needs The project is an investment operation designed as a public-private partnership () aimed at optimizing the hydropower potential of the Ruzizi Cascade. For its implementation, a private partner recruited as an investor/developer has been awarded a twenty-five (25) year concession. This partner will be required to develop the project, be a majority partner in a project company (C) with the three countries concerned, and secure the necessary financing. To cover the risks involved and with a view to reducing the cost of energy, the countries concerned will provide the C with concessional financing. 2.4 roject Cost and Financing Arrangements The total project cost, net of taxes and customs duties, is estimated at UA million, comprising approximately UA million in foreign exchange and UA million in local currency. The cost includes a 10% provision for physical contingencies and price escalation. The cost by component is presented in Table 2.3 below. 4

14 COMONENTS 1. Support for Ruzizi III Implementation Table 2.3 Estimated Cost by Component (in UA million) Foreign Exchange Local Currency Total Cost F.E. % Construction cost % Development cost % Environmental and social cost % Reserve account % Revolving fund requirements % Component 1 Total % 2. Support for Regional Cooperation and Integration in the Energy Sector Development of national energy markets and their access to the regional energy market % Institutional framework for the development of regional projects % Support for regional integration development % Component 2 Total % 3. Support for roject Management EGL capacity building % IU operating cost % reparation of a procedures and training manual % Training activities % roject audit % anel of independent experts % Component 3 Total % Total roject Base Cost % rovision for physical contingencies (5%) % rovision for price escalation (5%) % Total roject Cost % roject Financing Arrangements: The project will be co-financed by different donors 2. The Bank's public sector window contribution is 22%. This contribution comprises grants and loans to the three States concerned which are participating directly in the project through a shareholding in the C, and the award of concessional loans to the company as provided for under the Bank's on-lending policy (see Annex 5). Therefore, all the project costs are covered by the C. In addition to this participation, the States concerned will contribute in kind to the operating costs of the national teams. They will cover the acquisition of land located in the project right-of-way, which will be reimbursed by the C. The financing plan is presented in Table 2.4: 2 For information, the contributions of the other donors (in USD million) to the concessional/commercial debt are as follows: WB (150/0); EIB (120/50); AFD (15/30); KfW (30/0); and EU (46/0) 5

15 Sources of Financing Component 1 Table 2.4: Sources of Financing (in UA million) Cost in Foreign Exchange Cost in Local Currency Total Cost % Total rivate Investor % AfDB Group % Other Donors % Component 1 Total Cost % Component 2 AfDB Group % Component 2 Total Cost % Component 3 AfDB Group % Component 3 Total Cost % roject Total Cost Table 2.4bis below presents the sources of financing by component. The project cost by expenditure category and expenditure category by component are presented in Tables 2.5 and 2.6. Table 2.4bis: Sources of Financing by Component (in UA million) Component 1 Equity Capital Rwanda Burundi DRC rivate Investor Concessional Debt Rwanda Burundi DRC Commercial Debt rivate Investor Bank Group ADF TSF AfDB Other Donors Total Component 2 Bank Group ADF TSF Total Component 3 Bank Group ADF TSF Total TOTAL Total 6

16 Expenditure Categories Table 2.5: roject Cost by Expenditure Category (in UA million) Cost in Foreign Exchange Cost in Local Currency Total Cost % F.E. Works % Goods % Services % Operation % Total base cost % rovision for contingencies (5%) % rovision for price escalation (5%) % Total roject Cost % Table 2.6 : Expenditure Schedule by Component (in UA million) Components Support for Ruzizi III Implementation Component 1 Total Support for Regional Cooperation and Integration in the Energy Sector Component 2 Total Support for roject Management Component 3 Total Total roject Base Cost roject Target Areas and Beneficiaries The project area lies in South-West Rwanda and Eastern DRC between Lake Kivu and Lake Tanganyika. The Ruzizi III hydropower facility is on the Ruzizi River between DRC and Rwanda. The Ruzizi valley is very narrow with steep sides and a difference in level of about 500 metres between the plateaux and the valley bottom. The dam is about 10 km upstream from Bugarama/Kamanyola while the power plant is 5 and 6.5 km from these two localities, respectively. The project area lies in South Kivu rovince in DRC, Ruzizi District in Rwanda and Cibitoke rovince in Burundi. Agricultural activity in the project area focuses mainly on food crops. opulation pressure, which is very strong in the area, is one of the main reasons for the small size of farms (less than 1 hectare per family). The estimated population of the project area is 615, The project will generate many benefits, including: (i) increased supply of electricity in the region and consequently access to electricity at an affordable cost, the direct beneficiaries of which will be the population, electricity companies and businesses in the countries concerned; (ii) the creation of direct and indirect jobs during works and permanent jobs during the operational phase; (iii) a reduction in subsidies on fossil fuels and development of the industrial fabric for Governments, (iv) the creation of income-generating activities for women and youth; and (iv) improvement of population's living conditions. Regarding climate change adaptation, the project will ensure the annual avoidance of about 151,000 tco 2. Since the river flow is highly dependent on climatic variability and the Ruzizi I and II facilities, a supplementary study and climatic and hydrological parameter monitoring mechanism are planned. The adequate building of EGL s capacity will ensure that the new structures on the cascade are rapidly put in place. Financially, the different governments will benefit from income generated by their participation in the C and by the debt on-lent to the C. This income could be recycled in the sector. The private partner will also be remunerated for its majority participation in the C. 7

17 2.6 articipatory rocess The different Governments concerned have adopted a participatory process fully involving the communities in identifying needs, monitoring activities and assessing them in a spirit of citizen control, knowledge and know-how sharing, and social efficiency. Thus, the preparation of the Environmental and Social Impact Assessment (ESIA) and Resettlement Action lan (RA) in 2012 was carried out using a participatory process. Different consultations were held in the main localities of the project area. They involved the competent government authorities, local authorities, the population including women and youths, project affected persons and non-governmental organizations (NGO). roject Affected Smallholder Committees (CA) were established in the localities concerned for consultations with those inhabitants directly concerned by the project. The establishment of CAs took into account representativeness, in particular, gender balance with women's participation. Exchanges with project affected persons (As) and neighbouring communities highlighted their concerns and/or wishes, some of which have been taken into account in this project. Furthermore, the project communication strategy will focus on information, sensitization, education, social mobilization and capitalization. 2.7 Bank's Experience and Lessons Reflected in roject Design The Bank intervenes in the development of the energy sector in Burundi, DRC and Rwanda, where the bulk of the projects are being implemented. At community level, it has intervened since 2008 in the Great Lakes region through the NELSA project, which concerns the three ECGLC countries plus Kenya and Uganda. This project will contribute to the interconnection between the different countries to facilitate access to the EA regional electricity market. No completion report has yet been prepared for the NELSA project, which is ongoing. However, the main lessons to learn from it to-date are: (i) the need for effective coordination between the different actors; and (ii) the importance of the project implementation structure. NELSA is implemented by national entities responsible for structures located on their territory. The NELSA roject Coordination Unit (CU) only carries out regional coordination to harmonize the different schedules and ensure compatibility of the standards used on the interconnected grid, which is the reason for the lack of works synchronization. Furthermore, the public management method retained for the Ruzizi II community power plant has incurred losses. DRC and Burundi's situations as States in transition, confirmed by their weak capacity, and lessons learned in implementing the NELSA and Ruzizi II projects explain the decision of States involved to entrust the execution of the Ruzizi III project to EGL which has experience of working with the TFs. It is also the reason for selecting a private operator which will set up a C for the construction and subsequent operation of the structures These experiences are enriched by lessons drawn by the Bank from the portfolio review of the countries concerned and its participation in s (like the Ouarzazate Solar lant) or multinational projects. The main problems identified relate to: (i) major overruns on the estimated costs; (ii) delays in establishing adequate financial management systems; (iii) the lack of an efficient monitoring/evaluation system; (iv) weakness of project implementation structures; and (v) ineffectiveness of project steering committees. The project addresses these problems by focusing on EGL capacity building and quality at entry of activities through Component Key erformance Indicators The project's key performance indicators are presented in the Results-Based Logical Framework. They concern the construction of structures and conduct of studies planned under the project, but also the facilitation of access to electricity in the Great Lakes Region As the project executing agency, EGL will be responsible for establishing a baseline situation for the performance indicators as well as monitoring and analysing their trends by comparing them with the logical framework estimates. At the level of the different countries concerned, the project performance indicators will be integrated into the different periodic activity reports. The indicators will be analysed in relation to the project's target values or any other benchmark considered relevant, in particular, during supervision missions fielded by the Bank and other technical and financial partners. 8

18 3 ROJECT FEASIBILITY 3.1 Economic and Financial erformance Burundi, Rwanda and DRC are experiencing significant power deficits. This justifies major investments to increase generation capacity and develop the transmission and distribution grids. Implementation of Ruzizi III falls within this context and constitutes the next stage 3 in realizing the optimal hydropower potential of the Ruzizi cascade, reducing the current supply and demand imbalance which ranges from 20 to 65%, and meeting future demand Ruzizi III was retained following a preliminary review of the costs and benefits of exploitable sites in the region. Despite the outdated basic figures, the results remain valid given the costs and technical constraints concerning alternative generation methods. The project financial and economic evaluation is carried out from 2016 over a thirty-year period (5 years of construction and 25-years of operation) The findings of the analysis show that the project is financially and economically viable. Based on a weighted average price of USD 0.124/kWh and an energy sales volume of GWH per year, the project's estimated financial internal rate of return will be 7.84% and its financial net present value (calculated on the basis of a weighted average cost of capital of 6.55%) USD million. In addition to the fact that it is part of a long-term development plan for the region at an affordable cost, the economic justification of the Ruzizi III project may be proved by calculating the economic costs avoided in the event of no project implementation. Economic agents who are not supplied with electricity from the grids use individual generators or kerosene lamps. The cost per kwh of these different alternative energies may be considered as an indicator of consumers willingness to pay (WT) for access to electricity supply services. Based on an average WT of USD 0.22, USD 0.29 and USD 0.23 per kwh in Burundi, Rwanda and DRC respectively, the project shows an economic internal rate of return (EIRR) of 13.35% and an economic net present value (ENV) estimated at USD million. The table below summarizes the main economic and financial results. The detailed calculations and assumptions are presented in Annex B7. Table 3.1: Key Financial and Economic Indicators ARAMETERS VALUES FIRR 7.84% FNV USD million EIRR 13.35% ENV USD million 3.2 Environmental and Social Impacts Environment In accordance with the Bank's Integrated Safeguards System, the project was classified in Category 1 because of the scale of the works and negative environmental and social impacts identified. The comprehensive ESIA and Full Resettlement lan (FR) were prepared in The ESIA and FR summaries were posted on the Bank's website on 14 August In view of the project's restructuring as a, the existing studies will be updated in accordance with the Environmental and Social Action lan (ESA) following the establishment of the C. These updates constitute conditions precedent to disbursement. 3 The Ruzizi I (constructed in 1959 with installed capacity of 29.8 MW) and Ruzizi II (commissioned in 1989 with installed capacity of 43.8 MW) plants are already operational in the Ruzizi valley. 9

19 During the works, the main negative impacts will concern: (i) the quantitative and qualitative degradation of the river's water resources downstream from the works area; (ii) the destruction of property affecting 4,300 people in DRC and Rwanda; (iii) the destruction of plant species and wildlife habitat on the right-of-way planned for the reservoir and different facilities; and (iv) other risks related to health, hygiene and security of employment for employees. In the operational phase, the reservoir is likely to cause: (a) a proliferation of water-borne diseases; (b) accidents and drownings; and (c) landslides up to the equilibrium period. The most significant cumulative negative impacts relate to: (1) successive dam failures (Ruzizi I, II and III); (2) erosion and sedimentation created by various activities in the catchment area; and (3) those relating to the hydro-ecological continuity of the water course mainly for barbels (Barbus altianalis) TO mitigate these negative impacts, the contractors selected will be required to prepare, on the basis of the roject ESM and C, environmental and social management system, detailed and specific environmental and social plans, in particular: (i) Hygiene, Health, Safety and Environment lans (HHSE); (ii) erosion and sedimentation control; (iii) site replanting and rehabilitation; (iv) quarry and borrow site management; (v) management of fortuitous discoveries; (vi) initial filling of the reservoir; (vii) monitoring of water quality; (viii) environmental and social training of personnel; and (ix) site dismantling. roject affected persons will be compensated and assisted in compliance with the resettlement plan. During the operational phase, an operations and maintenance plan as well as an emergency preparedness plan will be implemented to manage the impacts during this phase. The estimated cost of the ESM measures is USD million. Hence, an appropriation of USD million was made for updating the ESIA/ESM and FR. The project will also generate many positive impacts. Specifically, through complementary actions under the aegis of ABAKIR, it will contribute to the implementation of lasting solutions to the basin-wide problems of erosion and sedimentation as well as to those relating to hydro-ecological continuity, including for Ruzizi I and II Climate Change The project was classified in Category 1 with respect to climate change. The impact assessment indicates that the Ruzizi flow rate depends mainly on the level of Lake Kivu. This level has been falling for several years due to a downward trend in rainfall, expansion of its catchment area and anthropic activities which are accelerating erosion and sedimentation in the river. The analyses indicate average temperature increases of 1.9 C and 2.5 C by 2050 and 2060, respectively. Climate variability will have an impact on the cascade's energy production and the choice of flow control equipment for Ruzizi III. Adaptation measures will be integrated in the project's design It is also recommended to update the hydrological study and monitor the climatic and hydrological parameters, in order to ensure the smooth operation of the plant. The monitoring indicators will be updated in the quarterly ESM implementation reports. Based on the AFD methodological approach, GHG emissions during works are estimated at 39,000 tco2 for the dam's construction. Methane gas emissions from the reservoir during the operational phase will be significantly reduced due to the fact that: (i) very little vegetation will be submerged; and (ii) the water retention time in the reservoir will be very short. These emissions particularly concern the first two years. They will be mitigated by: (a) a reduction in the amount of plant cover submerged by the reservoir; and (b) the planting of 3,000 trees/ ha over 15 ha, which will serve as protection of the catchment area. Therefore, the implementation of Ruzizi III would help prevent the emission of over 7.5 million tco2 over 50 years Gender Women, girls and children are still paying a heavy price for the different crises that have affected the region. Despite the existence of favourable legislation, women's rights are not evenly enforced in the three countries. The project's implementation will have the following positive impacts on 10

20 women, girls and children: (i) strengthen women's income-generating activities (IGA), in particular, through the development of small businesses during the construction phase; (ii) at least 20% of unskilled direct and indirect jobs will benefit women and girls; (iii) promote agricultural produce artisanal processing activities mainly carried out by women; and (iv) access to electricity and the use of lighting will improve the well-being of women and girls especially, in terms of education. The likely negative impacts on women are: (s) increase in water-related health problems (accidents and drownings); (b) impact on sexually transmitted infections-hiv/aids; and (c) changing vectors of disease due to modifications of the habitat To mitigate the negative impacts, the project will pursue the following actions: (i) sensitization campaigns on different themes (STI-HIV/AIDS) for workers and communities settled in the project area, in particular women and children; (ii) support for the promotion of IGAs will be factored into the local development plans and the lan to Restore and Improve Living Conditions financed and implemented by the C; and (iii) support for the promotion of well-being through the rehabilitation and equipping of schools, health centres and women's promotion centres planned in the local development plan. The financing of women's promotion activities is included in the project costs and their implementation entrusted to the C. The Bank's contribution will be used to provide EGL with a specialized expert on social and gender issues responsible for preparing and implementing the different plans Social The Great Lakes Region is one of Africa's fragile areas. The main factors associated with fragility and analysed in relation to the Ruzizi III project are: (i) the volatility of the security situation and political instability; (ii) the different forms of social exclusion: identity crisis, ethnic divides and land tenure conflicts; (iii) the weak water resource governance capacity; (iv) gender-based violence; and (v) extreme poverty and unemployment, especially among young people. This situation of fragility, mainly perceived at the social level, poses risks for the project's implementation, which are to be found among the potential negative impacts referred to in paragraph However, the experience of existing infrastructure shows that this risk is relative and that the project could serve as an instrument of dialogue to encourage peace consolidation and stabilization activities in the region. The availability of energy in this region could help to restore peace by developing highly remunerative economic activities The project's implementation will have the following positive social impacts: (i) improved access of households to electricity; (ii) economic diversification; and (iii) creation of 800 to 1000 direct and indirect permanent and temporary jobs in favour of local but unskilled labour, with a proportion of 20% for women. To optimize its social impact, the project will help affected households to rediscover or sustainably create satisfactory living conditions. In this regard, a lan to Restore and Improve Living Conditions (RRV) and a local development plan (DLC) will be rolled out. These two plans will be finalized by the C in close collaboration with the competent local authorities. The estimated cost of implementing these two plans is USD 7 million Involuntary Resettlement Clearing of the works right-of-way, estimated at 115 hectares by the technical studies, will a priori affect no fewer than 636 households in Rwanda and in RDC, i.e. about 4500 people, 64% of whom are living in DRC and 36% in Rwanda. Affected property mainly comprises unbuilt land, crops (food and market garden), fruit trees and various other plants. The Resettlement Action lan prepared in 2012, a summary of which will be published on the Bank's website, will be updated by the C prior to the launching of invitations to bid for EC contracts, in accordance with the Bank's requirements. 11

21 4 ROJECT IMLEMENTATION 4.1 Implementation Arrangements Through a anel of Experts, Burundi, DRC and Rwanda shall establish the project steering body. This committee will comprise, for each country, representatives of the ministries responsible for energy, environment, finance and electric power utilities. roject implementation is entrusted to EGL - an ECGLC specialized institution with a specific mandate to implement the Ruzizi III project as a public-private partnership (cf. special delegation of powers conferred upon EGL to implement Ruzizi III, on 12 November 2010, by the three States). It is planned that infrastructure construction will be awarded to a project company and that the implementation of related activities will be awarded to EGL The three countries and the private partner, investor/developer have jointly and severally agreed to establish a project company to finance the construction and operation of the Ruzizi III plant. One third (1/3) of the C's share capital will be held in equal parts by the three countries and two thirds (2/3, i.e. USD 100 million) of the share capital will be held by an investor/developer. ending the signing of the project agreement for the establishment of the C expected by end-2015, preliminary procurement operations will be carried out by EGL, supported by the Steering Committee established in 2013 and comprising two experts/representatives per country. The treaty, internal rules and shareholders' agreement were established by the three governments assisted by international lawyers. Establishment of the C will be a condition precedent to first disbursement of the Bank's financing Since the related capacity building/project management and regional integration activities transcend the individual States, they will be implemented by EGL. The three countries have agreed to onlend the related financial resources to EGL. In light of the mandate assigned to EGL and to ensure the quality of its investments, there is a real need to build its capacity in order to enhance the performance of the executing agency. Thus, in addition to the international consultants recruited to assist EGL, the key personnel will include technical, legal, economic and financial experts. The additional human resources will be recruited through a competitive process and will comprise at least a financial expert, a procurement expert and electromechanical/electrical engineer, a civil engineer, a legal counsel, a computer specialist, an environmental expert and expert on social and gender issues. A monitoring/evaluation expert will be recruited for EGL to monitor project activities. From an institutional standpoint and in view of the project's scope, EGL will work closely with the other regional entities operating in the river basin's management (Regional Dispatching Centre (CDR) and the Ruzizi River Cascade Coordination Centre (CC)) rocurement The procurement process for the selection of the developer/investor was launched in It was approved by the Bank as well as the choice of the future developer However, the future developer and EGL agreed to adopt a competitive selection procedure for a turnkey contract for engineering, supplies and construction of the lant (EC contract) [Component 1: Support for the implementation of Ruzizi III]. To that end, this contract was awarded in compliance with the relevant WB Guidelines subject to a waiver by the Bank's Board of Directors. Joint financing was chosen because: (i) to date, the fiduciary safeguard policies of both the Bank and WB are almost identical; and (ii) the Bank's rocurement Rules and rocedures and WB Guidelines as well as their standard bidding documents (SBDs) are closely harmonized. It should be noted that, like other donors, AfDB will carry out a prior review of procurement documents during the selection process (prequalification, bidding, bid evaluation and contract negotiation phases, etc.). Thus, for the EC contract, the procurement of goods, works and services (other than consulting services) will be carried out in compliance with the WB's Guidelines for the rocurement of Goods, Works and Non-Consulting Services using the WB's relevant SBDs as well as with the provisions stipulated in the Financing Agreement. 12

22 All procurement of goods, works and consulting services for project Components 2 and 3 which are fully financed by the Bank will be made in accordance with Bank Rules and rocedures for the rocurement of Goods and Works, May 2008 Edition, revised in July 2012, and Bank Rules and rocedures for the Use of Consultants, May 2008 Edition, revised in July 2012, using the Bank's standard bidding documents (SBDs) as well as with the provisions stipulated in the Financing Agreement EGL will be responsible for the award of all contracts for project activities, in particular monitoring the selection of the EC (Component 1) and implementation of the procurement activities planned under Components 2 and 3. The assessment of EGL's capacity indicates a need for capacity building by a procurement expert, whose qualifications and experience are deemed satisfactory by the Bank. A draft procurement plan prepared by EGL will be submitted to the Bank for review and approval prior to negotiations. The procurement details are set out in Annex B Financial Management and Audit Arrangements Based on the review carried out, the project's overall financial management risk at entry was considered substantial. Mitigation measures proposed in the financial management action plan (Annex B4 and B6) aim to support EGL for the rapid establishment of a project financial management mechanism. The recruitment of a financial expert and accountant to strengthen the Administrative and Financial Department, the updating of EGL's accounting procedures manuals, the preparation of an accounting procedures manual for the C prior to first disbursement and speedy implementation of actions agreed in the action plan will help to lower the residual risk to a moderate level and at EGL, to meet the Bank's minimum project financial management requirements. It will also be necessary to acquire software configured to meet the project's accounting needs no later than six (6) months following project effectiveness Thus, in accordance with the implementation arrangements, responsibility for project financial management will fall within the remit of EGL, which will also use the C s financial statements. In this regard, EGL will establish an adequate financial management system which meets international standards, with qualified and experienced financial staff, to maintain general, cost and budgetary accounting with adequate software. The project's financial management will be based on the entire financial management system to be established at EGL, especially the following systems: (i) budgetary management; (ii) accounting and reporting; (iii) internal control and external audit; and (iv) cash and funds flow management system. Compliance by EGL with the arrangements agreed upon in the financial management action plan will ensure that the funds provided to the project are used for project purposes. In addition, recruitment of the external auditor six months after project effectiveness and all other measures contained in the financial management action plan constitute other financing conditions. EGL accounts will be maintained separately from the project accounts. EGL has undertaken to produce and regularly submit to the Bank quarterly financial monitoring reports as well as annual financial statements on the due dates agreed upon, in a format to be determined during negotiations. Furthermore, the C will be responsible for the establishment and operation of infrastructure, including its own financial management following signature of the term sheets of the project agreement establishing the C. The Bank will ensure the adequacy of the C's financial management capacity during the project launching mission The C will put in place appropriate and well-documented internal control procedures, in particular relating to accounting entries, financial transactions, commitment and justification of expenditure, safeguarding of financial data and project assets. Internal auditing will be carried out by an internal auditor or an audit committee as required. A detailed reporting system will enable EGL to report on financial management to the Bank. 13

23 The annual financial statements will be produced for EGL on time in accordance with International ublic Sector Accounting Standards (ISAS). The C will produce the agreed upon periodical financial statements in compliance with International Financial Reporting Standards (IFRS). These reports will include a balance sheet, income statement, a statement of equity, a cash flow table as well as accounting principles and notes to the financial statements The project and EGL financial statements prepared separately will be audited annually by an external auditor. The auditing of the project and EGL's accounts will be performed in compliance with International Auditing Standards (IFAC). EGL will publish a request for proposals and will appoint international external auditors no later than six (6) months after project effectiveness to conduct the annual audit based on the Terms of Reference agreed upon with the Bank during the negotiations. The audit report will be submitted to the Bank latest six months after the end of the fiscal year concerned. The C will recruit auditors for the project's financial and technical audit Disbursement Mechanism and Modalities Within the project implementation framework, the special account and direct payment disbursement methods have been retained. EGL will open a special account in a bank deemed acceptable by the Bank, for financing all eligible expenditure under Components 2 ( Support cooperation and regional integration in the energy field ) and 3 ( roject management ). The special account will be managed in compliance with the provisions of the procedures manual and those of the grant protocols of agreement and loan agreements. The direct payment method will be used for payments related to: (i) resources onlent to the C under Component 1 ( Support for Ruzizi III implementation ); and (ii) Components 2 and 3 expenditures ineligible for special account financing. In accordance with the provisions of the financing agreements and its Disbursement Rules and rocedures, the Bank will disburse resources to cover expenditure. Disbursements to the C shall comply with the Bank s on-lending policy for concessional loans. 4.2 roject Monitoring The main project stages are presented in Table 4.1 below. The activities will be implemented as set out on the project implementation schedule. EGL will use the services of a monitoring/evaluation expert to monitor the status. Table 4.1: Main roject Implementation Stages Duration Stages Monitoring Activities/Feedback Loop Approval of loans and grants 3 months Approval and General rocurement Notice effectiveness Signature of financing agreements and effectiveness AfDB launching mission 8 months rocurement Review and approval of bidding documents Bidding and award of contracts Signature of project agreements C's establishment Signature of EC contract Contract execution 72 months reparation of periodic project status reports roject's physical Supervision missions by the Bank and other partners implementation roject social and environmental monitoring Bank's mid-term review 6 months Auditing of roject Recruitment of the auditor to conduct annual audits Accounts Conduct of annual audits 3 months roject Completion Borrower's and Donees' roject Completion Report reparation of the Bank s roject Completion Report 14

24 4.3 Governance Governance risk for this project is low and could occur in the course of implementing activities entrusted to EGL. EGL has already implemented this type of operation with other partners as well as the Bank, through NEAD/IF. The risk is mitigated by the involvement of donors. The same will apply to the recruitment of personnel where the Bank's opinion will be required prior to appointments. rocurementrelated risks are minimal since an agreement was reached to award the largest contract in accordance with WB procedures. Moreover, the Bank's supervision and technical and financial audits will ensure conformity between the specifications, outputs, disbursements and financing agreements. The involvement of the countries concerned in the project's management will also strengthen governance. 4.4 Sustainability roject sustainability will depend principally on the commitment of the three governments through the specific mandate entrusted to EGL. Furthermore, since the launching of the feasibility study, the three countries have established a monitoring and dialogue mechanism with a view to achieving optimal and sustainable development of the Ruzizi Cascade. Thus, in terms of ownership, other actions such as the institutional study on the cascade management or on the rehabilitation of the Ruzizi I and II structures are ongoing. These actions should contribute to optimal integrated water resource management The adoption of a project stems from the determination of the countries to avoid the management problems encountered with Ruzizi II, reason for which the facility now needs rehabilitation. 4.5 Risk Management Risk management: EGL undoubtedly has experience of Ruzizi II but has no previous history of monitoring and implementing a project of Ruzizi III's complexity. This risk will be mitigated by building EGL's capacity, support from high-calibre consultants, analyses and opinions of the Bank and other donors on the project implementation process. The project costs include provisions for contingencies and price escalation Fiduciary risk: The project's initial fiduciary risk was deemed high. EGL, which will implement the project, is not yet sufficiently operational to ensure effective project financial management at this stage. The project has also become somewhat complex as a result of the need to find a joint management mechanism for the resources mobilized from different donors - a further risk factor for the Bank. Fulfilment of conditions precedent related to the financing will help to mitigate this risk to a moderate and acceptable level. In addition to the operationalization of EGL, it will be necessary for the Bank to confirm or obtain evidence of the establishment of a satisfactory financial management mechanism for project implementation. Another aspect of fiduciary risk lies in the confirmation of the investor/developer since the IS/Sithe Global Consortium retained in 2012 does not offer all the guarantees of its determination to pursue the process towards establishment of the C. The withdrawal of this consortium or of one of the firms could delay the project by requiring a new bidding process Co-financing risk: This risk is real despite the coordination efforts. Slippage or default on implementation of part of its commitments could undermine the smooth execution of the entire project. This risk will be mitigated by the collaborative attitude of all the co-financiers but also by the communication efforts made and which will continue olitical risk: This risk is the result of the fragility of the ongoing peace process and political instability in the region, which could impede the implementation of project activities. This risk will be mitigated by the ongoing political developments, in particular, the consultative process and regional and 15

25 internal mediation. The dialogue pursued by the technical and financial partners to encourage governments in their efforts to restore State authority over their respective national territories is another contributory factor, as is the presence of MONUSCO in Eastern DRC Technical risk: this risk concerns the availability of distribution networks for energy or water from Lake Kivu through upstream facilities. These risks will be mitigated by the works being prepared or implemented, which are expected to be commissioned in 2017 as well as the establishment of ABAKIR which will work in concert with the Kamanyola Coordination Centre. Ruzizi I and II rehabilitation and restructuring studies are also being finalized. 4.6 Knowledge Building The project provides an opportunity to disseminate new knowledge for the Bank and for the ECGLC through EGL. For the Bank, it is an illustration of support to a sub-regional organization for the preparation of a complex project. Implementation of this project will build the Bank's capacity to prepare and support projects. It is also an example of cooperation among technical and financial partners New knowledge will be mainly acquired through interaction between partners and also with the beneficiaries. The documentation stemming from these meetings and supervision reports, periodic status reports as well as the reports following the different controls will provide the basis for knowledge building Ruzizi III will build EGL's capacity and is expected to facilitate the development of the Ruzizi IV project on a much larger scale than Ruzizi III. 5 LEGAL FRAMEWORK 5.1 Legal Instrument The Bank will use the following instruments: (i) for Burundi: a grant of UA 21 million from ADF-13 resources (of which UA 7 million BA and UA 14 million RE); (ii) for DRC: a grant of UA 45 million (of which UA 15 million TSF allocation (illar 1) and UA 30 million RE) and a loan of UA 15 million (of which UA 5 million TSF allocation (illar 1) and UA 10 million RE); and (iii) for Rwanda: a loan of UA 17.5 million from ADF-13 resources (of which UA 7 million BA and UA 10.5 million RE) to co-finance the project. 5.2 Conditions for Bank's Intervention A. Conditions recedent to Grant/Loan Effectiveness: Effectiveness of the ADF and TAF grant protocols of agreement is subject to their signature by the Donee, the ADF and the Bank. Effectiveness of the ADF and TSF loan agreements is subject to fulfilment by the Borrower of the conditions stipulated in Section of the General Conditions Applicable to Loan Agreements and to Guarantee Agreements of the African Development Fund, to the Fund s satisfaction. B. Conditions recedent to First Disbursement of the Grants/Loans: Conditions recedent to First Disbursement of Component 1 In addition to effectiveness of the grant protocols of agreement and the loan agreements, the first disbursement of each grant or loan for financing Component 1 shall be subject to fulfilment of the following conditions by the Donee/Borrower, to the full satisfaction of the ADF/TSF: 16

26 (i) (ii) rovide the Bank (or the Fund) with evidence of completing project financing arrangements by showing proof of approval of project financing by other donors; For each loan/grant, present to the Bank the original or certified true copy of the attestation for an account opened by the C through which the resources of each loan/grant shall transit, and comprising the full bank account references and indication of persons authorized to make disbursements therefrom; and (iii) rovide the Bank to its satisfaction, with a certified true copy of: (a) the signed and registered Articles of Association of the C; (b) the Certificate of Registration of the C; (c) the power purchase contract between Buyers and the C; and (d) the agreement onlending all or part of grant and loan resources allocated to project Component 1 to the C, stating inter alia that: (1) the C shall forward financial and accounting information to EGL on a half-yearly basis; and (2) the C s annual financial statements shall be audited by its external auditors in accordance with applicable norms and taking into consideration the Bank s terms of reference. Conditions recedent to First Disbursement of Components 2 and 3 Apart from effectiveness of the grant protocols of agreement and the loan agreements, the first disbursement of each grant or loan for financing Components 2 and 3 shall be subject to fulfilment of the following conditions by the Donee/Borrower, to the full satisfaction of the ADF/TSF: (i) (ii) For each loan/grant, provide the Bank with the original or certified copy of the certificate proving the opening by EGL of a special account in the name of the project in a Bank acceptable to the Fund for payment of the ADF and TSF grants and loans (paragraph ), and containing full banking details of the account and the names of persons authorized to make disbursements; rovide the Bank with a certified true copy of the agreement on-lending to EGL the ADF/TSF grant and loan resources allocated for financing project Components 2 and 3. C. Other Conditions: In addition, the Donees/Borrowers shall, to the Fund s satisfaction: (i) (ii) rovide, as works advance and in any event prior to the start of works on a given zone, evidence of compensating project-affected persons in the said zone, in accordance with the Comprehensive Resettlement lan (CR) and the relevant Fund rules and procedures, especially the Fund s Involuntary Resettlement olicy and Integrated Safeguards System; and rovide, no later than six months after the financial closure, all the documents relating to environmental and social aspects (ESIA, FR, RRV, DLC, etc.) (aragraphs ). D. Undertakings: To the satisfaction of the Fund/TSF, each Borrower or Donee shall undertake to: (i) (ii) rovide the Fund/TSF with all documents reasonably required for the project's implementation; Have prepared by EGL the project implementation and administrative and financial management procedures manuals (aragraph ) ; 17

27 (iii) Implement the roject and ESM as revised and have them implemented by the C and its contractors in compliance with national laws, the recommendations, requirements and procedures contained in the ESM as well as with the related Fund/TSF rules and procedures (aragraph ); and (iv) rovide the Fund/TAF with quarterly reports on the implementation of the revised ESM including, as required, weaknesses and remedial action taken or to be taken. 5.3 Compliance with Bank olicies The Ruzizi III Regional Hydropower lant roject complies with all applicable Bank rules and regulations. 6 RECOMMENDATION Management recommends that the Boards of Directors: (i) waive, on an exceptional basis, the application of the Bank's rules and procedures in favour of those of the World Bank for the procurement of goods, works and services for the EC contracts; and (ii) approve: (a) for Burundi: a grant of UA 21 million from ADF-13 resources; (b) for DRC: a grant and loan from TSF resources (illar I), of UA 45 million and UA 15 million; and (c) for Rwanda: a loan of UA million from ADF-13 resources to finance the Ruzizi III Regional Hydropower lant. 18

28 Annex 1(a) Comparative Socio-Economic Indicators for Burundi Burundi COMARATIVE SOCIO-ECONOMIC INDICATORS Year Burundi Africa Develo- Developing ped Countries Countries Basic Indicators Area ( '000 Km²) Total opulation (millions) , ,9 6,0 1,3 Urban opulation (% of Total) ,8 39,9 47,6 78,7 opulation Density (per Km²) ,7 37,8 73,3 24,3 GNI per Capita (US $) Labor Force articipation - Total (%) ,7 66,1 67,7 72,3 Labor Force articipation - Female (%) ,4 42,8 52,9 65,1 Gender -Related Dev elopment Index Value ,904 0,801 0,506 0,792 Human Develop. Index (Rank among 187 countries opul. Liv ing Below $ 1.25 a Day (% of opulation ,3 39,6 17,0... Demographic Indicators opulation Growth Rate - Total (%) ,1 2,5 1,3 0,4 opulation Growth Rate - Urban (%) ,6 3,4 2,5 0,7 opulation < 15 y ears (%) ,8 40,8 28,2 17,0 opulation >= 65 y ears (%) ,4 3,5 6,3 16,3 Dependency Ratio (%) ,8 62,4 54,3 50,4 Sex Ratio (per 100 female) ,6 100,4 107,7 105,4 Female opulation y ears (% of total populatio ,7 24,0 26,0 23,0 Life Ex pectancy at Birth - Total (y ears) ,5 59,6 69,2 79,3 Life Ex pectancy at Birth - Female (y ears) ,6 60,7 71,2 82,3 Crude Birth Rate (per 1,000) ,3 34,4 20,9 11,4 Crude Death Rate (per 1,000) ,5 10,2 7,7 9,2 Infant Mortality Rate (per 1,000) ,8 56,7 36,8 5,1 Child Mortality Rate (per 1,000) ,9 84,0 50,2 6,1 Total Fertility Rate (per woman) ,9 4,6 2,6 1,7 Maternal Mortality Rate (per 100,000) ,0 411,5 230,0 17,0 Women Using Contraception (%) ,5 34,9 62, ,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0, GNI er Capita US $ Burun di Africa opulation Growth Rate (%) Burundi Africa Health & Nutrition Indicators hy sicians (per 100,000 people) ,8 46,9 118,1 308,0 Nurses (per 100,000 people)* ,1 133,4 202,9 857,4 Births attended by Trained Health ersonnel (%) ,3 50,6 67,7... Access to Safe Water (% of opulation) ,3 67,2 87,2 99,2 Healthy life ex pectancy at birth (y ears) ,0 51, Access to Sanitation (% of opulation) ,5 38,8 56,9 96,2 ercent. of Adults (aged 15-49) Liv ing w ith HIV/AID ,0 3,7 1,2... Incidence of Tuberculosis (per 100,000) ,0 246,0 149,0 22,0 Child Immunization Against Tuberculosis (%) ,0 84,3 90,0... Child Immunization Against Measles (%) ,0 76,0 82,7 93,9 Underw eight Children (% of children under 5 y ears ,1 20,9 17,0 0,9 Daily Calorie Supply per Capita ublic Ex penditure on Health (as % of GD) ,4 2,7 3,1 7, Life Expectancy at Birth (years) Burun di Africa Education Indicators Gross Enrolment Ratio (%) rimary School - Total ,1 106,3 109,4 101,3 rimary School - Female ,5 102,6 107,6 101,1 Secondary School - Total ,1 54,3 69,0 100,2 Secondary School - Female ,2 51,4 67,7 99,9 rimary School Female Teaching Staff (% of Total) ,8 45,1 58,1 81,6 Adult literacy Rate - Total (%) ,9 61,9 80,4 99,2 Adult literacy Rate - Male (%) ,8 70,2 85,9 99,3 Adult literacy Rate - Female (%) ,6 53,5 75,2 99,0 ercentage of GD Spent on Education ,8 5,3 4,3 5,5 Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,8 8,8 11,8 9,2 Agricultural Land (as % of land area) ,8 43,4 43,4 28,9 Forest (As % of Land Area) ,6 22,1 28,3 34,9 er Capita CO2 Emissions (metric tons) ,0 1,1 3,0 11, Infant Mortality Rate ( er 1000 ) Burun di 2010 Africa Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : UNAIDS; UNSD; WHO, UNICEF, UND; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available. novembre 2015 I

29 Annex 1(b) Comparative Socio-Economic Indicators for DRC Congo, Dem. Republic COMARATIVE SOCIO-ECONOMIC INDICATORS Year Congo, Dem. Republic Africa Develo- ping Develo- ped Countries Countries Basic Indicators Area ( '000 Km²) Total opulation (millions) , ,9 6,0 1,3 Urban opulation (% of Total) ,9 39,9 47,6 78,7 opulation Density (per Km²) ,6 37,8 73,3 24,3 GNI per Capita (US $) Labor Force articipation - Total (%) ,0 66,1 67,7 72,3 Labor Force articipation - Female (%) ,8 42,8 52,9 65,1 Gender -Related Dev elopment Index Value ,822 0,801 0,506 0,792 Human Develop. Index (Rank among 187 countries opul. Liv ing Below $ 1.25 a Day (% of opulation ,7 39,6 17,0... Demographic Indicators opulation Growth Rate - Total (%) ,7 2,5 1,3 0,4 opulation Growth Rate - Urban (%) ,3 3,4 2,5 0,7 opulation < 15 y ears (%) ,8 40,8 28,2 17,0 opulation >= 65 y ears (%) ,9 3,5 6,3 16,3 Dependency Ratio (%) ,6 62,4 54,3 50,4 Sex Ratio (per 100 female) ,7 100,4 107,7 105,4 Female opulation y ears (% of total populatio ,0 24,0 26,0 23,0 Life Ex pectancy at Birth - Total (y ears) ,3 59,6 69,2 79,3 Life Ex pectancy at Birth - Female (y ears) ,0 60,7 71,2 82,3 Crude Birth Rate (per 1,000) ,3 34,4 20,9 11,4 Crude Death Rate (per 1,000) ,2 10,2 7,7 9,2 Infant Mortality Rate (per 1,000) ,1 56,7 36,8 5,1 Child Mortality Rate (per 1,000) ,5 84,0 50,2 6,1 Total Fertility Rate (per woman) ,8 4,6 2,6 1,7 Maternal Mortality Rate (per 100,000) ,0 411,5 230,0 17,0 Women Using Contraception (%) ,0 34,9 62, ,5 3,0 2,5 2,0 1,5 1,0 0,5 0, GNI er Capita US $ Cong o, Dem. R epublic 2013 opulation Growth Rate (%) Congo, Dem. Republic Africa Health & Nutrition Indicators hy sicians (per 100,000 people) ,7 46,9 118,1 308,0 Nurses (per 100,000 people)* ,9 133,4 202,9 857,4 Births attended by Trained Health ersonnel (%) ,4 50,6 67,7... Access to Safe Water (% of opulation) ,5 67,2 87,2 99,2 Healthy life ex pectancy at birth (y ears) ,0 51, Access to Sanitation (% of opulation) ,4 38,8 56,9 96,2 ercent. of Adults (aged 15-49) Liv ing w ith HIV/AID ,1 3,7 1,2... Incidence of Tuberculosis (per 100,000) ,0 246,0 149,0 22,0 Child Immunization Against Tuberculosis (%) ,0 84,3 90,0... Child Immunization Against Measles (%) ,0 76,0 82,7 93,9 Underw eight Children (% of children under 5 y ears ,2 20,9 17,0 0,9 Daily Calorie Supply per Capita ublic Ex penditure on Health (as % of GD) ,9 2,7 3,1 7,3 Education Indicators Gross Enrolment Ratio (%) rimary School - Total ,9 106,3 109,4 101,3 rimary School - Female ,6 102,6 107,6 101,1 Secondary School - Total ,3 54,3 69,0 100,2 Secondary School - Female ,2 51,4 67,7 99,9 rimary School Female Teaching Staff (% of Total) ,5 45,1 58,1 81,6 Adult literacy Rate - Total (%) ,2 61,9 80,4 99,2 Adult literacy Rate - Male (%) ,9 70,2 85,9 99,3 Adult literacy Rate - Female (%) ,1 53,5 75,2 99,0 ercentage of GD Spent on Education ,6 5,3 4,3 5,5 Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,1 8,8 11,8 9,2 Agricultural Land (as % of land area) ,1 43,4 43,4 28,9 Forest (As % of Land Area) ,7 22,1 28,3 34,9 er Capita CO2 Emissions (metric tons) ,0 1,1 3,0 11, Life Expectancy at Birth (years) Infant Mortality Rate ( er 1000 ) Cong o, Dem. R epublic Cong o, Dem. R epublic Africa Africa Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : UNAIDS; UNSD; WHO, UNICEF, UND; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available. novembre 2015 II

30 Annex 1(c) Comparative Socio-Economic Indicators for Rwanda Rwanda COMARATIVE SOCIO-ECONOMIC INDICATORS Year Rwanda Africa Develo- ping Develo- ped Countries Countries Basic Indicators Area ( '000 Km²) Total opulation (millions) , ,9 6,0 1,3 Urban opulation (% of Total) ,0 39,9 47,6 78,7 opulation Density (per Km²) ,4 37,8 73,3 24,3 GNI per Capita (US $) Labor Force articipation - Total (%) ,7 66,1 67,7 72,3 Labor Force articipation - Female (%) ,3 42,8 52,9 65,1 Gender -Related Dev elopment Index Value ,950 0,801 0,506 0,792 Human Develop. Index (Rank among 187 countries opul. Liv ing Below $ 1.25 a Day (% of opulation ,0 39,6 17,0... Demographic Indicators opulation Growth Rate - Total (%) ,7 2,5 1,3 0,4 opulation Growth Rate - Urban (%) ,3 3,4 2,5 0,7 opulation < 15 y ears (%) ,1 40,8 28,2 17,0 opulation >= 65 y ears (%) ,4 3,5 6,3 16,3 Dependency Ratio (%) ,7 62,4 54,3 50,4 Sex Ratio (per 100 female) ,5 100,4 107,7 105,4 Female opulation y ears (% of total populatio ,2 24,0 26,0 23,0 Life Ex pectancy at Birth - Total (y ears) ,5 59,6 69,2 79,3 Life Ex pectancy at Birth - Female (y ears) ,2 60,7 71,2 82,3 Crude Birth Rate (per 1,000) ,5 34,4 20,9 11,4 Crude Death Rate (per 1,000) ,9 10,2 7,7 9,2 Infant Mortality Rate (per 1,000) ,1 56,7 36,8 5,1 Child Mortality Rate (per 1,000) ,0 84,0 50,2 6,1 Total Fertility Rate (per woman) ,4 4,6 2,6 1,7 Maternal Mortality Rate (per 100,000) ,0 411,5 230,0 17,0 Women Using Contraception (%) ,5 34,9 62, ,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0, GNI er Capita US $ Rw anda Africa opulation Growth Rate (%) Rwanda Africa Health & Nutrition Indicators hy sicians (per 100,000 people) ,6 46,9 118,1 308,0 Nurses (per 100,000 people)* ,9 133,4 202,9 857,4 Births attended by Trained Health ersonnel (%) ,0 50,6 67,7... Access to Safe Water (% of opulation) ,7 67,2 87,2 99,2 Healthy life ex pectancy at birth (y ears) ,0 51, Access to Sanitation (% of opulation) ,8 38,8 56,9 96,2 ercent. of Adults (aged 15-49) Liv ing w ith HIV/AID ,9 3,7 1,2... Incidence of Tuberculosis (per 100,000) ,0 246,0 149,0 22,0 Child Immunization Against Tuberculosis (%) ,0 84,3 90,0... Child Immunization Against Measles (%) ,0 76,0 82,7 93,9 Underw eight Children (% of children under 5 y ears ,7 20,9 17,0 0,9 Daily Calorie Supply per Capita ublic Ex penditure on Health (as % of GD) ,5 2,7 3,1 7, Life Expectancy at Birth (years) Rw anda Africa Education Indicators Gross Enrolment Ratio (%) rimary School - Total ,8 106,3 109,4 101,3 rimary School - Female ,3 102,6 107,6 101,1 Secondary School - Total ,6 54,3 69,0 100,2 Secondary School - Female ,7 51,4 67,7 99,9 rimary School Female Teaching Staff (% of Total) ,1 45,1 58,1 81,6 Adult literacy Rate - Total (%) ,9 61,9 80,4 99,2 Adult literacy Rate - Male (%) ,1 70,2 85,9 99,3 Adult literacy Rate - Female (%) ,5 53,5 75,2 99,0 ercentage of GD Spent on Education ,8 5,3 4,3 5,5 Environmental Indicators Land Use (Arable Land as % of Total Land Area) ,9 8,8 11,8 9,2 Agricultural Land (as % of land area) ,8 43,4 43,4 28,9 Forest (As % of Land Area) ,4 22,1 28,3 34,9 er Capita CO2 Emissions (metric tons) ,1 1,1 3,0 11, Infant Mortality Rate ( er 1000 ) Rw anda 2010 Africa Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : UNAIDS; UNSD; WHO, UNICEF, UND; Country Reports. Note : n.a. : Not Applicable ; : Data Not Available. novembre 2015 III

31 Annex 2a: Status of Bank Group's Active ortfolio in Burundi as at 26 October 2015 National roject Division Full Name Sector Name Window Approval Date Signature Date Net Loan Amount Disbursed Disb. Ratio OITC2 THE NYAKARARO -MWARO-GITEGA ROAD (RN18) Transport [ ADF ] 24Sep14 19Nov14 19,420,000 1,640, % 1.1 IMROVEMENT AND ASHALTING ROJECT OITC2 THE GITEGA-NYANG ROAD IMROVEMENT AND Transport [ ADF ] 29Jun11 16Mar12 10,000,000 2,172, % 4.3 ASHALTING ROJECT OITC2 THE GITEGA-NYANG ROAD IMROVEMENT AND Transport [ ADF ] 29Jun11 16Mar12 32,000,000 26,832, % 4.3 ASHALTING ROJECT OITC2 MAKEBUKO RUYIGI ROAD ROJECT Transport [ ADF ] 18Dec13 18Feb14 8,940, , % 1.9 ONEC2 JIJI AND MULEMBWE HYDROOWER LANTS ower [ ADF ] 23Jun14 31Jul14 14,340, % 1.4 DEVELOMENT ROJECT ONEC2 MASTER LAN STUDY OF ELECTRICITY GENERATION, TRANSMISSION AND DISTRIBUTION IN BURUNDI ower [ ADF ] 30Apr14 14Aug14 414, % 1.5 OSAN3 WATERSHED MANAGEMENT AND CLIMATE Environment [OTHERS] 22Apr13 28May13 2,191, , % 2.5 RESILIENCE IMROVEMENT ROJECT Environment [ ADF ] 22Apr13 28May13 6,230,000 3,939, % 2.5 OSGE2 RIVATE SECTOR DEVELOMENT SUORT Multi-Sector [ ADF ] 09Nov12 01Mar13 884, , % 3.0 ROJECT (ADS) OSGE2 UBLIC FINANCE MANAGEMENT CAACITY Multi-Sector [ ADF ] 09Nov12 01Mar13 1,244, , % 3.0 BUILDING ROJECT OSHD1 CAACITY BUILDING FOR COLLECTION OF DATA Multi-Sector [ ADF ] 09Nov12 01Mar13 400, , % 3.0 ON LABOUR AND SOCIAL ROTECTION OSHD1 INSTITUTION CAACITY BUILIDING -EMLOYMENT AND ENTRERENEURSHI Multi-Sector [ ADF ] 12Nov12 01Mar13 1,347,796 1,162, % 3.0 Regional rojects Age 97,413,253 38,729,771 40% 2.6 Division Full Name Sector Name Window Approval Date Signature Date Net loan Amount Disbursed Disb. Ratio Age OITC2 NYAMITANGA-RUHWA-NTENDEZI-MWITYAZO Transport [ ADF ] 16Dec08 16Mar09 49,380,000 45,878,958 93% 6.9 ROAD ROJECT OITC2 ISAKA-KIGA/KEZA-MUSONGATI RAILWAY Transport [ ADF ] 17Nov09 12Feb10 1,670,000 1,240,977 74% 6.0 ROJECT-HASE 2 OITC2 BURUNDI- MUGI ROADS IMROVEMENT AND Transport [ ADF ] 27Jun12 23Jul12 27,500,000 5,731,000 21% 3.3 ASHALTING ROJECT OITC2 ROJECT REARATORY STUDY FOR Transport [OTHERS] 14Oct13 13Dec13 826, ,860 28% 2.0 DEVELOMENT OF BUJUMBURA ORT ONEC2 NELSA INTERCONNECTION ROJECT - BURUNDI ower [ ADF ] 27Nov08 16Mar09 15,150,000 1,818,000 12% 6.9 ONEC2 REGIONAL RUSUMO HYDROOWER - BURUNDI ower OSAN1 OWAS2 OSHD1 BUGESERA INTEGRATED REGIONAL DEVELOMENT ROJECT LAKE VICTORIA WATER AND SANITATION ROGRAM TECHNICAL ASSISTANCE AND CAACITY BUILDING TO ICGLR (REGIONAL) [ ADF ] 27Nov13 18Feb14 16,700,000 93,520 1% 1.9 [OTHERS] 21Nov13 23Sep14 10,196,085-0% 1.9 Agriculture [ ADF ] 25Sep09 04Nov09 15,020,000 8,062,736 54% 6.1 Water Supply/Sanitation [ ADF ] 17Dec10 04Apr11 14,000, ,000 5% 4.9 Multisector [ TSF] 15Jul13 08Nov13 1,485, ,428 39% ,927,785 64,338,479 42% 4.2 IV

32 roject Name Annex 2b Status of Bank Group's Active ortfolio in DRC as at 30 September 2015 SA Code Source of Financing. Approval Date Signature Date Effectivenes s Date Closing Date Approved Amount in MUA Total Disbursed in MUA AGRICULTURE SECTOR % 7.06% RURAL INFRASTRUCTURE DEVELOMENT SUORT % Disburse d. -CD-AB0-001 ADF grant 10/11/ % TRANSORT AND ICT SECTOR % RIORITY AIR SAFETY ROJECT BATSHAMBA-TSHIKAA ROAD REHABILITATION ROJECT BATSHAMBA ROAD- LOVUA SECTION- IMROVEMENT ROJECT ROJECT TO IMROVE THE TSHIKAA-MBUJI MAYI ROAD (TSHIKAA-KAMUESHA SECTION) AND REHABILITATE RELATED RURAL AND AGRICULTURAL INFRASTRUCTURE. -CD-DA0-001 ADF grant 29/09/ % -CD-DB0-002 ADF grant 13/06/ % -CD-DB0-008 ADF grant 10/12/ % ADF loan 10/12/ % ADF grant 22/10/ % % sect. Status % -CD-DB0-009 ADF grant 17/12/ /12/ % WATER AND SANITATION SECTOR % % REINFORCEMENT OF SOCIO-ECONOMIC INFRASTRUCTURE IN THE CENTRAL -CD-E ADF grant 27/11/ % REGION ADF loan 27/11/ % TSF Grant 27/11/ % RWSSI 27/11/ % FEASIBILITY STUDY ON THE EXANSION OF DRINKING WATER SULY SERVICES AWF 25/06/ , % TO WEST KINSHASA RIVATE SECTOR % 6.10% NYUMBA CEMENT LANT ROJECT -CD-B ADB loan 12/02/ % ENERGY SECTOR % % 9 INGA HYDROOWER REHAB. ROJECT-MEDE -CD-FA0-001 ADF grant 18/12/ % 10 RURAL & ERIURBAN ELECTRIFICATION ROJECT -CD-FA0-003 TSF Grant 15/12/ % RURAL & ERIURBAN ELECTRIFICATION ROJECT -CD-FA0-003 ADF grant 15/12/ % 11 ESTABLISHMENT OF INGA SITE DEVELOMENT AND ROMOTION AUTHORITY -CD-FA0-005 TAS 17/04/ % V

33 INGA3 DEVELOMENT ROJECT -INGA/ATCD -CD-FA0-009 TAS 13/05/ % MULTISECTOR (GOVERNANCE) % UBLIC FINANCE MODERNIZATION SUORT ROJECT MOBILIZATION OF UBLIC ADMINISTRATION HUMAN RESOURCES STATISTICS AND UBLIC FINANCE INSTITUTIONAL SUORT -CD-KF0-002 ADF grant 25/04/ % -CD-KZ0-004 ADF grant 21/01/ % -CD-K ADF grant 23/10/ % BUILDING CAACITY TO STEER REFORMS -CD-KF0-008 TAS grant 18/07/ % RIVATE SECTOR DEVELOMENT AND JOB CREATION SUORT ROJECT -CD-KB0-001 ADF grant 03/06/ /08/ /08/ % SOCIAL % 2.32% % 18 GENERAL OULATION CENSUS AND SOCIAL DATABASES CONSOLIDATION SUORT ROJECT -CD-KF0-007 ADF grant 26/11/ /05/ /05/ /12/ % 19 SUORT FOR REARATION OF CWIQ SURVEY -CD-IZ0-005 TAS grant 22/06/ /09/ /09/ /12/ % ENVIRONMENT % 20 -CD-AAD-003 FI 11/09/ % REDD- KIS INTEGRATED ROJECT National Operations % EMERGENCY ASSISTANCE % 0.19% 1 EMERGENCY ASSISTANCE TO DISLACED EOLE IN KATANGA ROVINCE -CD-AA0-005 SRF 20/02/ /08/ /08/ % 2 EMERGENCY ASSISTANCE FOR THE FIGHT AGAINST EBOLA -CD-IBE-001 SRF 22/09/ /09/ % CONGO BASIN FOREST FUND (CBFF) % 1 SANKURU FAIR TRADE CARBON INITIATIVE -Z1-C CBFF 07/04/ % 2 CONSERVATION INTERNATIONALE FOUNDATION -Z1-C CBFF 09/06/ % 3 -Z1-C CBFF 12/07/ % ECOMAKALA 4 -Z1-C CBFF 12/07/ % SOUTH KWAMOUTH REDD AGROFORESTRY ILOT ROJECT 5 -Z1-C CBFF 19/05/ % ISANGI REDD ILOT ROJECT 6 -Z1-C CBFF 13/07/ % CIVIL SOCIETY AND GOVERNANCE CAACITY BUILDING 7 -Z1-C CBFF 22/07/ % LUKI REDD ROJECT VI

34 8 -Z1-C CBFF 27/04/ % MAMBASA REDD ROJECT 9 -Z1-C CBFF 16/11/ % VAMEEN VALORIZATION OF AFRICAN MEDICINE 10 AGROFORESTRY DEVELOMENT SUORT -CD-C CBFF 02/04/ % 11 ROJECT TO REDUCE DEFORESTATION AND ALLEVIATE OVERTY -CD-C CBFF 28/11/ % IN THE VIRUNGA-HOYO REGION MULTINATIONAL % STUDY ON THE ROAD-RAIL BRIDGE BETWEEN KINSHASA (DRC) -Z1-D AND BRAZZAVILLE (CONGO) ADF grant 03/12/ % 2 STUDY ON THE EXTENSION OF THE KINSHASA-ILEBO RAILWAY -Z1-DC0-014 IF grant 15/07/ % STUDY ON THE OUSSO-BANGUI-NDJAMENA ROAD AND RIVER -Z1-D NAVIGATION ADF grant 01/12/ % 4 NELSA INTERCONNECTION ROJECT - DRC -Z1-FA0-035 ADF grant 27/11/ % 5 INTERCONNECTION OF BOALI ELECTRIC OWER GRIDS -Z1-FA0-047 ADF grant 19/09/ % INGA SITE DEVELOMENT AND ELECTRICITY ACCESS SUORT ADF grant 20/11/ % -Z1-FA ROJECT TAS grant % STUDY ON EXTENSION OF NORTH KIVU 220KV TRANSMISSION -Z1-FAD LINES IF grant 07/06/ % LAKE EDWARD AND ALBERT INTEGRATED FISHERIES AND -Z1-AF WATER RESOURCES MANAGEMENT (LEAF II)* ADF grant 20/06/ % GRAND TOTAL % VII

35 AGRICULTURE Annex 2c Status of Bank Group's Active ortfolio in Rwanda as at 03 September 2013 ROJECT Window Total approved Date Approved Closing Date Amt. disb. Disb. rate Undisbursed amount 1 Livestock Infrastructure Support rogramme-lis (SBS) ADF loan 21,810, Jun Dec-15 21,810, % 0 WATER 2 Rural Water and Sanitation-hase II (AEA) ADF Grant (UA10 M) 10,000,000 1-Jul Aug-15 9,955, % 44,040 Rural Water and Sanitation-hase II (AEA) RWSSI ( EURO M ) 6,127,084 1-Jul Aug-15 6,127, % 4 Sub-total Water 16,127,084 16,083, % 44,044 TRANSORT 3 Base Nyagatare 49,000,000 Sub Total Transport ENERGY 3 Scaling Up Energy Access roject ADF Grant 11,871, , % Scaling Up Energy Access roject ADF Loan 15,494, % SUB-TOTAL INFRASTRUCTURE 92,492,084 16,083, % 76,409,044 HUMAN DEVELOMENT 4 Support to Skills Dev in Science & Tech ADF loan 6,000, Nov Dec-13 2,596, % 3,403,168 5 Regional ICT Centre of Excellence 8,600, Dec Jun , % 8,010,126 SUB-TOTAL HUMAN DEV 14,600,000 3,186, % 11,413,294 6 Support to EICV-4 ADF Grant 820, Sep Sep , % 229,806 EAC-CoE 12,000,000 7 SEE II ADF Loan 34,000,000 34,000, % 0 8 Support to the Energy Sector (FAA) FAA Grant 800, Nov Dec , % 631,429 SUB-TOTAL MULTI-SECTOR 47,620,000 34,758, % 12,861,235 Total National Operations - ublic 176,522,084 75,838, % 100,683,573 RIVATE SECTOR 9 KivuWatt ADB loan (UA5.3M& FAA Grant UA 491,834) 15,892,693 3-Feb-11 NA 15,892, % 0 10 BRD (LOC & FAA) ADB loan (UA7.6& FAA Grant UA 246,799) 7,600, Nov-10 NA 7,600, % 0 11 BRD FAA) FAA Grant 480,789 1-Nov , % 398, BK (ADF) ADF Loan 12,000, Nov-10 NA 12,000, % 0 BK (FAA) FAA Grant 547,200 1-Nov-11 NA 220, % 326,904 Sub-TOTAL RIVATE SECTOR 36,520,682 35,574, % 725,457 Total National Operations - ublic + rivate 213,042, ,413, % 101,629,326 MULTINATIONAL 13 Isaka-Kigali Railway Study (hase 2) ADF grant 1,670, Nov Dec-15 1,250, % 419, Rwanda-(Nyamitanga-Ruhwa-Ntendezi-Mwityazo Rd) ADF grant 50,620, Dec Jun-16 34,521, % 16,098, Regional Rusumo Falls 25,384, % NELSA NBI ADF grant 1,210, Nov Dec-16 1,191, % 16 NELSA Interconnection ADF grant 30,470, Nov Dec-16 21,264, % 9,205, Bugesera Multinational roject ADF loan 14,980, Sep Dec-17 9,010, % 5,969, Rubavu-Gisiza Road roject ADF loan (UA40.525) & ADF grant (UA4.525) 40,050, Jul Dec-17 5,932, % 34,117, Rubavu-Gisiza Road roject 4,525, Jul Dec , % 4,212,680 Sustainable management of woodlands and restoration of natural forests of Rwanda ADF grant 4,015, Nov May-14 1,590, % 2,425, Lake Victoria Water and Sanitation rogramme ADF grant 15,110, Feb Dec-15 8,316, % 6,793, ayment and Settlement Systems Integration roject ADF grant 3,690,000 5-Dec-12 1-Jun % 3,690,000 SUB-TOTAL MULTINATIONAL 191,724,424 92,400, % 82,931,770 GRAND TOTAL 404,767, ,814, % 184,561,096 VIII

36 Annex 3 - Development artners' Operations in the Electricity Sub-Sector in the Great Lakes Countries DONORS ROGRAMME OR ROJECT AMOUNT ADB Kamanyola (RDC) Bujumbura 220KV Interconnection Line UA million ADB/WB/EU Master lan for the Transmission and Distribution of Affordable Electrical Energy in UA 2 million Burundi (Burundi) EU/WB/ADB/EIB Jiji Mulembwe Hydropower lant (Burundi) UA million CHINA Ruzibazi Hydropower lant in Burundi (17MW) USD 60 million EXIM INDIA Kabu 16 Hydropower lant in Burundi (20 MW) USD 80 million EU/KFW Ruzizi II Rehabilitation- Regional roject EUR 76 million EU/WB/ADB Rusumo Falls Hydropower lant UA million EU/KFW Rwanda, DRC, Burundi Interconnection Regional roject EUR 15.8 million ADB, KFW, EU, JICA NELSA Interconnection roject connecting Burundi, DRC, Kenya, Rwanda and Uganda EUR million (Bank contribution is 30.47MUA ADB Scaling-up Energy Access roject UA 30 million ADB KIVUWATT (Bank contribution is 25MUSD) UA 184 million WB Regional and Domestic ower Markets Development roject (MEDE) Southern African ower Market roject (SAM) USD 937,000,000 KfW - roject for the Rehabilitation and Strengthening of the Inga Hydropower Stations and Kinshasa Distribution Grid (Inga II generator 27) - Kamanyola Substation roject under the Ruzizi III roject EIB Belgian Technical Cooperation Chinese Cooperation Netherlands Cooperation - Southern African ower Market roject (SAM) - roject for the Rehabilitation of the Inga Hydropower lants and Kinshasa Distribution Grid (MEDE) - Rehabilitation of the Tshopo Hydropower lant and Kisangani Distribution Grid - Construction of Zongo II Hydropower lant (150 MW) - roject for Consolidating the Interconnection of the Electric Grids of Nile Equatorial Lakes Countries Financing being prepared EUR 110,000,000 EUR 13,500,000 EUR 360,000,000 10,000,000 IX

37 Annex 4 Map of roject Area This map has been provided by the staff of the African Development Bank exclusively for the use of the readers of the report to which it is attached. The names used and the borders shown do not imply on the part of the Bank Group and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders. X